The Solar Supply Chain Traceability Protocol, launched in April by SEIA, offers guidelines intended to help solar companies meet compliance obligations and “provide customers with assurances that their solar products are free of unethical labor practices.”
“Solar customers expect their products to be ethically produced, and this protocol helps ensure that solar products coming into the United States are not made using forced labor,” said John Smirnow, SEIA’s vice president of market strategy, in a statement timed with the release of the document.
Forced labor
The release comes at a challenging time for the solar industry, as allegations of forced labor use in China’s Xinjiang region have implicated some segments.
In May, researchers working at the Helena Kennedy Centre for International Justice at Sheffield Hallam University in the United Kingdom published a report alleging that 11 companies in the solar energy sector were engaged in “forced labor transfers.” It said another 90 Chinese and international companies had their supply chains affected by such forced labor.
The researchers said their work spanned the entire solar module supply chain “from quartz to panel” and aimed to better understand the extent to which allegations of forced labor in China affect international value chains. They said their work was meant to provide stakeholders with the “evidence base upon which to judge risk of exposure to forced labor in the solar supply chain.”
Strong reaction
CNN Business, which first reported on the Sheffield report, quoted Chinese Foreign Affairs spokesperson Hua Chunying as calling the claims of forced labor “an outrageous lie.”
“A few Western countries and anti-China forces went all out to hype up the so-called ‘forced labor’ in Xinjiang’s cotton-growing industry. Now they are turning to the solar energy industry,” Chunying was quoted as saying. She added that “lies like ‘forced labor’” were being used to create “forced industrial decoupling” and “forced unemployment” in the Xinjiang region to suppress Chinese companies and industries.
In a statement responding to the university report, SEIA’s Smirnow said that “the use of forced labor at any stage of the supply chain is wholly unacceptable” and that the U.S. industry trade group was taking the report’s findings “very seriously.” He said that whether through U.S. Customs and Border Protection (CBP) enforcement, legislative action, or customer demands, “solar deployment in the U.S. could be jeopardized” without independent third-party audits, “which cannot happen in Xinjiang.” It remains to be seen whether such independent third-party audits are in fact impossible in this part of China.
SEIA protocol
The SEIA’s traceability protocol follows action taken in early February when some 175 solar companies, including some of the world’s top solar manufacturers, signed a SEIA-led pledge opposing forced labor in the solar supply chain.
In an interview at the time with pv magazine, SEIA President and CEO Abigail Ross Hopper said that the industry trade group became aware of the forced labor issue late in 2020 and had been communicating with member companies that “they need to move their supply chains.” She set a goal of late June for companies to adjust their supply chains to avoid conflicted regions.
A spokesperson said in early May that SEIA’s goal of late June for a shift in the supply chain remains in place.
The SEIA supply chain traceability protocol is intended to have “universal application” across product lines intended for export to the U.S. market, and it expects key adopters to include equipment manufacturers and U.S. importers. Although its aim is to focus on “the provenance of material inputs,” it also recognizes the importance of independent, third-party audits and a “strong corporate social responsibility and import compliance platform.”
In releasing the protocol, SEIA said that the U.S. government has “identified forced labor as an area of concern for the solar supply chain.” It went on to say that U.S. solar customers are “increasingly seeking assurances that the products they purchase are truly sustainable and, in particular, free of forced labor.”
SEIA said that while the new tool “by itself will not stamp out forced labor, companies need to go through the steps laid out by the protocol.”
Shift underway?
SEIA’s overarching call to shift solar supply chains away from conflicted regions comes as other economic factors offer anecdotal evidence that some movement toward expanding domestic U.S. supply chains may already be underway.
During a quarterly earnings call, Maxeon Solar Technologies said it would ramp up efforts to sell its Performance line shingled module technology in the U.S. market, facilitated by deployment of up to 3.6 GW of new factory capacity. The expansion depends on the company obtaining debt or equity financing to buy equipment; initial sales could begin in the first quarter of 2022.
Maxeon said it would take a two-tiered approach to expanding its U.S. market presence. Large-format G12 mono-PERC solar cells would be manufactured at the company’s site in Malaysia, and module assembly completed at a facility in Mexicali, Mexico.
The company would then select a site for a U.S.-based module assembly facility with a capacity of up to an additional 1.8 GW. Depending on site conditions and market demand, the second phase is expected to begin operation in 2023.
Separately, GAF Energy said in May that it planned to move its manufacturing out of Asia to a new facility in California as it develops technology to integrate solar panels with roof shingles.
Components for GAF Energy’s building-integrated solar products are produced in South Korea, but manufacturing will be moved to a renovated 112,000-square-foot factory in San Jose, California, later this year. The facility will be capable of producing about 50 MW of solar panels a year.
In making the move, GAF Energy said it expected to benefit from what it said were reduced risks associated with offshore production, including tariffs on Asian-made solar goods and rising transportation costs.
Best practices
Those recent moves hint at the complexity of the solar supply chain and at factors that are beyond the forced labor allegations that underpin much of the SEIA’s traceability protocol.
The protocol lays out a set of recommended best practices that SEIA said are designed to prevent forced labor in the solar supply chain; help companies meet their U.S. import compliance obligations; and provide customers value chain transparency. SEIA said the tool has been structured as an industry specification or de facto standard, with the expectation that it will be further developed into a formal industry standard.
The protocol includes an audit mechanism intended to measure a company’s implementation and compliance. SEIA said that in assessing conformance, “no single factor will be dispositive,” and that auditors would assess conformance based on a “holistic approach.”
The protocol said that any organization should be prepared to provide information that includes such details as the legal name of the company, its length of time in business, the company structure – including organizational chart – and its importer status, when relevant.
In addition, a number of documents were identified as being important to provide. Those documents would include purchase orders and contracts between and among the links in the supply chain; associated commercial invoices and proofs of payment; customs entry documents; freight forwarder notices of arrival; international bill of lading/packing lists with shipper and product descriptions; foreign inland freight documentation from the manufacturer to the port of export; and customs broker instructions.
The SEIA protocol advised that U.S. Customs and Border Protection agents could engage in further scrutiny if goods are detained. Detention notices from federal border agents could require a laundry list of documents, including affidavits from each producer in the supply chain that identify where the input material was sourced; list production steps and records for the product, including records that identify the input materials; and supporting documents related to employees. Those documents could include documents related to wages and hours worked, along with daily production output for each factory in the supply chain.
In addition to the traceability protocol, SEIA also updated its Solar Commitment document, which defines common labor, health and safety, environmental, and ethical standards and expectations for solar companies. The update includes guidance on workplace safety and ethical labor practices.
The Solar Commitment includes recycling and refurbishment best practice, information on energy consumption tracking, procedures to avoid the use of conflict minerals, and additional guidance that companies can follow to hold suppliers to the standards.
SEIA also released a Solar Buyers’ Guide on Traceability, which summarizes the protocol and offers a set of questions that customers, developers, financiers, and other stakeholders should ask suppliers about products in the solar and storage value chain.
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