Now that analysts and others in the solar industry have had time to digest Monday’s news, some interesting information has come out. But first, we will get to Green Tech Media’s Research report.
GTM Research is saying that while the decision on the Section 201 solar trade case could have been much worse for the solar market, it isn’t the greatest news. Actually, the ITC wanted a 35 percent tariff and Solar World and Suniva wanted a 50 percent tariff.
The solar import tariff is for crystalline-silicon solar cells and modules and will drop down by 5 percentage points each year to 15 percent by the fourth year. Additionally, 2.5 gigawatts of cells are exempt from the tariffs each year.
What do the tariffs mean for the U.S. solar industry?
M J Shiao, the head of America’s research at GTM Research provided an overview of what the company expects, reports PV Magazine. GTM says that based on current prices in 2018, the 30 percent tariff will end up costing around $0.10 per watt for the most common crystalline silicon modules.
Shiao also expects an 11 percent reduction in solar installations over the next five years because of the tariffs. This means there will be a cumulative 61.3 gigawatts of solar deployed over the next five years compared to an original projection of 68.9 gigawatts,
The tariffs will impact utility-scale solar projects the hardest, and markets in emerging regions of the country, particularly in the South. “You can look at 11 percent and say that is not so bad, but I think one of the more intangible impacts is that you do reduce or eliminate all these state markets that are on the cusp,” Shiao told PV magazine.
Shiao also pointed out that solar markets in the Midwest will feel the effects of the tariffs, but not as bad as the South, calling them an “opportunity cost,” because markets outside of Minnesota, Illinois, and Michigan are still largely undeveloped.
And perhaps the most telling comment Shiao made was on President Trump’s thinking the tariffs would spur U.S. cell and module manufacturing. “It is still bad policy in that it doesn’t really accomplish what it sets out to do,” stated Shiao. “It’s not going to spur a ton of U.S. cell and module manufacturing.”
Abigail Ross Hopper, SEIA president, and CEO acknowledged that the outcome is not a death blow to the broader collection of U.S. solar companies — the vast majority of which opposed the Section 201 case, according to GTM Research.
“I think that this administration really grappled with the understanding that solar is creating jobs, more jobs in this economy than many other industries and many other energy sources,” she said. “A quarter of a million people are employed in this industry.”
Trump may have shot himself in the foot
According to Renew Economy, the tariff signed by Trump may have backfired, and they explain why, citing two issues.
First, as GTM points out, states in the South, “like Texas, Florida, Georgia, and South Carolina will be amongst the most impacted by the tariffs.” All of these states voted for President Trump in 2016. And in addition to punishing emerging markets in Red States, Renew Economy also suggests the American taxpayer will end up footing half the cost of the tariffs,
“The U.S. federal government will end up footing some of the bills for Trump’s decision,” Hugh Bromley, a Bloomberg New Energy Finance (BNEF) solar analyst, said in an email. “Half of any increase in system costs will be offset through the tax code via the Investment Tax Credit and depreciation.”
“The investment tax credit for solar is 30 percent of CapEx [capital expenditure],” Amy Grace, head of North American research for BNEF, explained — “so 30 percent of any tariff-driven price increase gets paid back through the tax code.”
And what about the president’s thinking the tariffs will cause a boom in solar manufacturing in the U.S.? BNEF’s Bromley says it won’t. “Anyone expecting a U.S. manufacturing renaissance as a result of these tariffs is set to be disappointed,” he said.
