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The U.S. solar industry faces a new wave of disruptions in the supply chain this year after the U.S. act on banning products manufactured using forced labor in China’s Xinjiang Uyghur Autonomous Region entered into force a few weeks ago.
Some of China’s suppliers of solar panels, which are among the largest in the world, have seen their exports to the United States detained by U.S. customs or shipped back under the so-called Uyghur Forced Labor Prevention Act (UFLPA), analysts and executives from the industry have told The Wall Street Journal.
The UFLPA entered into force in June, but the industry is still trying to assess the potential delays in deliveries of solar panels.
The Xinjiang Uyghur Autonomous Region (XUAR) is home to half of the world’s polysilicon, which is used in solar panels manufactured in many other countries.
“They are among more than a dozen other sectors that source significant quantities of raw or component materials from the XUAR,” the U.S.-based Center for Strategic and International Studies (CSIS) noted as the U.S. legislation went into effect at the end of June.
The uncertainties and customs checks are likely to delay imports of components for the solar manufacturing industry.
Affected Chinese companies include top China-based solar panel maker Longi Green Energy Technology, which has had to temporarily idle a factory in Vietnam that supplies the United States, sources familiar with the situation told the Journal.
In a commentary in June, Wood Mackenzie analysts Sylvia Leyva Martinez and Michelle Davis said that “Enforcement of this new law could severely constrain module imports to the US,” adding that the true impact could be determined when the industry has processed the guidance on the new legislation.
The U.S. solar industry has just had its worst quarter in Q1 in terms of installations since the start of the pandemic, the U.S. Solar Market Insight report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie showed in June. Price increases and supply chain constraints continued to suppress the solar market as the industry installed 24% less solar capacity in the first quarter this year compared to the same period of 2021.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.