American solar installers have stopped doing business with China-backed U.S. production centers due to uncertainties about their products’ eligibility for government subsidies
image credit: Bamboo Works
Key Takeaways:
- China-linked U.S. solar panel makers may be ineligible for U.S. subsidies aimed at supporting residential-based solar power, according to a Reuters report
- JinkoSolar is selling 75.1% of its U.S. plant in Florida to an American private equity company in an apparent attempt to keep its products eligible for subsidies
As Donald Trump prepares to visit China later this week to meet with President Xi Jinping, U.S. protectionist measures against Chinese products are likely to be one of the top items on the agenda. An important part of that discussion could focus on solar energy products, not only ones produced in China but also ones made at Chinese-invested plants in the U.S.
That issue was a central element in a Reuters report last Friday, which revealed that U.S. solar installers, as well as insurance companies and banks, have stopped doing business with China-invested U.S. solar module makers. That includes companies like leading residential solar installer Sunrun (NASDAQ:RUN), which has stopped buying panels from U.S. plants with links to Chinese companies.
In what looks like a direct response to that challenge, leading Chinese panel maker JinkoSolar Holding Co. Ltd. (NYSE:JKS) (688223.SH) has agreed to sell 75.1% of its U.S. plant in Florida to private equity company FH Capital, according to an announcement from FH Capital the same day as the Reuters report. JinkoSolar would retain the remaining 24.9% in the factory in the city of Jacksonville, which began operations in 2018.
The size of the stake sale is quite revealing, since legislation passed by the U.S. last year, with strong backing from the Trump administration, sharply cut subsidies for residential solar installations, and placed restrictions on subsidies that remained. One restriction prohibited subsidies for any installations using panels produced at factories that were more than 25% owned by Chinese companies.
“We believe this transaction provides the right ownership, management and strategic direction for this new venture to grow capacity and serve the growing demand for …
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