Day: April 18, 2018

SunPower Corp. on Wednesday said it would buy U.S. solar panel maker SolarWorld Americas, expanding its domestic manufacturing as it seeks to stem the impact of Trump administration tariffs on panel imports.

The White House cheered the deal, saying it was proof that Trump’s trade policies were stimulating U.S. investment.

Terms of the transaction were not disclosed.

The news sent SunPower’s shares up 12 percent on the Nasdaq to their highest level since before President Donald Trump imposed 30 percent tariffs on imported solar panels in January.

“The time is right for SunPower to invest in U.S. manufacturing,” chief executive Tom Werner said in a statement.

SunPower is based in San Jose, California, but most of its manufacturing is in the Philippines and Mexico. The company had lobbied heavily against the solar trade case brought last year by U.S. manufacturers, including SolarWorld, which said they could not compete with a flood of cheap imports.

‘This is great news’

The deal is a win for the Trump administration’s efforts to revive U.S. solar manufacturing through the tariffs. SunPower will manufacture its cheaper “P-series” panels, which more directly compete with Chinese products, at the SolarWorld factory in Hillsboro, Oregon, it said. It will also make SolarWorld’s legacy products.

“This is great news for the hundreds of Americans working at SolarWorld’s factory in Oregon and is further proof that the president’s trade policies are bringing investment back to the United States,” White House deputy press secretary Lindsay Walters said in an emailed statement.

The announcement comes as SunPower is seeking an exemption from tariffs on its higher-priced, more efficient panels manufactured overseas. It has argued to the U.S. trade representative, which will make a decision on exemptions in the coming weeks, that those products should be excluded because there is no U.S. competitor that makes a similar product.

In a note to clients, Baird analyst Ben Kallo said the SolarWorld deal would enable the company to compete against Chinese imports should SunPower’s products not receive an exemption. But he added that skeptics “may question the company’s ability to generate profits with U.S. manufacturing.”

Capital injection

The deal will inject much-needed capital into SolarWorld’s long-suffering manufacturing plant and give it the support of a major market player. SunPower is one of the largest solar companies in the world and is majority owned by France’s deep-pocketed oil giant Total SA.

The U.S. arm of Germany’s SolarWorld AG opened the Hillsboro factory in 2008 as it sought to capitalize on surging solar demand in the United States. But its start coincided with a dramatic increase in the production of cheaper solar products in Asia, and SolarWorld struggled to compete.

Twice, in 2012 and 2014, trade cases brought by SolarWorld prompted the U.S. Commerce Department to slap import duties on solar products from China and Taiwan. Yet prices on solar panels continued their free fall, and in 2017, the company joined rival Suniva in asking for new tariffs.

SolarWorld called the outcome “ideal” for its hundreds of employees in Hillsboro.

Suniva’s future in doubt

During the trade case and after the tariffs were announced, the solar  industry’s trade group, the Solar Energy Industries Association, argued that the tariffs would not be enough to keep SolarWorld and Suniva afloat.

Indeed, Suniva’s future remains uncertain after a U.S. bankruptcy court judge this week granted a request by its biggest creditor that will allow it to sell a portion of the company’s solar manufacturing equipment through a public

auction.
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President Donald Trump’s tariffs on imported aluminum and steel are disrupting business for hundreds of American companies that buy those metals, and many are pressing for relief.

Nearly 2,200 companies are asking the Commerce Department to exempt them from the 25 percent steel tariff, and more than 200 other companies are asking to be spared the 10 percent aluminum tariff.

Other companies are weighing their options. Jody Fledderman, chief executive of Batesville Tool & Die in Indiana, said American steelmakers have already raised their prices since Trump’s tariffs were announced last month. Fledderman said he might have to shift production to a plant in Mexico, where he can buy cheaper steel.

A group of small- and medium-size manufacturers are gathering in Washington to announce a coalition to fight the steel tariff.
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German Chancellor Angela Merkel backs the idea of a European Monetary Fund, provided national governments have sufficient oversight, sources close to her said before a visit by the French president.

President Emmanuel Macron, who will meet Merkel in Berlin on Thursday, is pushing hard for bold euro zone reforms to defend the 19-member currency bloc against any repeat of the financial crisis that took hold in 2009 and threatened to tear it apart.

His vision includes turning Europe’s existing ESM bailout fund into a European Monetary Fund (EMF). At one point, Macron also suggested the zone should have its own budget worth hundreds of billions of euros, an idea that does not sit well with Germany.

Merkel told lawmakers from her conservative bloc on Tuesday that she favored the EMF concept as long as member states retain scrutiny over the body, participants at the meeting said.

“It’s not that one side is putting the brakes on and the other pushing ahead,” one of the participants at Tuesday’s meeting said. “We want to find a good reform path together.”

German conservatives worry that an EMF could fall under the purview of the European Commission and could use German taxpayers’ money to fund profligate states. They also fear the Bundestag, Germany’s lower house of parliament, would lose its ability to veto euro zone aid packages.

Merkel told the meeting that an EMF should be incorporated into European law via a change in the EU treaty, though she did not make this a stipulation for creating it, participants said.

European treaty change is a tricky feat that could take time to achieve, but by not categorically insisting on it Merkel leaves wiggle room for her talks with Macron.

The chancellor’s remarks to her parliamentary bloc tread a careful line between Macron’s drive for bold euro zone reform and her conservatives’ push to retain scrutiny of any EMF.

A succession of bailouts for Greece aroused stiff opposition in Germany. The Bundestag approved them all, but the rise of the anti-euro Alternative for Germany (AfD) – now the main opposition party – has since heightened the conservatives’ wariness of going too far with euro zone reforms.

“Angela Merkel must not become Macron’s assistant,” the AfD’s leader in parliament, Alexander Gauland, said in a statement, urging her to distance the government from the French leader’s plans.

Reform road map

One participant at Tuesday’s meeting of lawmakers with Merkel said she wanted an EMF to act with conditionality – the same approach taken by the International Monetary Fund, which attaches strict reform conditions to aid.

In line with leading members of her conservatives in parliament, she also rejected plans floated by the European Commission to make use of a specific EU legal provision to develop the existing euro zone bailout fund into an EMF.

Merkel’s coalition partners, the left-leaning Social Democrats (SPD), sympathize with Macron and want him to be rewarded for his efforts to reform the French economy, well aware that a large chunk of French voters remains susceptible to far-right and far-left populists skeptical about the EU.

France and Germany, which account for around 50 percent of euro zone output, are essential to the reform drive. But while they often put on a strong show of political unity and shared intent, the devil is often in the detail.

On Tuesday, Merkel said creating a euro zone banking union was a priority for her, but she also broadened out the reform question to include a European asylum system, as well as foreign, defense and research policy.

Framing reform as such a broad issue risks diluting Macron’s drive to beef up the euro zone with extra funding fire power.

In Brussels, senior EU officials are playing down expectations for rapid and substantial progress. They hope the next couple of months can lay the groundwork for what will be agreed over the coming years.

“We hope to get an early harvest in June and a road map for the rest,” said one senior official, describing the Commission’s hopes for a Franco-German deal to conclude some euro zone reforms at a summit on June 28-29 and agree a schedule for further moves.

 
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The European Commission will put forward a proposed free-trade agreement with Japan for fast-track approval Wednesday, hoping to avoid a repeat of the public protests that nearly derailed a trade pact with Canada two years ago.

The European Union and Japan concluded negotiations to create the world’s largest economic area in December, signaling their rejection of the protectionist stance of U.S. President Donald Trump. Now they want to see it go into force.

The agreement would remove EU tariffs of 10 percent on Japanese cars and the 3 percent rate for most car parts. It would also scrap Japanese duties of some 30 percent on EU cheese and 15 percent on wines, and secure access to large public tenders in Japan.

Canada deal memories

The commission, which negotiates trade agreements for the EU, will present its proposals to the 28 EU members, along with another planned trade agreement with Singapore. EU countries, the European Parliament, and the Japanese parliament will have to give their assent before the trade pact can start.

The EU is mindful of protests against and criticism of the EU-Canada Comprehensive Economic and Trade Agreement (CETA) in 2016, which culminated in a region of Belgium threatening to destroy the deal. It provisionally entered force last September.

Both Brussels and Tokyo want to ensure the agreement can enter force early in 2019, ideally before Britain leaves the EU at the end of March. If it does, it could apply automatically to Britain during a transition period until the end of 2020.

Otherwise, it might not.

Before Brexit

Many of Japan’s carmakers serve the EU from British bases, and it has said having a deal in force during the transition would buy it more time to establish a separate trade agreement with Britain.

One reason the Japan deal may get rapid approval is that it does not deal with investment protection, which critics say allows multinational companies to influence public policy with the threat of legal action.

The agreement could then enter force after approval by the national governments and the European Parliament, rather than also having to secure clearance from national and even regional parliaments.

In fact, EU and Japanese negotiators have not agreed on the way in which foreign investors should be protected.
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The city of Yanan, a major wind power base in northwest China’s Shaanxi province, has introduced a lottery system to decide which wind projects will go ahead this year, a sign that grid constraints are forcing local governments to restrict capacity.

China has been aggressively developing alternative power as part of its efforts to cut pollution and greenhouse gas emissions. Grid-connected wind power reached 163.7 gigawatts (GW) last year, up 10.1 percent on the year and amounting to 9.2 percent of total generating capacity.

But capacity expansion has outpaced grid construction, and large numbers of wind, solar and hydropower plants are unable to deliver all their power to consumers as a result of transmission deficiencies, a problem known as curtailment.

Grid constraints

According to a Yanan planning agency notice seen by Reuters, the city was given permission to build 900 megawatts of wind capacity this year, but 1,300 megawatts (or 1.3 GW) have already been declared eligible for construction, forcing authorities to whittle the total number of projects.

“After study it was decided that the lottery method should be used to determine what plans will be submitted (for approval) to the provincial development and reform commission,” it said.

The authenticity of the document was confirmed by a local municipal government official. He declined to give his name or provide details.

China aims to raise the share of non-fossil fuels in its total energy mix to around 15 percent by the end of the decade, up from 12 percent in 2015.

​Renewable power grows

But while renewable power has grown rapidly, around 80 GW of wind capacity was still unable to transmit electricity to consumers in 2015. Wasted wind power amounted to around 12 percent of total generation in 2017, according to the energy regulator.

An environmental group is suing grid companies in the northwest for failing to fulfill its legal obligation to maximize purchases of local renewable power.

To try to prevent waste, China has drawn up guidelines aimed at preventing new plant construction in regions suffering from surplus capacity.

It also released draft guidelines last month for a new renewable energy certificate system that will force regions to meet mandatory clean electricity utilization targets. The plan is expected to help alleviate curtailment.
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