Grape Solar could be key to post-tariff solar supply chain

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Ocean Yuan, CEO of Grape Solar, is talking with Chinese solar manufacturers and may try to bring assembly work to Eugene.

Several Chinese solar panel manufacturers, in an attempt to bypass potential U.S. tariffs, are considering shifting production to Taiwan and South Korea as part of a remapped supply chain that could culminate in Eugene.

Ocean Yuan, majority owner and CEO of Eugene-based solar panel-maker Grape Solar, on Monday said he’s been in discussions with several unidentified Chinese manufacturers about expanding his operations to include assembly of the South Korea and Taiwan-made solar modules.

“Our partners on the supply chain side are calling in and they all want to find a solution to (the threat of tariffs),” Yuan said in a phone interview Monday morning. “One of the solutions is to set up a solar panel assembly here and hire a bunch of people on the assembly side.”

The plan -- which Yuan first outlined in an interview with the New York Times published Monday morning -- is among China’s latest moves in an ongoing trade war with the United States that is beginning to reshape the global solar energy industry.

The U.S. Department of Commerce is investigating claims made last month by a coalition of American solar manufacturers — led by Hillsboro-based SolarWorld Industries America Inc. — that China has been dumping low-cost, subsidized panels into the U.S. market.

The Coalition for American Solar Manufacturing wants the federal government to impose tariffs on imported Chinese panels.

Now the coalition’s Chinese counterparts are striking back with a mirror image complaint of their own.

On Monday, an official with the China Photovoltaic Industry Alliance told China Daily that the trade group plans to file a complaint with China’s Ministry of Commerce claiming the U.S. has been dumping subsidized polysilicon into the Chinese market.

Among the companies cited were Norway-based Renewable Energy Corp. ASA, which operates a North American silicon materials division on Moses Lake, Wash. Gao Hongling, deputy secretary-general of the China Photovoltaic Industry Alliance, told China Daily that REC received $155 million in subsidies for polysilicon production.

"These companies took advantage of the subsidies to lower prices in China, which seriously damaged the Chinese polysilicon industry," she told the publication.

Ben Santarris, a spokesman for SolarWorld in Hillsboro, said the Chinese complaint “would seem to be retaliatory.”

“My question is will they apply the investigative vigor and the due process and the public transparency that we would in handling the legitimate case that we’ve brought,” Santarris said.

A shifting of China’s supply chain to other nations won’t be a problem for SolarWorld, so long as it all remains legal, Santarris said.

“We would welcome the competition on an even playing field,” he said. “If it causes somebody to start up high-quality production in the U.S. and add manufacturing jobs, we think that’s terrific.”

Grape Solar’s Yuan believes China’s efforts to focus on U.S. polysilicon producers could be just the first salvo. He said companies that make the manufacturing equipment used by solar energy firms — Santa Clara, Calif.-based Applied Materials Inc., among them — could be the next target.

“The U.S. ships more raw materials of polysiilicon and solar cell manufacturing equipment to China than China exports solar panels (to the U.S.) by billions of dollars,” Yuan said.

Yuan finds himself in a unique position in this trade war.

Born in China, Yuan is a naturalized U.S. citizen educated in Eugene at the University of Oregon. He’s had experience running an electronics contract manufacturing plant in China, and led the U.S. business of Chinese solar manufacturer Solarfun, before launching Grape Solar in 2009.

Grape is a major importer of panels — of which 80 percent of the material is sourced from Chinese manufacturers — that are assembled into kits by the company’s 10-person staff in Eugene. The company then sells them direct to consumers through retail partnerships with major U.S. retailers Costco Corp., Home Depot and Amazon.com Inc.

Yuan said his Chinese supply chain partners are considering altering their supply chain out of the belief that it could avoid paying any tariffs should the SolarWorld-led effort to succeed.

According to the New York Times, the U.S. trade complaint targets solar panels in which China was the source of two parts of the manufacturing process: Turning silicon wafers into cells or assembling the cells into a completed panels.

Instead of making the products in China, Yuan said the Chinese manufacturers would contract with plants in South Korea and Taiwan, two nations Yuan said have abundant capacity and free trade agreements with the U.S.

And rather than shipping the components back to China for assembly — which would still be subject to U.S. tariffs if later imported to the U.S. — Yuan is offering to expand his Eugene plant to bring the assembly work to Oregon.

“Being an Oregonian, I love this state and this city,” Yuan said. “I’m trying to facilitate to have them come here rather than (elsewhere).”

@ErikSiemers | esiemers@bizjournals.com | 503.219.3419