Biden Invokes Emergency Power in Bid to Resolve Solar Import Dispute

The four Southeast Asian countries account for roughly 80% of U.S. solar panel imports. The Commerce investigation had led importers to halt shipments, putting in jeopardy more than half of the 27 gigawatts of new solar-power capacity developers had been expected to install this year, according to the energy consulting firm Rystad Energy.

The White House acted as part of a larger package intended to resolve a conflict pitting solar power developers and utilities that rely on cheap imported components against manufacturers who want to reshore solar parts manufacturing to the U.S.

Mr. Biden invoked the Defense Production Act among other measures to help U.S. suppliers compete with Asian rivals and spur more U.S. manufacturing long-term.

The developers and utilities who import solar panels cheered the decision as a way to avoid a slowdown in new installations. But advocates for U.S. manufacturers said it undermines efforts to help U.S. companies catch up to Chinese rivals that dominate the industry.

“President Biden is significantly interfering in Commerce’s quasi-judicial process,” said Mamun Rashid, chief executive of California-based Auxin Solar Inc., a small maker of solar panels whose complaint triggered the Commerce investigation.

“By taking this unprecedented—and potentially illegal—action, he has opened the door wide for Chinese-funded special interests to defeat the fair application of U.S. trade law,” Mr. Rashid said in a  statement.

Some trade lawyers and analysts question whether Mr. Biden has overstepped authority meant for use in wartime.

“It is highly problematic that the Administration is apparently declaring a war or similar national emergency as the basis for negating a continuing trade law investigation on solar,” said

Timothy Brightbill,

a trade lawyer at Wiley Rein LLP. “This emergency authority is used extremely rarely and it’s a dangerous precedent to use it to negate a continuing trade investigation.”

Mr. Biden cited disruptions in global energy markets caused by Russia’s invasion of Ukraine—along with extreme weather events exacerbated by climate change—as justification for his emergency declaration.

When asked about challenges to the decision’s legality, a senior administration official said the president is acting under his emergency authority under the Tariff Act of 1930 to waive import duties. The changes will not interfere in the Commerce investigation, the official said.

Administration officials said the plan creates a bridge period to keep developers supplied for now while U.S. panel-makers build up their limited capacity.

“The Federal Government is working with the private sector to promote the expansion of domestic solar manufacturing capacity, including our capacity to manufacture modules and other inputs in the solar supply chain, but building that capacity will take time,” Mr. Biden said in his declaration.

Solar developers and installers, who vastly outnumber manufacturers in the U.S. and have lobbied for protection, said the decisions could jump-start projects that have been delayed.

Executives at SOLV Energy LLC, the biggest installer of large-scale solar farms in the U.S., are now reconsidering decisions on nearly a dozen projects that were halted or delayed by fallout from the Commerce probe and would have eliminated or postponed thousands of new jobs, said George Hershman, the company’s chief executive.

“We’re starting to work with our customers and determine which projects we can restart and how quickly we can restart them,” he said.

Companies that build or support solar projects such as

Sunrun Inc.,

SunPower Corp.

and

Enphase Energy Inc.

all posted gains Monday, with

Sunnova Energy International Inc.

NOVA 6.45%

leading the group, up nearly 6.5%.

Shares of

NextEra Energy Inc.,

a utility and one of the world’s largest renewables companies, added almost 2%. Monday’s advance pares some of the sector’s recent losses.

“A big part of the tariff uncertainty and a lot of the other supply chain disruption just creates uncertainty,” said

Rebecca Kujawa,

president and CEO of NextEra Energy Resources, the company’s competitive power business. “To remove this as a point of concern, at least for a period of time, is going to be hugely helpful.”

But

First Solar Inc.,

a U.S. manufacturer based in Tempe, Az. said the administration’s actions “only benefits China’s state-subsidized solar industry.”

“The use of the Defense Production Act to boost solar manufacturing is an ineffective use of taxpayer dollars and falls well short of a durable solar industrial policy,” the company said in a statement. “Quite simply, the administration cannot stick a Band-Aid on the issue and hope that it goes away.”

First Solar manufactures solar panels using a different technology that is not affected by industry tariffs.

Washington has been central in the solar dispute in part because Mr. Biden has promised that addressing climate change with support for clean energy would grow working-class jobs in solar, wind, battery and other manufacturing businesses. In recent months a fight over tariffs has illustrated how those goals can clash rather than complement one another.

The White House has tried to help build up a U.S. supply chain by maintaining Trump-era solar tariffs on China and Taiwan. Utilities and developers—fearful the reach of those tariffs was expanding to other Asian partners—warned that threat was causing what could become a drastic slowdown in solar growth.

In Monday’s declaration, Mr. Biden accepted those industry claims that a slowdown was caused in part by import bottlenecks, and that ultimately it was threatening the reliability of the country’s electricity supply.

“The United States has been unable to import solar modules in sufficient quantities to ensure solar capacity additions necessary to achieve our climate and clean energy goals, ensure electricity grid resource adequacy, and help combat rising energy prices,” Mr. Biden said in the declaration.

Abigail Ross Hopper,

president and chief executive officer of the Solar Energy Industries Association, applauded the decision.

“While the Department of Commerce investigation will continue as required by statute, and we remain confident that a review of the facts will result in a negative determination, the president’s action is a much-needed reprieve from this industry-crushing probe,” she said in a statement.

—Anthony DeBarros and Katherine Blunt contributed to this article.