The Canada Border Services Agency has ruled that cheap subsidized Chinese solar modules are being dumped into Canada, and is imposing stiff provisional import duties to protect Canadian manufacturers.

While the ruling is a big win for companies that make solar panels in Canada, it could drive up costs for installers – and their customers.

The CBSA's preliminary decision follows a ruling last month from the Canadian International Trade Tribunal that cheap imported Chinese solar modules and laminates are likely damaging the business of Canada's domestic panel makers.

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The two government bodies waded into the solar-dumping issue after four Ontario-based solar-panel makers complained that they are being hurt by competition from cut-priced Chinese imports.

While a final decision is months off, this ruling puts in place immediate provisional duties ranging from 9 per cent to 202 per cent on nine specific Chinese panel exporters, and a duty of 286 per cent on all other Chinese exporters.

One of the companies found to have dumped panels here is the Chinese arm of Canadian Solar Inc., whose headquarters is in Guelph, Ont., and which has two Canadian panel-making plants in addition to several in China.

"This is a victory for the [Canadian] manufacturers," said lawyer Thomas Timmins of Gowlings in Toronto, although he cautioned that this is not the final decision and duties can be adjusted significantly, even before the process is complete. He also noted that many panel manufacturers have operations in a variety of countries, so they could begin sending panels to Canada from other locations.

The next step in the complex process is for the CBSA to make its final decision on the dumping issue – it has to reveal that within 90 days. If the CBSA's final verdict upholds its preliminary ruling, then the tribunal – a quasi-judicial body that deals with trade disputes – will jump back in. It will conduct a full inquiry, and eventually make a final, detailed determination on the matter and what should be done about it.

In the meantime, companies that install Chinese-made solar panels for Canadian solar projects face the prospect of costs increasing dramatically.

"For the industry, generally, it is going to have a material cost impact," said Jared Donald, president of the Canadian operations of solar project developer Conergy. The ruling will do less damage to large companies such as Conergy, he said, because they use a diversified range of suppliers and can shift to ones not subject to the tariffs. But for smaller installers that have less flexibility "it will be quite material and drive costs up quite quickly."

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The four Canadian panel manufacturing companies that initially complained – Eclipsall Energy Corp., Heliene Inc., Silfab Ontario Inc. and Solgate Inc. – say unfair competition means they are losing sales and market share, and this is putting them under pressure to cut their prices.

Panel makers have already been hurt by Ontario's elimination of local-content rules, which had forced solar installers to buy a proportion of their equipment from local manufacturers. Ontario dropped those requirements to satisfy a ruling from the World Trade Organization.

Heliene president Martin Pochtaruk said in an interview that the preliminary CBSA ruling "is a positive step in the right direction to level the playing field in terms of competition." He noted that several other countries have found that Chinese solar panels were subsidized and dumped into their markets.

If the duty becomes permanent, "it will help every Canadian manufacturer," he said. That help is needed because margins on solar panels are "very, very thin," he added. In solar-panel manufacturing "you are walking the line between life and death."

In a statement filed with the initial complaint to the CBSA, Mr. Pochtaruk said that since Ontario domestic-purchase requirements ended, "we have felt the full force of the extremely low-priced modules produced in China. While these low-priced goods have always been around, we were able to compete because of Ontario's domestic content requirements, which I saw as a shield against low-priced imports for our sales in Ontario." Since then, Heliene, which makes solar panels in Sault Ste. Marie, Ont., has been forced to discount its prices to compete for sales, he said.