On the heels of imposing tariffs on Chinese solar cell imports to the US, the Commerce Department is doing the same for wind towers.
US wind tower manufacturers also filed a trade complaint, saying Chinese companies receive production subsidies of 14-26%. Broadwind Towers, DMI Industries, Katana Summit and Trinity Structural Towers asked for tariffs that match those subsidies.
The Commerce Department issued a preliminary decision to charge a tariff up to 26% on imports of utility-scale steel towers that support wind turbines with a capacity of over 100 kilowatts.
As in the solar tariffs, the wind tower tariffs vary depending on the company: CS Wind will be charged 13.74%, Titan Group, 26%, and all others 19.87%.
The ruling only covers the steel tower. It doesn’t affect the nacelle, turbine and rotor blade complex that sit on top of a tower.
Unlike their solar counterparts, Chinese wind turbine manufacturers have a small presence in the US, but tower imports have been doing well. Last year, Chinese imports of wind towers were valued at $222 million, according the Commerce Dept. They will issue a final decision in August.
The Obama administration wants to protect the US wind tower industry. Vestas opened the world’s largest tower factory in Colorado in 2010, and the industry has been growing here. It’s under pressure from the imminent expiration of the key subsidy, the Production Tax Credit.
Obama has been pushing Congress to extend the tax credit, which is already causing cancellations of new factories and projects, and job cuts at existing operations.
China volleyed back last week, filing a complaint with the World Trade Organization that challenges US import duties on 22 Chinese products including steel and solar panels. It also alleges that renewable energy subsidies in five US states violate free trade rules: California, New Jersey, Massachusetts, Ohio and Washington State.
All countries offer subsidies to certain industries, "The absurdity is the scope and depth of the subsidies in China," Hari Chandra Polavarapu, an analyst at Auriga USA told Bloomberg. "You’re competing against a sovereign when you’re talking about the Chinese solar industry. It’s economic warfare."
Although China’s domestic solar market is healthy enough to absorb losses in the US and Europe, its wind industry is having a tough time.
Its biggest wind companies have reported greatly reduced revenue and orders. Although China led the world in wind installations last year, the 17.6 gigawatts installed was 7% less than 2010. This year, about 40% less new capacity will be approved than in 2011, according to the China Wind Energy Association (CWEA).
The problem is over-capacity, which the government is trying to address. At the peak of the wind boom in 2010, wind farms were built at break-neck speed, and then sat idle because they couldn’t connect to the grid. There’s enough idle wind capacity to supply 3 million homes.
"The under-regulated expansion of the Chinese wind power sector created a serious misalignment between the capacity of new wind farms and ability of provincial and national grid infrastructure to handle the their large and unpredictable fluctuations in wind-powered generation," says CleanBiz Asia.
"The grid issue is primarily one of safety. Last year, for example, a number of serious incidents cropped up in Gansu province, one of China’s major power bases. In once instance, equipment failure at one Gansu wind far caused a chain reaction that knocked out hundreds wind turbines across the region and threatened to disrupt a transmission network that delivers electricity to about a third of the country," they report.