Trump’s Solar Tariff Decision Rocks Renewables World

Last year, two US solar manufacturers (with majority foreign ownership) brought a trade case before the U.S. International Trade Commission, charging that low-cost Chinese solar panels were undercutting the market for U.S. solar panels. Suniva, Inc. and SolarWorld requested tariffs on imported solar cells and panels, which according to Bloomberg New Energy Finance are used in more than 80% of U.S. solar installations.

The trade case created strange allies, with conservative free trade groups aligning with virtually the entire renewables industry to urge the Trump administration to dismiss the case.  But making good on a campaign promise to get tough on trade, President Trump yesterday imposed a 30% tariff on imported solar panels in a move that the Solar Energy Industry Association (SEIA) predicts will result in 23,000 lost solar jobs and delays or cancellations of solar projects.

The tariffs on imported panels will run for four years, declining to 15% by the fourth year. The rates are less than what the Trade Commission had recommended and significantly less than what was requested by Suniva and SolarWorld. And in fact, both companies yesterday claimed the announced tariffs will not save their businesses.

SEIA released a statement noting “the impact of the decision will be far-reaching across all sectors of the solar economy.” Many industry analysts are reacting with “this could have been worse,” and “this won’t kill the solar industry.” That may be true, but there is no doubt that this decision will raise the costs of solar power. BNEF estimates “they’ll increase costs for large solar farms by less than 10 percent and for residential systems by about 3 percent.” Analysts may downplay the added costs, but they’re missing two things. The first is that this decision changes the trajectory of rapidly declining solar costs and will cause major delays in new solar projects as developers go back to the drawing board to figure out what the tariffs mean for the viability of their proposals.

The second is that taxing low-cost imported equipment that is fueling one of the fastest growing sectors of our economy ignores the strengths of the U.S. economy, which is no longer based on manufacturing but on technological innovation, finance and service. I remember talking to a major energy investor a few years ago who surprised me by saying he had no interest in investing in U.S. solar manufacturing. He was far more interested in investing in the solar projects themselves and saw cheap solar panels as the way to get the greatest deployment of solar power.  In the years since, I have come to believe that America’s strength is in technological development—American innovators invent new technologies, and someone else builds them more cheaply. Those lower costs allow for far more rapid deployment of these new technologies, and our economy grows as a result (think of the iPhone story….).

It is not clear how the countries that export solar panels will react to yesterday’s decision, and we can only hope this is not the beginning of a trade war that raises costs on the goods and services that the U.S. produces for export. For so many reasons, Trump’s tariff decision is bad policy, and not just for the solar industry.

2017 Wrap-up, Part 3: The Summit is Back!

This blog is the third in our “2017 Wrap-up” series. To read Parts 1 and 2, click here. 2017 was particularly exciting for CEP in that after a one-year hiatus, we relaunched the National Clean Energy Summit with our partner, MGM Resorts International. This year’s Summit was co-hosted by Senator Harry Reid and Governor Brian...

Read More

2017 Wrap-up, Part 2: Growing Nevada’s Clean Energy Advocacy Community

This blog post is the second in our “2017 Wrap-Up” series. To read Part 1, click here. The core of our advocacy efforts begins with engaging like-minded, clean energy supportive businesses. We stepped up our outreach to the business community in 2017, giving presentations and engaging with the Las Vegas Metro Chamber of Commerce, Las...

Read More

2017 Wrap-up, Part 1: Clean Energy Legislative Wins

Celebrating CEP’s Successes in 2017 We thank you for being a part of Clean Energy Project’s successful, exciting and busy year. We had a lot on our agenda throughout 2017, but we have been thinking of the past 12 months in two parts: the first half was dominated by CEP’s work with the Nevada Legislature...

Read More