The bill may soon come due for millions of Southeast Asian solar panels imported duty-free into the US that haven’t been installed by a Dec 3 deadline.

With the cutoff’s arrival on Tuesday, companies that imported those panels between mid-November 2022 and June 6, 2024 and haven’t deployed them are on the hook for tariffs ranging from 30%, to more than 230%. The US Customs and Border Protection has vowed to “vigorously enforce” the requirement meant to deter stockpiling of duty-free panels, raising the risk of audits, inspections, and potentially billions of dollars in retroactive tariffs for importers.

“That bill will shock a lot of people,” said Tom Beline, a trade attorney and partner in Cassidy Levy Kent’s Washington office. Robust enforcement is “tremendously important” to ensure that the two-year tariff moratorium doesn’t mean we’re “living with a stockpile of panels that would never be installed”.

The crackdown heightens uncertainty for solar developers and manufacturers, coming on top of existing trade probes, questions about the longevity of tax credits for renewable power projects, and President-elect Donald Trump’s vow to hike tariffs on a wide range of goods and suppliers.

At issue is a tariff holiday that President Joe Biden ordered in 2022, to blunt the impacts of a US government trade probe that spooked renewable developers and chilled solar installations nationwide. Ultimately, the Commerce Department concluded that manufacturers were evading longstanding tariffs on Chinese solar imports by assembling the equipment in Cambodia, Malaysia, Thailand and Vietnam. 

Although the government extended those duties to solar gear from the Asian nations, Biden’s order effectively meant tariffs didn’t apply until early June. To counteract a surge in duty-free solar imports from the region, the administration set the December deadline for using or installing the equipment.

Federal regulators have spent months warning importers they will have to prove modules have been “utilised”, or pay duties retroactively. And they’ve taken pains to explain what qualifies, making clear that creative measures — from destroying affected panels to temporarily installing them at warehouses — aren’t enough to dodge the duties.

Companies raced to deploy the imported equipment, as Tuesday’s deadline neared. But analysts estimate some 30 to 40 gigawatts of affected imports are still waiting to be used — at least two-thirds of current annual US panel needs. Based on import and installation data analysed by BloombergNEF, more than 30 gigawatts of modules in the US missed the deadline.

“Given that the domestic industry is still facing a price collapse, and a surge of imports that have left years of inventory still in warehouses, the enforcement of this circumvention regime remains extremely important to the domestic industry,” said Tim Brightbill, a trade lawyer and partner at Wiley Rein.

The enforcement pressure falls on companies listed as importers of record, even for panels that have been sold many times over since entering the US. The group includes large-scale renewable developers, as well as US units of foreign module suppliers, such as Canadian Solar Inc, Jinko Solar Co, Ltd; JA Solar Technology Co, and Trina Solar Co, Ltd. 

Representatives of those manufacturers, as well as developer NextEra Energy Inc, didn’t comment on the matter. Chicago-based developer Invenergy said it doesn’t have a stockpile of affected modules, having imported supplies to serve immediate demand tied to its projects under construction.

“All modules that we imported into the US have been deployed at project sites to meet domestic energy demand across the country, including a de minimus number of modules being held on site for parts and maintenance,” said Art Fletcher, Invenergy’s executive vice-president for domestic content.

US solar manufacturing advocates have made clear that they expect strong enforcement. While customs officials have telegraphed that they will be tough, they haven’t publicly detailed their strategy for scrutinising imports.

Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, encouraged a “risk-based approach” focused on “producers who have a long track record of circumventing duties”.

  - Bloomberg