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A New Day Dawns For U.S. Solar

In the wake of new tariffs on cheap foreign panels, the industry is looking ahead.

Last week, Solar Tribune looked at some of the possible effects of President Trump’s recent decision to impose tariffs on many foreign-made solar products. As more analysis of the economic impacts becomes available, a clearer picture is forming of what we can expect to see in the months and years to come. Let’s look at what some of America’s leading experts and solar industry insiders are saying about the future of US solar.

Who is in, and who is out?

The tariff comes at the request of two troubled American solar manufacturers, Suniva and SolarWorld. These two companies petitioned the International Trade Commission to recommend sanctions against foreign-made solar products– Chinese solar panels in particular. Though the 30% tariffs approved by the President are less than requested, they are significant and will have a major impact on the US in the near-term. Ironically, they are not expected to be enough to save the two companies who requested them. According to said Abigail Ross Hopper, The Solar Energy Industry Association’s president, and CEO:

“While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs.”

There will be new opportunities created by the tariffs, although they will be too little and too late to make up for the loss of jobs and business in the coming years. However, Jinko Solar, a Taiwanese solar company, announced last week that it would be setting up a new manufacturing facility in the U.S. in response to the tariffs. Also, companies like Tesla, who recently opened its new gigafactory with Panasonic just outside of Buffalo, New York, will be in a good position to benefit from some of the new openings in the market. First Solar, America’s largest domestic solar manufacturer, saw an 8% rise in stock price after the tariff was announced.


graphic: GTM


According to Greentech Media (GTM), there are 14 American solar manufacturers, including CBS Solar, Colored Solar, Csun USA, Lumos, Mission Solar, Prism Solar Technologies, Seraphim USA Manufacturing, SunSpark Technologies, Tesla, Solaria, Itek Energy and SolarTech Universal — plus Section 201 trade case petitioners Suniva and SolarWorld Americas. So far, Texas-based Mission has announced it will be hiring to replace the 50 workers laid off in 2017, and California’s Solaria is also planning expansion in response to the tariffs.

Also, there is a long list of countries that are exempt from the tariffs, and one country on the list, Pakistan, has already invited Chinese solar giant Trina to set up shop there. Other notably exempt are: Afghanistan, Belize, Bolivia, Bosnia and Herzegovina, Brazil, Cambodia, Ecuador, Egypt, Georgia, Grenada, Guyana, Haiti, India, Indonesia, Iraq, Jamaica, Kazakhstan, Kenya, Lebanon, Nigeria, Paraguay, Samoa, Serbia, Sierra Leone, South Africa, Sri Lanka, Turkey, and Ukraine. Most of the countries on the list are not industrial powerhouses, but there are definitely a few glaring exceptions. For instance, Adani, an Indian solar manufacturer, now rates as the largest tariff-free solar manufacturer in the world. Tata Power Solar and Vikram Solar, Longi, Hareon Solar and GCL-Poly are all Indian companies that stand to enjoy major gains.

What About Jobs?

The single biggest head-scratcher for many solar watchers is why the administration would implement a move that will have such an obvious negative effect on American jobs. Even if U.S. manufacturing ramped up to produce enough solar panels to fill 100% of the nation’s demand, it would take years and still would not produce enough jobs to replace all of the installation, sales and service jobs that will be lost. The good news is because the Presidents tariff is not as large as that requested by Suniva and SolarWorld, the initial job-loss estimates by SEIA have dropped from as high as 80,000 to 25,000. Hardest hit for job losses will be states including California, Texas, Florida and South Carolina, where solar is growing fast. Matt Moore, the former chair of the state’s Republican Party and the new chair of the Palmetto Conservative Solar Coalition told GTM:

“The solar panel tariffs are a 30 percent tax on consumers that will reduce energy freedom and kill South Carolina jobs. That is unacceptable in my opinion, and local leaders can’t do much to fix it. That tariff will kill more jobs than it will possibly create. I will also say this: We appreciate the President looking out for American workers, but American workers are already winning with solar.”

How much will the Trump tariff cost consumers?

The way that the tariff is structured, it will start high and decline over the next four years. It starts with a 30% tariff in the first year, 25% in the second year, 20% in the third year and 15% in the fourth year. In each year, the first 2.5 GW of imported solar cells would be exempt from the tariff. Many large companies have amassed considerable stockpiles of panels in anticipation of the ruling. It is also important to remember that the solar panels are only a portion of the total cost of a solar project. This means that we can expect to see the installed price of solar go up about 10% for utility-scale projects, but only about 3-7% for residential and rooftop projects. This will roll back costs to where they were in 2015–which is, admittedly, a move in the wrong direction– but certainly not a death-knell for the solar business.

The immediate impact of the decision to affix a tariff on imported panels is a “speed bump, but not a wall,” for solar power, said PJ Deschenes, a partner at renewable energy boutique Greentech Capital Advisors. However, GTM Research estimates that the tariffs will cut about 7.6 gigawatts (GW), or 11%, of the 68.9GW of solar projects to be installed between 2018 and 2022.


graphic: GTM


Will the Trump tariff help the coal industry?

Many critics of the President speculate that the tariff was designed not to help the solar industry, but to hurt it. By increasing the cost of solar, they think, he will be helping the coal industry. We can only speculate on the motivations, but the fact is, that the tariff will not help the coal industry. Job growth in the coal has been nearly non-existent since President Trump came into office, and coal production dropped 5% in 2017. If the move helps any sectors in the utility-scale production business, it would be natural gas or wind, both of which are showing plenty of growth without taking any business away from solar.

What’s the “bright side?”

“Had Trump listened to the solar installers and coddled solar-panel dumping, Americans would have been limited to affixing imported solar equipment to U.S. homes and businesses, the nation would have been pushed further to the sidelines of the green-energy revolution, and government-supported foreign producers would have compromised further the nation’s free markets.”

So writes Alan Tonelson of RealityChek. Tonelson makes a case in favor of the tariffs on the grounds that the Chinese government is subsidizing their manufacturing sector and dumping cheap panels specifically to drive American manufacturing even father into the ground. He is not wrong. Despite the partisan arguments, there is a chance that the tariffs may be setting the groundwork for a solar manufacturing renaissance in this country. However, one of the keys to this becoming a reality is that the U.S. must be ready to commit to new R&D and innovation. That innovation takes place in large part at places like the National Renewable Energy Labs (NREL). And, their budget has been cut.

Thankfully, there are a select few American innovators like Elon Musk who are stepping into that void. With a few more leaders like Musk, the nation’s solar horizon may look very different and hopefully very bright in the next four years.

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