Arkansas solar power developers are rejoicing at President Joe Biden’s two-year moratorium on solar panel tariffs and a new White House commitment to ramp up domestic manufacturing of modules, but they’re also waiting on some details and market reactions.
“This is great news for the solar industry as a whole,” said Caleb Gorden, co-founder and president of Shine Solar of Rogers. “The supply chain is tight right now and prices are increasing monthly. This will help provide relief for both of those.”
Biden invoked the Defense Production Act on Monday, aiming to spur more panel manufacturing in the United States even as the tariff suspension eases imports. A lack of modules, foreign or domestic, has been a serious concern for the booming solar installation industry.
“At least at first review, this eliminates a previous self-inflicted wound that was causing tremendous havoc across the country for a huge number of contracted and future projects,” said Bill Halter, CEO of Scenic Hill Solar of Little Rock.
Tariffs, along with a Commerce Department investigation into whether solar panel exports from Southeast Asian countries were a ruse for avoiding tariffs on modules actually made in China, have stalled a number of projects in Arkansas, including Entergy Arkansas’ large 100-megawatt-plus solar generation projects in West Memphis and near Brinkley.
Biden’s moves, which came in the form of executive orders and presidential proclamations, align with his environmental priorities as president, including promoting green energy and fighting climate change. However, the administration still supports the Commerce investigation, which could lead to retroactive tariffs of 180%, by one measure, and could utterly wreck solar construction, industry officials say. The countries accused of fronting for Chinese exports are Malaysia, Thailand, Vietnam and Cambodia.
Because of the ongoing Commerce inquiry, doubts linger among some Arkansas solar executives. “We are waiting to see how the markets and the vendors react,” said Heather Nelson, president and co-founder of Seal Solar of North Little Rock. She had no further comment.
The American Clean Power Association estimates that tariff issues, if left unaddressed, could eliminate 80% of planned solar projects nationwide. Significant delays nationwide include Entergy’s two Public Service Commission-approved solar fields under construction in Arkansas. On hold are Walnut Bend Solar in Lee County near Brinkley, a 100-megawatt system with sun panels planned over 900 acres, and West Memphis Solar, an even bigger 180-megawatt project. That field is planned along Interstate 40 in Crittenden County and is being built by NextEra Energy Resources of Juno Beach, Florida.
NextEra Chief Financial Officer Kirk Crews announced April 21 that up to 2.8 gigawatts of the company’s planned solar projects were on hold, the approximate generation capacity of three nuclear power plants. He said all that work “may shift to 2023” or later “due to the circumvention investigation.”
Credit Suisse described the announcement as the “first concrete data point” indicating distress in the U.S. solar industry.
A spokeswoman for Entergy Arkansas, the state’s largest electric company and solar power producer, said the presidential announcement had left the investor-owned utility looking ahead. “We have been discussing the supply issue with the developers we have contracted with to build our new solar projects,” said Kacee Kirschvink, Entergy Arkansas’ communications manager. “With news about the waiving of solar panel tariffs for 24 months, we look forward to working with them to see how this will progress both our Walnut Bend and West Memphis solar facilities.”
The Walnut Bend project is being built by Invenergy LLC of Chicago, which will sell the array to Entergy after completion. Originally expected to be completed this year, construction has yet to begin.
Halter of Scenic Hill Solar, a former Arkansas lieutenant governor who had described the tariff issue as a “grave threat,” called the presidential action “a very good outcome for the country and for our sustainability objectives,” and he predicted more clarity about effects will come promptly.
“We'll see what happens in the markets, and certainly I think a lot of folks will be talking to suppliers immediately to begin discussions about additional purchases,” Halter said. “We should have visibility into that, I think, fairly quickly.”
Other COVID-linked supply chain issues will persist, he predicted, and so will issues related to the Russian invasion of Ukraine. “We'll see over time how these various negative supply shocks begin to work themselves out. But we are very pleased that one of those shocks here in the United States is in process of being removed.”
White House officials said Biden's actions aim to increase domestic production of solar panel parts, building installation materials, high-efficiency heat pumps and other components like cells used for clean-energy generated fuels, the Associated Press reported. Officials called the tariff suspension affecting imports from Thailand, Vietnam, Malaysia and Cambodia a bridge measure while other efforts work to increase domestic solar power production — even as the administration remains supportive of U.S. trade laws and the Commerce investigation.
Solar company stocks surged after Biden’s announcement.
"The president's announcement will rejuvenate the construction and domestic manufacturing of solar power by restoring predictability and business certainty that the Department of Commerce's flawed inquiry has disrupted," Heather Zichal, CEO of the American Clean Power Association, said in a statement Monday.
The Defense Production Act allows the federal government to oversee manufacturing for national defense. President Donald Trump's administration used it to produce medical equipment and supplies during the early stages of the coronavirus pandemic. Biden evoked it last month to boost the national supply of baby formula amid a domestic shortage.
The Associated Press contributed to this report.