U.S. Senate, Supreme Court hinder Biden climate plan; Solar offtake prices soar in Europe
The solar news you need to know.
U.S. Senate, Supreme Court deal blows to Biden climate plan
President Joe Biden vowed to take executive action to reduce climate emissions after Democratic Senator Joe Manchin withdrew crucial support for climate legislation Democrats had hoped to pass before the summer recess. Manchin's support was critical for passage of the legislation in the evenly divided Senate as it lacked any Republican backing.
"If the Senate will not move to tackle the climate crisis and strengthen our domestic clean energy industry, I will take strong executive action to meet this moment," Biden said in a statement July 15. "My actions will create jobs, improve our energy security, bolster domestic manufacturing and supply chains, protect us from oil and gas price hikes in the future, and address climate change."
A fortnight earlier, the U.S. Supreme Court hampered Biden’s plans to tackle climate change by ruling to limit the Environmental Protection Agency's (EPAs) authority to regulate greenhouse gas emissions from existing coal- and gas-fired power plants. The conservative court's 6-3 ruling on June 30 restricted the EPA's authority under the Clean Air Act anti-pollution law in a case brought by the coal-reliant state of West Virginia.
President Biden aims to decarbonise the power sector by 2035 but there are no regulations in force to reduce carbon emissions from power plants and the EPA is currently working on a new proposal that is expected to come out next spring. Attempts by previous administrations have been blocked by federal courts. The Obama-era Clean Power Plan was blocked by the Supreme Court in 2016 and a less comprehensive plan by the Trump administration was blocked by a federal appeals court in 2021.
"While this decision risks damaging our nation’s ability to keep our air clean and combat climate change, I will not relent in using my lawful authorities to protect public health and tackle the climate crisis," Biden said in a statement.
"My administration will continue using lawful executive authority, including the EPA’s legally-upheld authorities, to keep our air clean, protect public health, and tackle the climate crisis. We will work with states and cities to pass and uphold laws that protect their citizens. And we will keep pushing for additional Congressional action," the President said.
U.S. to fund solar factories that reduce reliance on China
The Biden administration is to provide $56 million in funding to solar manufacturing projects that help the U.S. reduce its dependence on Chinese silicon-based products.
The U.S. Department of Energy (DOE) will provide $27 million to expand domestic manufacturing of thin film PV modules made from cadmium telluride that are already made by U.S. supplier First Solar and are the second-most common PV technology behind silicon, the Department said July 14.
U.S. solar developers import most of their panels from low-cost Asian countries and supply chain constraints and strong global demand for solar has raised prices and curbed growth. The Biden administration aims to triple domestic solar manufacturing capacity to 22.5 GW by 2024 and has exempted panels from Asia from tariffs while domestic manufacturing is scaled up.
Solar manufacturing capacity by country, region in 2021
(Click image to enlarge)
Source: International Energy Agency (IEA)
The DOE will also provide $29 million to R&D projects that increase the reuse and recycling of solar panels as well as new technologies that reduce manufacturing costs, including modules made from perovskite materials, it said.
U.S. solar installations must quadruple to around 60 GW/year by the middle of the decade and 70 GW/year in 2031-2035 to meet President Biden's goal of a decarbonised power sector by 2035, the DOE said in a report in September.
U.S. lifts tariffs import tariffs on solar modules from Canada
The U.S. has lifted tariffs on Canadian solar products after a North American dispute panel found they were unjustified in a ruling in February.
Imposed by President Trump in 2018, the Section 201 import tariffs aim to protect U.S. manufacturers of crystalline silicon photovoltaic cells from cheaper Chinese imports but did not exempt Canada or Mexico. The tariffs started at 30% and have fallen each year to 15% in 2022. The Biden administration extended the tariffs for a further four years but exempted bifacial panels that are used on the majority of utility-scale solar projects.
Canada and Mexico currently account for just 0.4% and 1% of U.S. panel imports and in February a U.S.-Mexico-Canada Agreement (USMCA) dispute panel found the tariffs were unjustified.
U.S. and Canada have agreed to remove the tariffs on solar products from Canada while also ensuring that they do not undermine wider U.S. safeguard measures, trade representatives said July 7. The U.S. is on track to triple domestic solar manufacturing capacity to around 22.5 GW by 2024, the White House said last month.
“Reaching this settlement with Canada will promote greater deployment of solar energy in the United States using products from one of our closest allies, and foster a more resilient North American supply chain," U.S. Ambassador Katherine Tai said.
The Biden administration has also waived anti-dumping duties on solar panels from the four largest supplier countries in Southeast Asia for two years in an attempt to ease price uncertainty that has delayed projects and curbed investments.
In March, the U.S. commerce department launched an investigation into panels imported from Malaysia, Thailand, Vietnam and Cambodia after U.S. manufacturer Auxin claimed Chinese manufacturers shifted production to these countries to avoid paying U.S. anti-dumping duties on imports from China.
European solar offtake prices hike 19% in three months
European solar offtake prices rose by 19.1% in the second quarter to 59.43 euros/MWh ($60.66/MWh) and are now 40.2% higher than a year ago, LevelTen pricing platform said July 14.
After years of falling costs, power purchase agreement (PPA) prices are rising as developers tackle inflationary pressures, supply chain constraints and grid connection delays. Wholesale power prices have also soared as Europe implements measures to end Russian oil and gas supplies.
Wind power purchase agreements (PPAs) climbed by 14% last quarter to 72.71 euros/MWh and are 52% higher than the same time last year.
Spain and Finland have largely bucked the upward trend in solar prices, LevelTen noted.
“In Spain, an abundance of competition and high levels of [solar] irradiance make for good opportunities for buyers," Flemming Sorensen, VP Europe at LevelTen Energy, said. Rapid solar growth in Spain could erode power prices for developers, he warned.
Finland's supportive regulatory regime and low interconnection costs have helped to reduce cost uncertainty and put downward pressure on PPA prices, Sorensen said.
In the U.S., an investigation by the Department of Commerce into new anti-dumping duties has injected further price uncertainty and delayed projects. Last month, the Biden administration waived anti-dumping duties on solar panels from the four largest supplier countries in Southeast Asia for two years in an attempt to ease price uncertainty.
Solar PPA prices in the Midcontinent Independent System Operator (MISO) market in Central U.S. jumped by 15.7% last quarter to $45.8/MWh, some 29.6% higher than a year ago, while prices also climbed significantly in California, LevelTen said.
Average U.S. solar prices rose by 8.1% in the second quarter to $39.26/MWh and are now 25.4% higher than a year ago, LevelTen said.