Solar projects to be hit by big increase in costs due to new Australian anti-dumping decision

Australian utility-scale solar projects face a significant increase in costs after the Australian government agreed to impose hefty new tariffs on imported steel at the request of local steel-makers.

The decision by Industry minister Tim Ayres, published with no fanfare on Friday, threatens to impose a 48 per cent duty on hollow steel tubing – including those used in torque tubes that support the mounting of solar modules – imported from China, Taiwan, Malaysia and South Korea.

Solar industry sources note the decision is retrospective – to September last year – and so could impact multiple gigawatts of recently completed projects and others that are about to start construction.

They say it will add significantly to project costs, and potentially puts a further question mark over Australia’s ability to meet its ambitious renewable energy target of 82 per cent by 2030, already under strain because of a lack of investment, particularly in big wind projects.

The solar industry, and particularly solar-battery hybrids, has been the strongest part of the green energy transition in the past year, given the multiple challenges facing the wind industry.

A number of new solar-battery hybrid projects have reached financial close and begun construction in recent months. Some are key to provide power to major energy consumers such as Rio Tinto’s giant aluminium smelter and refineries in Gladstone, Queensland.

One industry insider says the ruling – justified on the basis that it will increase demand for local steel products – could be self-defeating as there is simply not the local manufacturing capacity to deliver the products needed.

The steel industry, and Bluescope in particular, have been pushing for the tariffs, arguing that the imported tubings have been sold in Australia below cost price, and is undermining and damaging Australian efforts to compete.

Bluescope subsidiary Orrcon, which manufactures steel tubes, argued that the goods involved had been only slightly modified – including with drill holes – to circumvent anti-dumping rules. The commission appears to have agreed with it.

Russell Wilkinson, of World Customs Consultants, says the solar industry will be caught by surprise because they did not believe it would happen to partially modified products, and he expects an appeal is possible.

“We are yet to learn from the anti-dumping commission on how they will implement these duties,” Wilkinson told Renew Economy on Monday. He said the industry will be in limbo until the situation is resolved, noting that an appeal could take months to resolve.

“There are a lot of unanswered questions at the moment,” he said. “The question is if this is fair or not.”

Nextpower Australia, a major provider of tracking and other technologies, and which is building a local manufacturing facility for its solar tracking systems, and even has a partnership with Orrcon, says it is concerned by the ruling.

“Ultimately, the cost of these measures will not be borne by manufacturers alone – it will be felt across Australia’s renewable energy pipeline, affecting developers, investors, and consumers alike,” said Peter Wheale, the managing director of Nextpower Australia.

He says the solar industry more broadly should be concerned about the impact of significant cost increases on projects, including those already financed and committed, as well as potential delays to construction schedules.

Wheale says it will add to the financing risk for projects that the government’s flagship Capacity Investment Scheme is designed to eliminate and will reduce investment confidence.

“These are not speculative risks,” he said. “They are the direct and near-term consequences for projects that are already underway, many of which cannot readily be re-specified or re-sourced without significant disruption and cost.”

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