The announcement of the Office of the U.S. Trade Representative (“USTR”) on January 22, 2018, that the Trump Administration is granting relief for the domestic solar panels and modules industry under section 201 of the Trade Act of 1974, confirmed the fears of many consumers that substantial additional duties would be imposed on those products. USTR announced that the relief would come in the form of a tariff increase of 30% in the first year, decreasing to 25% in year two, 20% in year three, and then to 15% in year four. On January 23, 2018, President Trump signed the Proclamation implementing the relief. The relief will go into effect on February 7, 2018.

Despite the above tariffs, the relief announced provides that the first 2.5 gigawatts of imported cells are excluded from the additional tariffs. The use of the exemption for the first 2.5 gigawatts makes the relief a form of a “tariff rate quota,” meaning that tariffs only apply if imports rise above a certain quota amount. This type of relief has been imposed in the past, including on certain steel products. The ITC Commissioners made various recommendations to the President in this case, some of which included types of tariff rate quotas.

The nature of the relief will mean that exporters now are likely want to rush to import their products in order to be within the 2.5 gigawatt exclusion. The Proclamation states that the quota of 2.5 gigawatts “shall be allocated among all countries except those countries the product of which are excluded from such tariff rate quotas…” While this statement seems to imply that there will be a base time period used to determine different market shares within the total quota for different countries, our discussions with government officials indicate that this was not what was intended. Instead, the intention was to have one worldwide quota of 2.5 gigawatts that will apply to all countries, without any allocation among countries. Regardless of whether allocations are made among countries or there is just one overall quota, if shipments are made in the hope that they will fall within the exclusion but the 2.5 gigawatt quota already is filled at the time of entry, the 30% tariff that then will be applied may change the economics of a deal if the possibility of a tariff has not been taken into account. It is not clear at this time whether there will be some kind of pre-clearance for such imports before the time of exportation, or whether there will be a free-for-all at the time of entry. Continue Reading Solar Panels and Modules Trade Decision Creates New Uncertainty for Purchasers

The renewables industry can breathe easier this weekend as details emerge from whirlwind negotiations that appear to clear the path toward passage of the first comprehensive tax bill in more than 30 years.

The final language, released by the Conference Committee last night, scraps a House provision which would have effectively gutted Production Tax Credits (PTCs) critical to the wind industry; eliminates the corporate Alternative Minimum Tax; and takes the teeth out of the so-called BEAT (Base Erosion Anti-Abuse) Tax Continue Reading Congressional Compromise Mollifies Renewable Industry Concerns

Renewable energy developers believed to have dodged a bullet in the Senate’s tax reform bill face newfound concerns as the upper chamber works toward expected final passage this week. While the Senate bill preserves important Production Tax Credits (PTCs) that had been significantly rolled back in the House, it also contains a provision which would severely undercut the value of tax equity credits relied upon by institutional investors to justify upfront investments in wind and solar projects. Continue Reading “Base Erosion Tax” Poses Newfound Threat to Wind and Solar Development

Late last night, the Senate Finance Committee voted its massive tax overhaul bill out of committee, retaining Production Tax Credits (PTC) important to the wind industry. The House version, which cleared the lower chamber earlier in the day, significantly scaled back these credits.

After taking a week off to celebrate the Thanksgiving holiday, the full Senate is expected to Continue Reading Senate Battle Over PTC Heating Up

As expected, the U.S. House of Representatives passed its massive tax overhaul plan today, largely along party lines.  The House package significantly scales back important production tax credits (PTCs) which renewable industry supporters believe have jump-started new investment.  All eyes now turn to the Senate as a backstop to keep these incentives in place. Continue Reading House Passes Tax Overhaul Plan, PTC Cuts Intact

Last night the Senate Finance Committee released its own tax overhaul bill, which will be taken up next week by the committee.  The legislation retains important tax credits for wind developers, setting up a likely showdown with the House of Representatives during conference committee negotiations over the legislation before the end of the year.

The Production Tax Credit (PTC) enjoys outspoken support from an important bloc of Republican Finance Committee members, including Continue Reading Senate Version of Tax Bill Retains Incentives for Renewables

NOTE: An earlier draft of this update indicating that the FAA policy was still under consideration was inadvertently published last week. That draft was out of date and should not be relied on as a statement of FAA policies currently under consideration.

Changes to a Federal Aviation Administration (FAA) policy concerning the issuance of Determinations of No Hazard to Air Navigation (DNHs) under discussion late last year would have had profound and potentially adverse repercussions on wind development projects nationwide. Fortunately, Continue Reading FAA Changes Would Have Disrupted Financing of Wind Development Projects Nationwide

energy_solarSuniva, Inc., a bankrupt U.S. producer of crystalline silicon photovoltaic (CSPV) cells, filed a petition with the U.S. International Trade Commission (ITC) seeking relief from the effects of importation of foreign manufactured CSPV cells and modules. Suniva requests relief in the form of a minimum price for solar modules imported into the United States and imposition of an additional four-year tariff on all imported CSPV cells and modules that would establish a price-per-watt for inbound foreign competitors double that of current levels.

The requested relief calls for Continue Reading Proposed Tariffs Could Dramatically Affect Expansion of U.S. Solar Industry

Horn_Robert sachs_adam2016In the name of job creation, the Trump Administration is attempting to single-handedly bring back the coal industry via executive action.  But while the president may be scoring political points in coal country, as a practical matter that’s really not where energy sector job growth will come from in the next few years.

Nevertheless, the past several months have seen a resurgence of the long dormant coal industry.  Hampered by a number of factors Continue Reading Around the Horn: Trump’s Support for Coal and the Future of Renewables

energy_solarToday we highlight the Quadrennial Energy Review’s (“QER”) focus on grid modernization through increased renewable generation and its identification of opportunities to improve development, project financing, access, and the siting process. Part I of our series focused on “infrastructure challenges,” namely transmission and distribution and storage.

Renewable Generation Development

QER 1.2 dedicates significant analysis to renewable generation based on Federal environmental objectives. To encourage the deployment of clean energy generation, it recommends Continue Reading “Transforming the Nation’s Electricity System.” Part II: Renewable Generation