The recent announcement of President Trump’s decision to impose a tariff on imported solar cells and modules has given the United States solar industry a new outlook on its future. Known as the Section 201 Case, U.S. solar manufactures filed a trade compliant seeking protection from other counties that import their solar products at cheap rates. The Tariff will increase the rate of imported solar pv products by 30% providing a safeguard for U.S. solar energy companies such as Suniva and Solarworld to remain competitive and regain the market share they have lost over the last 2 years.
China’s Influence with The Solar Tariff
Since 2012, the volume of solar pv capacity has more than tripled due to the demand for low-priced solar cells and panels from China. According to the Executive Office of The President of the United States, China has the largest global influence on solar pv manufacturing. To date, the country dominates the solar pv supply chain capacity by 70%. That’s 63% growth since 2005. Majority of China’s global capacity has been due to their incentives, subsidies, and tariffs that help encourage more solar companies in China to scale and increase their R&D efforts for improved energy efficiency.
With China’s subsidies, solar manufactures were able to sell their products to the U.S. for less than the fair market value. From 2012 to 2016, imports grew 500% with prices for solar cells and modules falling by 60%; leading U.S. manufactures to file for bankruptcy. After the International Trade Commission (ITC) investigation, President Trump decided to take action to implement the following safeguards to protect the these U.S. companies:
Solar Industry Reaction
The U.S. solar industry is not too happy about the President’s decision. The Solar Energy Industries Association (SEIA) said the decision will cause a loss of 23,000 jobs in America and delay or cancel billions of dollars in projects that have invested in solar. According to GTM Research, the tariff is likely to add 10 to 12 cents per watt which may slowdown the solar market by 8.3%. The analysis also concluded that solar pv installations will be reduced by 11%.
Many CEOs in the solar industry have expressed discontent about the new safeguards and publicly shared their concern with the President’s decision. Some of these leaders believe that buyers will lose the power of choice and flexibility which will hurt the economy. While others consider this tariff as a “crisis” that will cost American jobs to decline and trigger economic disruptions within the clean energy sector which has been a growing trend in America.
How Solar Tariff Affects Homeowners
Large scale solar buyers will have the most financial impact with the solar tariff. The companies that install and purchase megawatt size systems will see price increase in the hundreds of thousands to millions. These projects have invested into the growth of renewable energy (21% increase year-after-year) through community solar and community choice aggregation programs.
The solar tariff will also affect the cost of rooftop solar for homeowners as well, but not to the extent of large megawatt scale pv projects. Despite an increase in 10 cents per watt, solar will remain a smart investment for homeowners to be energy smart and reduce costs associated with high electric bills from their utility company. Homeowners can still expect to receive an 8 year average return of investment…as long they go solar before the Federal Tax Credit expires.
Sources: GTM Research, SEIA, Solar Builder Magazine