Why is this Chinese solar firm resisting pressure to set up shop in the US despite punitive tariffs?
Gao Jifan, chairman of Trina Solar, says it does not make economic sense to build a plant in the US as there are plenty of challenges and uncertainties
Setting up a plant in the US to get around the 30 per cent punitive tariff imposed on Chinese solar panels by the Trump administration does not make economic sense because of cost concerns and policy uncertainty, according to the chairman of Trina Solar, the world’s second largest solar panels maker.
“The US’ tariff on solar imports from the rest of the world is certainly a negative development for the industry,” Gao Jifan said in an interview on the sidelines of the Boao Forum for Asia on Tuesday. “But the economics of setting up a plant in the US as a result is not straightforward … there are plenty of challenges and uncertainties.
“It is possible that the plant may not be competitive by the time it is built.”
The Chinese solar manufacturing industry – which last year accounted for 55 to 83 per cent of global supply of products ranging from the raw material polysilicon to solar panels – has been hit by a 30 per cent punitive tariff announced in January.
Gao noted the tariff will fall by 5 percentage points per year for the five-year period of implementation, which reduces the incentive of setting a plant in the US.
Besides, it takes time to build a plant in the US, which will also be more expensive than elsewhere given the need to also establish a supply chain of peripheral materials such as aluminium extrusion products, he added.
Gao’s comment came close on the heels of rival Jinko Solar’s announcement late last month to build a factory in Florida to supply NextEra Energy with up to 2.75 gigawatt of panels over four years.
It was the first Chinese firm to announce a large-scale production facility in response to the US tariff.