Energy Efficiency, Regulation, Solar - January 23, 2018
30% tariff hits solar panel imports
President Trump on Jan. 22 imposed a tariff of 30% on imported solar panel cells and panels. The Solar Energy Industries Association responded that this decision will increase solar prices, cause the loss of 23,000 American jobs this year and delay or cancel solar investments totaling billions of dollars.
The 30% tariff is more restrained than the 50% sought by SolarWorld Americas and Suniva, two foreign-owned solar panel manufacturers operating in the U.S. that requested the tariff. The tariff will drop to 25% after a year, and then 20% and 15% each year after, before phasing out entirely. The first 2.5 gigawatts of imports each year are exempt. A report in The Hill estimates the solar industry at $28 billion, with about 80% sourced from imported solar panel products.
While these companies say tariffs would boost domestic manufacturing and add more than 100,000 jobs, calculations from SEIA paint a different picture. In a press conference on Jan. 23, Abigail Ross Hopper, president and CEO noted that "23,000 Americans are likely to lose their job this year," considering the decline in demand likely to follow higher prices. "Most of our projects are winning because of the price." As prices increase, she expects job losses will occur "up and down the value chain," from existing manufacturer jobs, developers, installers, engineers, etc. She expects the job loss to continue. "There could be tens of thousands losing their jobs in 2020 and 2021."
"New markets for solar are where we think there could be pretty significant impact," continued Hopper, defining these markets as those that are newly cost-competitive for solar, particularly in the southeast region. In more established markets, such as California, she noted, "they will be impacted but in terms of percentage, it will be less."
Hopper expects the impact to be felt in all market segments due to cost increases. As commercial companies have set renewable goals, "We are competing with wind and hydro. If you raise the price (of solar), we are not going to win." Consumers will be impacted as well: "Most consumers are purchasing solar (to save) money on their electric bill. If you increase the price, you make this a less persuasive argument for the homeowner."
Reporting that the solar industry reached 14 gigawatts of installed energy in 2016-- "a blow-out year," according to Hopper--followed by 12 gigawatts in 2017—"the hangover year," Hopper reported 2018 was expected to increase by 11 gigawatts. "With these tariffs in place, we think we could lose 2 gigawatts this year," she said. Noting that numbers are preliminary, Hopper estimated another 6 gigawatts could be lost through 2021, leading to "billions of dollars of lost investment throughout the country."
While the action is targeted at imports from China, reported The Hill, "Trump’s tariffs apply to all imports, since Chinese manufacturers have moved operations to other countries."
Hopper noted that the entire proclamation has not been released yet, so some details are yet to be revealed. "We anticipate more clarity on country exemptions in the coming days. Mexico, Canada, South Korea, the Philippines, and Thailand are not exempt." Additionally, the Departments of Energy and Commerce may decide to exclude certain products from the tariff.
As for next steps, "I anticipate that another country might petition the WTO to challenge" the tariff as a violation of international law, said Hopper. "There is a procedural process that needs to be followed," she explained, noting that "the process is not a speedy one," with as long as two years expected before a final decision. "We will be watching with interest to see if another country chooses to pursue this path."
She added, "One of the great parts of the solar story is that we have moved from niche to mainstream. We are winning against traditional forms of energy," which she noted means that "people are trying to get a competitive leg up. We will continue to innovate and compete."