On January 22nd, 2018, The President signed a proclamation placing a solar tariff on imported solar cells. The solar tariff took effect on February 7th 2018 and starts out at 30%. The solar tariff then declines 5% per year for the next four years until it finally ends in 2019.
The Solar Tariff was signed by The President after a 9-month trade case before the International Trade Commission. The trade case was filed by two U.S. manufacturers, SolarWorld and Suniva, who make some of their product in the United States. Most of the U.S. solar industry has been united against this tariff arguing that this increase in solar module pricing will curb job creation and ultimately hurt the U.S. solar worker more than help them. Moreover, most U.S. based solar companies are quick to point out the irony that although SolarWorld and Suniva make the product in the United States, they are both based overseas. SolarWorld is actually a German company, and Suniva is a Chinese company.
Solar Tariff and U.S. Manufacturing Jobs
Some U.S. and foreign manufacturers are taking this opportunity to position themselves in the U.S. market, however, at least in the short term, U.S. job increases from solar manufacturing will be minimal. SolarWorld, one of the companies who filed the original grievance, has plans to increase their U.S. workforce by only 200 workers by the end of the year. According to Solar Energy Industries Association, or SEIA, there are more than 260,000 Americans employed in solar, but only 2,000 of those jobs come from manufacturing. Earlier this year The President stated, “We’ll be making solar products now much more so in the United States. Our companies have been decimated, and those companies are going to be coming back strong.” That statement is encouraging, but it will have to face the reality that 95% of solar panels used in the U.S. are imported from countries like China, Malaysia, and South Korea who will still continue to import with the help of their low labor costs.
The Tariff and Solar Customer
Despite the controversial motivations and implications of the solar tariff, the average homeowner will still find solar cost-effective. The biggest impact will fall on utility-scale solar projects which have to compete in price per kWhr contracts against natural gas and other low costs of power. In order to provide utility investors with attractive costs, every dollar counts. The homeowner, on the other hand, will see the average job increase by approximately $500 to $1,000. Solar module pricing only makes up a fraction of the residential solar installation cost. Since it is only a fraction of the cost, and since the price of equipment historically falls 2%-6% annually, the actual increase to a U.S. homeowner will ultimately fall at about a 2% total increase. In a State like New Jersey which has a solid SREC program and a legislative branch that will continue to foster SREC growth, the investment will stay make sense through the length of the tariff. Other states may not be so lucky and large scale installers may not either, but a New Jersey homeowner will still be able to install at a competitive cost.
