Shipment courier

Customs detain large shipment of solar power in forced labor crackdown

U.S. solar developers, buyers and shippers received a stark wake-up call this week when U.S. Customs and Border Protection detained a large shipment of equipment from a Tier 1 solar supplier.

Why is this important: The detention of a highly valued Tier 1 supplier signals that no one will escape scrutiny under the Uyghur Forced Labor Prevention Law, which came into force last week.

  • That sent shockwaves through an industry already rocked by supply chain disruptions, the Commerce Department’s anti-dumping investigation, inflation and labor shortages.

Driving the news: Investment bank Roth Capital Partners sent a note this week, warning of “further detention by the UFLPA of a large Tier 1 shipment” of quartzite, the raw material for making polysilicon.

  • Details are scarce: CBP generally wary of such detentions, industry analysts say tell Axios.
  • “We do not yet have data on specific cases; need to learn from the field,” a CBP spokesperson said.
  • The action would mark the first known detention under the UFLPA, analysts said.

Catch up fast: The law was signed by President Biden in December with near unanimous support from Congress.

  • It states that all materials, however sourced from China’s Xinjiang province, are assumed to be made with forced labor, unless importers can prove otherwise with “clear and convincing evidence”.
  • The measure extends to so-called “suspension of release orders” issued by CBP last June. It’s unclear how many shipments CBP has detained under those orders, but an analyst says Axios that they represented “at least 140 MW” of matter.

The plot: Homeland Security, CBP’s parent agency, previously released an “entity list” of companies it said produced goods with forced labor. It did not include any Tier 1 vendors, meaning that vendor was not on the list.

  • “That’s why all this notification of this seizure has had such an impact,” said Sylvia Leyva Martinez, senior research analyst at Wood Mackenzie, says Axios.
  • In short: “All shipments will be evaluated to see if they contain traces of forced labor”, says Levya Martinez.

What happens now: Lots of uncertainty.

  • With few details from CBP, industry players are scrambling to figure out what exactly happened, why the shipment was detained, who is affected — and even if the detention took place.
  • A common theory: CBP is stepping up enforcement by simply requiring more paperwork.
  • “One thing they could do, to step up the crackdown, would be to request more substantial documentation,” said Christian Roselund, senior policy analyst at Clean Energy Associates, says Axios.

And after: “No more delays and uncertainties,” Keith Martin, US co-head of projects at Norton Rose Fulbright, says Axios.

  • Under the hold release orders, shipments were held for up to eight months. Under the UFLPA, importers only have 30 days to challenge the detention.
  • That could be a big deal, Nick Baker, senior director of export controls practice at FTI Consulting, said to Axios: “Most importers are unable to provide this information, let alone within the 30 day time frame.”