Philadelphia Inquirer – Philadelphia solar installers on Tuesday said the Trump administration’s imposition of 30 percent tariffs on imported solar panels would drive up the cost to install systems and put the brakes on the growth of renewable energy.
Mark Bortman, the founder of Exact Solar in Yardley, said Monday’s tariff announcement would cool consumer demand for installations. “The uncertainty has already forced us to delay hiring and expansion plans,” said Bortman, who had tripled his staff in recent years.
Trump approved duties on solar equipment made outside the United States in response to a U.S. International Trade Commission (ITC) finding that solar-panel importers were engaged in unfair trade practices. The move has unsettled a $28 billion industry that imports about 80 percent of its photovoltaic modules, mostly from Chinese-owned companies in Asia.
The duties are in effect for four years, starting at 30 percent in the first year and gradually dropping to 15 percent. The first 2.5 gigawatts of imported solar cells are exempt for each year, which amounts to about 20 percent of the 12 GW of solar panels installed in America last year.
Clean-energy advocates said the decision reflected the president’s anti-renewable-energy tilt more than a desire to protect American module manufacturers. “This is Trump’s war on clean energy,” said Jeff Tittel, director of the New Jersey Sierra Club.
GTM Research, a Boston firm, predicted the tariffs will reduce U.S. solar installations by 11 percent over the next five years, or 7.6 GW of capacity between 2018 and 2022. The reduction is “meaningful but not destructive,” said M.J. Shiao, a GTM analyst.
Moody’s Investors Service said the long-term impact will be “limited” because the tariffs expire in four years and panel prices are now very low. “The near-term impact is also partly mitigated by annual tariff declines, exceptions for the first 2.5 gigawatts of imports, and exemption of Canadian panels,” Lesley Ritter, a Moody’s analyst, said in a statement.
A 30 percent federal tax credit for residential installations remains in place through 2019, stepping down to 26 percent and then 22 percent before expiring at the end of 2022, offsetting the tariff impact for less price-sensitive customers.
“There’s a market transformation going on,” said Ron Celentano, a Flourtown consultant and president of the Pennsylvania Solar Energy Industries Association. “People just want to get solar.”
Gold-Markel said prices of solar panels represent only about 20 percent of the overall project cost for a residential installation, and Bortman estimated the modules were closer to 30 percent of the total cost. In those circumstances, the tariff would translate into an increase of 6 percent to 9 percent in the total installation cost.
But panel costs represent a larger percentage of the total cost of large commercial solar projects, which are developed on thin margins for owners who are very price-sensitive. “Many utility-scale projects are likely to have a harder time going forward,” said Lyle Rawlings, a Flemington, N.J., installer who is president of the Mid-Atlantic Solar Energy Industries Association.
Rawlings said the tariff was already factored into the price of solar panels after the ITC agreed last April to accept the trade case brought by the bankrupt U.S. module manufacturer Suniva Inc.
“Prices immediately shot up for the modules,” Rawlings said. The rush to buy panels last year before a tariff was imposed created a shortage, which increased prices, he said.
Rawlings said the tariff is “highly counterproductive” because U.S. module manufacturers may create only a few thousand new jobs in response to higher cost of imports but won’t make long-term investments into new production facilities because the tariffs expire in four years.
Meanwhile, he said, the industry estimates that more than 20,000 of its 260,000 workers are likely to lose their jobs, including many who build solar mounting racks, power inverters, and other system components that employ more people than module manufacturing.
“We want to build up the solar industry and fight global warming, and there isn’t much of a bright spot in this decision,” Rawlings said.