Latest activities in U.S. and India markets

US movements  

The Biden administration announced on February 4 that President Biden extended the Section 201 tariffs on imported solar cells and modules for another four years. The extension also reduced tariff rates to 14.75% for the period from February 7, 2022 through February 6, 2023, as compared with the 15% rate that expired on February 6. The tariff rate will decline by 0.25% in each of the subsequent three years and expire on Feb. 6, 2026. Bifacial modules remain excluded from the tariff.

Compared with the rate introduced on January 23, 2018, which decreased by 5% each year, the extension this time significantly slows the reduction, a measure believed will protect and support domestic solar industry. In addition, the President raised the annual tariff rate quota for solar cells from 2.5 GW to 5 GW, as the quota ran out at the end of December last year before February. The increased quota is expected to boost local module production.

Source: Cost Report & Price Forecast Report, InfoLink

Against this backdrop, InfoLink updated the module cost estimation. Overall, the change to Section 201 tariffs will not cause much impact on the market, as bifacial modules remain excluded, giving advantages to manufacturers that export bifacial modules from Southeast Asia. Chinese modules, on the other hand, have lost cost advantages after taxes. While module manufacturers in the U.S. can enjoy tax-free advantage, variables exist for those who wish to set up facilities in the country. At present, few manufacturers have actual expansion plans and activities. In the future, the share of modules from Southeast Asia is expected to grow in the US market. Meanwhile, the raised tariff rate quota on cells will spur local module capacity expansion.  
 

India movements

After the safeguard duty expired at the end of July 2021, the Indian government has yet to introduce new tariff during the window period. As the basic customs duty (BCD) will be imposed in April, solar cells and modules will be subject to 25% and 40% tariff, respectively. In light of this, InfoLink updates module cost estimations.

Source: Cost Report & Price Forecast Report, InfoLink

The above table shows that during the window period from August 2021 through March 2022, Chinese modules enjoy around 9.6% of profit point, whereas Chinese cells barely generate profits. As a result, there is a high volume of Chinese module imports. In comparison, Chinese cells and modules will no longer enjoy cost advantage after BCD, and thus module prices may rise amid high costs in the Indian market. India-based module makers, with cost advantages after the imposition of BCD, will actively expand capacity and may see market share grow continuously. 

China aside, the U.S. and India are the only two solar markets with size beyond 10 GW. The U.S. market is forecast to add 31 GW of demand, while India is projected to see 10 GW. Continuously growing dominance of Chinese market is hitting solar industry in the U.S. and India. In response, the two countries implement policy and measures to protect the development of domestic manufacturing sector. With the protective measures in place, however, they should take into account whether domestic capacity can meet local demand.