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In a note on Wednesday, Roth Capital analyst Philip Shen highlighted what they believe will be a major problem for the US solar industry.
“We learned today that there has been a new UFLPA detention of a large Tier 1, and CBP is requiring documentation showing the source of the quartzite,” said Shen.
The UFLPA is US legislation that bans imported goods from the Xinjiang Uyghur Autonomous Region in China unless suppliers are able to prove the products were not made with forced labor.
Shen said it is a problem for the industry because Roth’s “checks suggest none of the module vendors have quartzite documentation.”
“We believe Wacker and Hemlock may find it tough to provide this information. Our checks suggest that while this can be solved, it is non-trivial and could take time. We see this as an incremental negative for the US solar industry,” wrote the analyst. “This UFLPA enforcement could be a major headwind near-term. We recently were hearing that UFLPA implementation should be ok for the Tier 1 with WRO experience, but we also recently wrote it may not be so easy.”
Shen said First Solar (NASDAQ:FSLR) benefits the most due to its “CdTe module technology and US manufacturing base,” while the news is an “incremental negative for those exposed to the US solar industry, especially the utility scale segment,” including Array Technologies Inc (NASDAQ:ARRY), Canadian Solar (NASDAQ:CSIQ), JinkoSolar (NYSE:JKS), FTC Solar Inc (NASDAQ:FTCI), Maxeon Solar Technologies Ltd (NASDAQ:MAXN), Shoals Technologies (NASDAQ:SHLS), and ReneSola Ltd (NYSE:SOL).
