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Solar panels installed on the roof the Ikea s tore in west end Toronto feeds power pack to the grid on Nov. 13 2013.Fred Lum/The Globe and Mail

An investigation now under way to see if Chinese solar panels are being dumped in this country is causing a split in the nascent solar industry in Canada.

After getting complaints from four Ontario-based solar-panel-making firms that said they are getting hurt by competition from cut-price imports, the Canada Border Services Agency (CBSA) launched a complex process that will eventually decide if Chinese-made solar panels are being unfairly subsidized or dumped in Canada.

If they rule that is the case, and the Canadian International Trade Tribunal decides that Canadian firms are being harmed, a stiff duty could be imposed on Chinese panel imports. While that would help Canadian panel makers, it would add costs to companies that buy and install solar equipment in Canada.

"The industry is split on this issue," said John Gorman, president of the Canadian Solar Industries Association, which represents the interests of both equipment makers and installers. "It could be divisive."

Ontario's solar-panel makers have a reputation for producing high quality and efficient solar panels using highly automated factories. But they are increasingly facing stiff competition from very low-priced panels from China.

The four companies that complained to the CBSA – Eclipsall Energy Corp., Heliene Inc., Silfab Ontario Ltd. and Solgate Inc. – say the unfair competition means they are losing sales and market share, and are 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.

Martin Pochtaruk, president of Heliene, which makes solar panels in Sault Ste. Marie, Ont., said in a statement to the CBSA that since those 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." Now, he said, "I have been forced to discount my prices in order to compete for sales."

Silfab's chief operating officer Paolo Maccario said in a statement that the Canadian solar-module industry can compete on an even footing with any companies in the world, "but we cannot compete against government-funded exporters that dump these goods in our market."

For firms that install solar-power systems, however, the prospect of countervailing duties is a concern. Jared Donald, president of solar developer Conergy Canada, said companies like his want to put panels in place at the lowest possible cost. Equipment prices have been declining continuously, he said, and if new tariffs are added to imported panels "this has the possibility of taking a step back and having cost increases."

The drop in the Canadian dollar has already hurt the industry, Mr. Donald said, and new duties could add another layer of costs. Still, he said, he is sympathetic to Canadian manufacturers, and believes there should be fair trade practices between countries.

One company that is caught on both sides of the issue is Canadian Solar Inc., a company that has panel manufacturing operations in both China and Canada.

Colin Parkin, general manager of Canadian Solar's Canadian operations, said the firm will participate in the anti-dumping investigation, and provide the investigators with information. But it has not yet decided on its position. "This is obviously a sensitive matter that is under review by our legal representative," he said.

In July, the U.S. Department of Commerce set new import duties on solar panels and cells from Taiwan, saying they were being dumped in the United States.

Despite the trade bumps, the solar industry is optimistic about its future in Canada. At the solar association's annual conference in Toronto on Monday, a new report was released that said by 2020, the country will have about 6,500 megawatts of solar power installed (up from about 2,000 MW at the moment) and employ about 10,000 people.

To flourish, however, the industry needs a more stable policy environment, including the creation of a federal renewable energy strategy, the report said. It also needs a more streamlined process of connecting to the electricity grid.

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