2024 will usher in the most powerful election year in history.
According to statistics from the U.S. Business Insider, more than 50 countries around the world will hold general elections in 2024, involving about half of the world's population. It will be the year with the most elections in history. In addition to the closely watched U.S. election, important overseas photovoltaic markets such as Europe and India will also face general elections, bringing great uncertainty to the future development of the photovoltaic industry.
Based on various perspectives, it is expected that the possible impacts of the “super election year” include:
> Trump regards the Inflation Reduction Act (IRA) as his top goal, and if re-elected, the bill may face the risk of being withdrawn.
> India’s current Prime Minister Modi is expected to be re-elected and will increase support for the solar industry
> The rise of right-wing forces in the EU may affect the progress of Europe's response to climate change
USA
Biden and Trump may face off again, increasing uncertainty over climate policy
According to the "Global Times" report, after the primary voting for the two-party presidential election in the United States on "Super Tuesday", former President Trump and current President Biden won big victories within their parties. With the withdrawal of Haley, Trump's only competitor in the party, the format of the U.S. election has become further clear, and the pattern of a second showdown between Trump and Biden has taken shape.
As of March 11, 2023 Beijing time
Voting in the primary elections for the two parties in the United States
Image source: CNN
Whether Biden is re-elected or Trump is elected, we have no expectations for the U.S. trade policy towards China. The Biden administration is relatively active in addressing climate change and new energy development, but it is basically impossible for Chinese-made photovoltaic modules to directly enter the U.S. market. The Biden administration has always been strict with China's photovoltaic products. Many policies such as "double anti-dumping" and "forced labor bill" have added many obstacles to China's photovoltaic exports. According to Wood Mackenzie statistics, in 2023, the United States will directly import components from China only accounting for 0.1%, which is approximately equal to none.
As Sino-US relations continue to deteriorate, the United States' suppression of China's new energy industry continues to escalate. From ZTE and Huawei to China's photovoltaics and new energy vehicles, the United States' pursuit and interception of Chinese technology products has only increased.
In February 2022, Biden extended the 201 tariffs imposed by the Trump administration on Chinese components. This policy will expire in February 2026, at which time the US government will decide whether to continue the extension. With the rise of domestic photovoltaic manufacturing in the United States, it is unlikely that the government will lift tariffs in the short term.
In November 2023, at the "Section 201" mid-term review hearing, most domestic component manufacturers in the United States stated that tariffs are still necessary to protect local companies and cope with competition from imported products. The U.S. International Trade Commission (ITC) report shows that due to multiple factors such as the sharp drop in international component prices and the surge in component imports, U.S. domestic photovoltaic manufacturing has suffered a major impact, and the industry as a whole is in a state of loss. This situation will be particularly serious in 2023. .
At present, the ITC report has been submitted to President Biden and Congress. Whether Biden will adjust existing policies still needs to wait for further news. Judging from Biden's policies during his term, if he is re-elected, the Biden administration is less likely to change its attitude towards Chinese photovoltaic companies.
If Trump is re-elected, the situation for new energy may become even more difficult.
● Policy change risk
According to the Financial Times, Trump's senior campaign officials and advisers said that he will seek to overhaul U.S. climate and energy policies during his second term, emphasizing "maximizing fossil fuel production." The Inflation Reduction Act (IRA) enacted by the Biden administration will become a key target of Trump. The IRA involves $369 billion in clean energy subsidies and tax breaks.
Carla Sands, Trump policy adviser and director of the Center for Energy and Environment at the America First Policy Institute, said that on his first day as president, he will repeal every stranglehold enacted by the Biden administration. Employment and industry regulations, including the IRA. Former Trump adviser David Banks also said that Trump may withdraw from the Paris Climate Agreement again. In addition, people familiar with the matter also revealed that Trump will also reform or abolish clean energy-related government agencies, cut spending on clean energy projects, and lift restrictions on fossil energy.
But whether the IRA can be successfully repealed also depends on whether the Republicans can win both houses of Congress and the Senate, prompting Congress to repeal the bill. Several experts have said that this will not be easy, because IRA subsidies have spawned a large amount of manufacturing investment, mainly benefiting Republican-controlled states, which means that overturning the IRA may face state-level opposition within the Republican party.
According to statistics from the U.S. National Renewable Energy Laboratory (NERL), the promulgation of the IRA has greatly stimulated the development of the photovoltaic industry, especially the photovoltaic manufacturing industry. More than 250GW of full industry chain capacity planning has been announced after the promulgation of the decree, including 105GW of modules. , 49GW of batteries, 29GW of silicon wafers, 69GW of auxiliary materials, inverters and brackets.
The American Photovoltaic Association (SEIA) estimates that without the support of the IRA, the United States may add 160GW less photovoltaic installed capacity in the next 10 years, which is enough to show the important status of the IRA. At present, the cost of domestic photovoltaic manufacturing in the United States is still higher than that of imported products, and local components still need to rely on government subsidies to maintain market competitiveness.
● Imports still dominate
Although the IRA has spawned a large amount of domestic production capacity in the United States, the current U.S. market is still dominated by imported components.
According to statistics from S&P Global Commodity Insights, U.S. photovoltaic module imports will increase significantly in 2023, surging 82% compared to 2022, reaching 54GW, and have increased by 10 times in the past five years.
U.S. quarterly photovoltaic module imports (unit: MW)
Image source: S&P Global
Most components for the U.S. market come from Southeast Asia. In the fourth quarter of 2023, 84% of imports came from Cambodia, Malaysia, Thailand and Vietnam, compared with 78% in the third quarter.
In fact, since U.S. President Biden announced exemptions from tariffs on photovoltaic products from four Southeast Asian countries in June 2022, U.S. imports from Southeast Asia have gradually increased. Although the U.S.
Department of Commerce determined in August 2023 that certain Chinese companies had engaged in tariff avoidance, Biden's two-year exemption period remains in effect.
But the two-year tariff exemption is set to expire in June this year. The U.S. Customs and Border Protection issued a reminder that batteries and component products imported from four Southeast Asian countries between November 15, 2022 and June 6, 2024 need to be exported within 180 days after the end of the exemption period, which is December 2024. The installation must be completed before March 3, otherwise anti-dumping and countervailing duties (AD/CVD) will be required. In addition, inventory products, secondary sales and battery component products destroyed after importation are not considered "used" and are subject to tax.
Therefore, we saw that last year many leading Chinese companies went to the United States to build factories and at the same time expanded their production capacity in Southeast Asia to the silicon wafer link to cope with future policy risks in the United States. Tianfeng Electric has previously pointed out that domestic photovoltaic companies building factories in the United States are expected to enjoy high subsidies from the U.S. IRA policy while overcoming export barriers to the United States.
Since 2023, a total of eight Chinese photovoltaic companies have announced the establishment of factories in the United States, and at least four of them are expected to be completed and put into operation this year. According to the Wall Street Journal, if Chinese companies build factories in the United States as planned, they will receive IRA subsidies totaling approximately US$1.4 billion per year. However, possible policy adjustments after the U.S. election will also bring a lot of uncertainty to Chinese companies building factories in the United States. If Trump is elected and subsidies are cancelled, it may be difficult for U.S.-based photovoltaic manufacturing to maintain its cost advantage.
The 2024 U.S. election will bring great uncertainty to the photovoltaic industry. Whether Trump will return to the White House, the fate of the IRA policy, photovoltaic import restrictions and other factors will affect the future direction of the industry.
India
Modi is expected to be re-elected, and the solar industry may usher in another golden decade
From April to May 2024, India will hold a new People's House election. The current Prime Minister Modi has announced that he will run for a third term. Although no one in India has been able to serve three consecutive terms except the founding Prime Minister Nehru, according to Reuters, Modi's re-election is a high probability event.
At the 2021 COP26 climate conference, Modi pledged to achieve net-zero emissions by 2070 and agreed to increase the proportion of non-fossil energy in total grid capacity to about 50% by 2030. In the past five years, India's wind and solar installed capacity has doubled to 135GW, and the proportion of renewable energy in the power system has reached 42%.
Indian climate scientist Suruchi Bhadwal pointed out that if Modi is successfully re-elected, climate policy will continue to remain aggressive. In early February, the Modi government proposed the mid-term budget for 2024-2025, which placed solar energy in an extremely important position. The budget for solar energy has increased to $1.207 billion, a 37% increase over last year's budget. At the same time, the Indian cabinet recently approved a US$9 billion rooftop photovoltaic plan, which is expected to promote the installation of 30GW of household rooftop photovoltaic systems.
According to India’s National Power Plan 2023, solar energy’s share of renewable energy will increase from 17% at the end of 2023 to 40% in the fiscal year 2031-2032.
After the results of the Indian general election are released, the government will release a new budget plan in July-August, which will most likely be a continuation of the current policy.
Dhruba Purkayastha, director of the Climate Policy Initiative, a non-profit research organization in New Delhi, said that unlike the United States, India's climate policy will not change erratically as the people in power change.
Currently, during the window period of the "List of Models and Manufacturers (ALMM)" plan, the Indian photovoltaic market is still dominated by Chinese companies. According to statistics from JMK Research, in the fourth quarter of 2023, the top three module shipments in the Indian market were Jinko, LONGi and TRW, of which Jinko accounted for as high as 35%.
India’s module shipment rankings in the fourth quarter of 2023
Image source: JMK Research
According to a report from Sobi Photovoltaic Network on February 19, the ALMM list originally scheduled to be re-implemented on April 1 this year has been temporarily shelved , and it is not yet known when it will be restarted again. Xingye Research Company believes that ALMM will have a certain impact on the export of China's photovoltaic products. But it is undeniable that no matter how the policy changes, in order to achieve emission reduction goals, it will be difficult for India's photovoltaic projects and local photovoltaic manufacturing to be separated from Chinese companies in the short term.
Bloomberg New Energy Finance BNEF data shows that since 2021, more than two-thirds of India’s photovoltaic cell imports and 100% of its silicon wafer imports have come from China. This situation is expected to continue in the short term.
European Union
The rise of the right may pose challenges to climate policy
From June 6 to 9, 2024, the five-yearly European Parliament elections will involve a change of leaders of EU institutions and a reorganization of forces within the Parliament. European citizens from 27 countries will vote to elect 720 members of the European Parliament. Many people believe that this election will determine the fate of Europe.
The European Parliament is one of the three major institutions of the European Union and is the EU's legislative, supervisory and advisory body. Opinion polls show growing support for right-wing parties. A study by the European Council on Foreign Relations shows that populist right-wing parties are expected to gain more seats in the election, while the center-left and green parties are likely to lose some seats.
Claire Dupont, a climate policy expert at Belgium's Ghent University, said climate is "not a big issue or a priority for most far-right parties." She said they tend to focus more on their own national interests. The increase in seats for far-right parties could lead to the formation of an “anti-climate policy” coalition within the European Parliament.
"This will seriously undermine the EU's Green Deal framework and hinder the introduction and implementation of EU policies to achieve net-zero emissions goals," the study said .
Dupont said that after the parliamentary elections, the European Parliament will elect the President of the European Commission. The Commission President will set out the EU’s strategy for the next five years and oversee policy implementation. Current Chairman Von der Leyen announced in February this year that she was seeking re-election. In 2019, Von der Leyen made combating climate change the top priority during her tenure and issued the "Green Deal", setting the goal of achieving carbon neutrality by 2050. .
But bottom-up political pressure means cracks are beginning to appear in Europe's previously broad consensus on climate action.
Corinne Le Quéré, a climate scientist at the University of East Anglia in the United Kingdom, said: "The EU does not have much room to pivot on climate policy, but it can slow down the process or give some political color to the actions that will be implemented." Furthermore, she warned that if Europe loses control over climate action, If the economy slows down, global risks will spread.
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