Preliminary findings from a Commerce Department investigation into trade violations in the solar industry show that four companies based in Southeast Asia have circumvented decade-old anti-dumping and countervailing duties, by serving as a transshipment point for imports of Chinese solar components.

The investigation was a source of controversy, as large solar installers in the U.S. claimed it was leading to delays in projects. The main solar trade group driving the controversy, the Solar Energy Industries Association, counts as members the parent companies of the firms that Commerce has found to be circumventing duties and violating U.S. trade law: BYD, Canadian Solar, Trina Solar, and LONGi Solar.

Duties on solar imports from China have been imposed since 2012, a result of the fact that China gave illegal subsidies to its manufacturers and dumped cheap solar panels on world markets to gather market share.

Auxin Solar, a U.S. manufacturer, charged that Chinese companies routed solar components through companies in Malaysia, Cambodia, Thailand, and Vietnam, countries which are not subject to the duties, in an attempt to pretend that the products originated from there. Solar component imports from these four countries spiked after the duties were imposed on China a decade ago, accounting for "82 percent of the most popular type of solar modules used in the United States," as The New York Times reported.

This triggered the Commerce Department investigation, a quasi-judicial process that took months and involved thousands of pages of documents. Of the eight companies studied, two in each of the four countries, four of them were found to be circumventing: BYD in Cambodia, Canadian Solar and Trina Solar in Thailand, and Vina, a subsidiary of LONGi, in Vietnam. Hanwha and Jinko Solar in Malaysia were found to not be circumventing, along with New East Solar in Cambodia and Boviet Solar in Vietnam. Other manufacturers were found to be circumventing in all of the countries.

The preliminary findings will be subject to an audit, with teams of investigators visiting the companies involved. There will be a hearing and a period of public comment before the final determination on May 1, 2023.

If the preliminary findings hold, companies found to have circumvented will be subject to the duties of their Chinese supplier. Currently, the parent company of Canadian Solar has a 15.87 percent duty, BYD has 26.7 percent, and Trina and LONGi are at 254 percent, because those companies have not demonstrated any separation from the Chinese government.

Those companies that can certify their supplier does not come from China will not be subject to any duties.

Because of a presidential proclamation in June of this year, importers subject to the duty will have until June 2024 before having to pay anything. As a senior administration official explained on a press call, that gives U.S. solar installers 18 months to find a supplier that complies with U.S. trade law.

While Auxin Solar was condemned by solar installers, even as a front for the Koch brothers and oil interests, it turns out they were correct (at least from the preliminary finding) in alleging that they couldn’t compete on a level playing field with foreign solar companies that were violating the law. Between this finding and the Inflation Reduction Act’s benefits for domestic manufacturing, a homegrown solar manufacturing industry should get a boost.

More important, dominance in solar manufacturing from a single country, which would amount to substituting a cartel-like structure in clean energy for a cartel-like structure in dirty energy, could be waning. The findings, the senior official said, create the opportunity to build a more resilient solar supply chain.