Palmetto Clean Energy News & Solar Energy Blog

President Trump should say no to tariffs on solar.

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Last week, the International Trade Commission in Washington, D.C. came out with recommendations to impose new tariffs on imported solar modules. These tariffs could increase the price of solar panels by up to 35%, while also limiting the number of panels that can be imported into the US. President Trump has the ability to override these recommendations and not impose these penalties. Here's what he should take into account:

Why does this matter?

The solar industry is the fastest growing segment of the energy sector, and one of the highlights of new job creation in every state in the country. It accounts for nearly 300,000 American jobs - or 1 of every 50 new jobs created in the US —  jobs that cannot be outsourced given that the installations are taking place on-site — either at the residential level, C&I level, or utility-scale level. All three segments are heavily reliant on solar panels remaining competitively priced, because as great as it is to use solar power — its carbon-free, and there is no variable-fuel charge — it has a short history and has taken only a decade to become cost competitive with coal and nuclear power, which have been been around for a collective 100 years. Thankfully, renewable energy costs have dropped rapidly as the industry has scaled up over the last ten years (see figure 1), but at this transformative moment, imposing punitive tariffs could slow this momentum.

Figure 1. Renewable Energy Costs Have Fallen
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Source: Bloomberg New Energy Finance

Could RPS compliance shift from utility-scale to residential?

Residential solar has grown significantly in the last ten years, while utility-scale is projected to grow even faster. Why? Because the unsubsidized cost of solar has dropped dramatically and customers are demanding cleaner, greener forms of power (Figure 2).  

Figure 2.png

Source: Bloomberg New Energy Finance

One interesting twist from these potential new solar tariffs, however, is that utility-scale projects make up a large portion of an individual state's RPS compliance goals, but the higher-priced panels have a much greater impact on utility-scale projects than residential projects. Why? The reason relates to project cost. Because utility-scale projects use hundreds, and sometimes thousands of panels per project, panels are a much larger percentage of total project cost. This could leave some utility-scale projects unable to be completed — and potentially shift renewable energy compliance goals back to the residential solar sector.  

Make the right call.

President Trump is looking to hammer China on trade infractions. The U.S.-based company that originally filed the trade dispute has long-since ceased to exist and has no plans to return even if new penalties are imposed on imported panels. So who is forcing the issue? The bank that lent money at the wrong time and lost their loan. President Trump has the power to listen to other conservative pundits calling out these penalties for what they are — a threat to the health of thousands of U.S. workers in the $20 billion solar sector.