President Trump has imposed a 30% import tariff on solar panels coming from overseas manufacturers to the US. The tariff is also being tacked onto foreign-made washing machines. The move by the administration is in line with its “America First” trade policy, which hopes to protect American manufacturers from foreign competition, but some installers of solar power systems and industry experts have said that the new tariff could make it more expensive for businesses to incorporate solar into their renewable energy plans. Others disagree.
Higher or Lower Solar Prices? Conflicting Views…
GTM Research predicted last year that a tariff would lead to prices for big utility-size solar doubling in 2018. With the tariff now a reality, MJ Shiao, head of Americas research for GTM, says he expects an 11% reduction in the US solar market over the next four years (via PV Magazine). On the other hand, the Rocky Mountain Institute (RMI), a nonprofit organization with a focus on energy and resource efficiency and a membership including top solar and energy companies, believes that even as policy change results in immediate-term headwinds, “all signs point to clean, abundant solar power increasingly becoming the energy source of choice for individuals, communities, and businesses across the globe.”
At a recent RMI workshop, with attendance from 35 leading companies representing at least 15 gigawatts of solar capacity, participants claimed there was an opportunity to reduce costs by $0.20/Wp in 2018 alone. Reducing costs at this scale would mitigate the effect of newly applied trade restrictions on solar components, keeping the solar energy industry on a maintained cost-reduction pathway, according to the organization. By identifying best practices in system design, supply chain, business model, finance, and market structures, members say they have developed a pathway to create a modular, pre-engineered and pre-assembled solar product of standardized design that would reduce solar prices beginning this year.
Jules Kortenhorst, CEO of RMI, told Energy Manager Today that the organization is “disappointed in the decision by the Administration to put a tariff on solar panels. However, the unrelenting reduction in costs, not just of the solar panels itself but of the integrated costs of solar installations, will continue and will ensure that the new tariff only have a modest impact in the short run. In the long run, it is hard to understand how this Administration reconciles this measure with a technology neutral energy policy that should not pick winners, long the GOP mantra.”
While RMI members seem optimistic, Duke Energy – which currently owns more than 800 megawatts of solar power capacity, and plans to build and procure more than 3,000 MW over the next five years – says the company has a “significant number” of projects planned across commercial and regulated business, and that the tariff will affect Duke’s ability to deliver on those promises. “Duke Energy has major expansion plans for solar, and this tariff will increase the cost of delivering that to customers,” says a spokesperson for Duke Energy. “But it’s premature to say if that’s a major or minor increase.”
The company says it will continue to invest in solar, but that it is also”carefully evaluating the economics of each of our solar projects with a focus on minimizing adverse impacts on our investments and costs to customers.”
Meanwhile, ClearView Energy Partners says the 30% tariff could increase the cost of distributed commercial solar projects by roughly 6% (via the Washington Examiner).
How the Tariff Works
According to bbc.com, the tariff increase on imported solar cells and modules in the first year will be 30%, falling to 15% by the fourth year, although 2.5 gigawatts (GW) of imported cells – enough for about 11.5 million panels – will be allowed in tariff-free annually. The International Trade Commission (ITC) said that China had been selling “artificially low-priced” solar components in the US, assisted by state subsidies.
Some environmentalists see the move as dangerous as it has the potential to slow the development of renewable energy in the US, while China, the world’s biggest solar panel manufacturer, said the move would further damage the global trade environment.
Currently, businesses that install solar-power systems are benefiting from a glut of cheaper panels made overseas, mostly in Asia. That has made solar power more competitive with electricity generated from coal and natural gas. The new tariff could make it more expensive for businesses to incorporate solar into their renewable energy plans.
A green-technology research firm estimates that tariffs could cost up to 88,000 US jobs related to installing solar-power systems, according to cbsnews.com.
However, a few US subsidiaries of foreign companies argue the domestic manufacturing of solar cells and modules has been decimated by a flood of imports, mostly from Chinese companies with operations throughout Asia.
Imports of silicon photovoltaic cells soared nearly 500% between 2012 and 2016, according to the ITC.
Back in 2015, in an effort to quell the dumping of Chinese solar products and provide US manufacturers with a more level playing field, the US Department of Commerce (DOC) imposed punitive tariffs on Chinese solar product manufacturers. The DOC’s ruling called for antidumping duties as high as 259.9% and countervailing duties as high as 23.3%.
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