Within a few weeks, imported solar cells and modules to the U.S. will be subject to a 30 percent tariff — and industry insiders say it’s not a positive development. Last week, President Trump announced that the tariff would last four years and taper down by 5 percent annually.
The majority of the U.S. solar industry doesn’t support the tariff, and it is viewed as a setback for solar energy deployment and even the U.S. solar equipment manufacturing sector. Many solar projects will be stalled or canceled due to the tariff and the sudden additional cost of solar panels.
Solar Industry Job Loss Expected
The exact goal of the tariff is unclear, although many believe it is to hurt renewable energy development or boost the coal industry. It will certainly not have an overall positive effect on the U.S. economy.
There were more than 260,000 jobs in the U.S. solar industry in 2016, with 51,000 jobs added just in 2015, according to the Solar Foundation. The tariff is expected to result in the loss of 23,000 U.S. jobs, including some in manufacturing, estimates the Solar Energy Industries Association. This is because of the 38,000 solar manufacturing jobs in the U.S., a mere 2,000 are in making the solar cells and panels, and panels are just one component of a system. The job loss in solar installation, financing and manufacturing other solar components will significantly outweigh any job gain from the tariff.
“It appears that the administration is caught in a paradox,” says Scott Mueller, co-founder of Solar Lead Factory, a company that helps homeowners get competitive bids for a solar system. “Job creation is a stated goal of this administration. The solar energy sector represents one of the fastest-growing job creators in the country. Legislating obstacles to job growth is confusing and downright misguided.”
Who Benefits from the Solar Tariff?
Two long-term proponents of this solar tariff are Solar World, a German-owned company with manufacturing in Oregon, and Sunviva, which is majority owned by a Hong Kong–based company with manufacturing in Georgia. They have complained about competing with cheaper Asian manufacturers, which are sometimes subsidized, and petitioned for a 50 percent tariff.
Solar World has already announced it will ramp up production thanks to the solar tariff and hire hundreds of workers, yet the net result across the U.S. will be job loss.
Will the Tariff Hurt the Chinese Solar Industry?
The solar panel tariff will have a far more severe impact on the U.S. than overseas. China is the undisputed renewable energy leader and is responsible for 40 percent of the global renewable energy capacity growth, with solar leading the way. The Indian solar market is also expected to be hot, as solar energy costs fall and demand surges.
“While the USA is an important solar market, we’re not ‘getting one over on China’ by restricting their access to the market,” Mueller says. “Chinese companies and the Chinese government are developing these technologies for their own and other global markets — because it’s a promising economic opportunity globally and an environmental imperative in China. Instead of investing to put the U.S. in a leadership position on what is almost certainly the energy source of the future, it appears that we are pumping the brakes and ‘un-friending’ countries that are now poised to take the leadership position.”
Policy changes that abruptly impacted market condition have plagued the U.S. renewable energy industry on a state and national level. This has made long-term planning incredibly tricky and caused stalled or canceled projects.
“Solar has been through a lot of uncertainty,” Mueller says. “It’s a promising but still nascent market, and in addition to internal challenges, the solar industry has been through a lot of political uncertainty from Washington, D.C. This actually isn’t a blue or red issue, but an issue of national security, economics, environmental and health concerns, and job creation.”