Solar Tariff Decision: What Happens Next?

Solar Tariff Decision: What Happens Next?

The solar industry was dealt a blow on January 22 when President Trump announced he would be implementing a four-year tariff on imported solar cells and modules that begins at 30 percent.

 

What do the tariffs mean for the solar industry and the community solar industry specifically – especially our customers, prospective customers and utility or development partners?

 

Although the tariff decision was not a surprise to those in the solar industry, we now brace for the immediate effects of increased prices. Currently 80 percent of panels installed here in the U.S. are manufactured abroad. This means solar installers – both community solar and rooftop – will feel the most immediate impact, likely crimping growth and eliminating jobs that would have been added in the solar industry. This week, the Solar Energy Industries Association (SEIA) estimated that 23,000 U.S. jobs would be lost this year due to the tariff. (It’s important to note that only about 1 percent of the 260,000 solar industry employees are involved in cell and panel manufacturing – meaning solar tariffs will have a broad impact beyond installers.)

 

We’ve received several questions from customers on what impact the tariffs will have on them, our business, and the industry in general, so we wanted to take a moment to address some of the key topics:

 

What if I’m a current community solar customer, will I owe more money on my monthly bill or is my array at risk of shutting down?
No. The tariffs are not retroactive, meaning projects that are already constructed are not at risk of being defunded or shut down. Also, current customers will not see higher costs because of the tariffs.

 

Is community solar still a good decision, and should I choose solar despite the new tariffs?
Community solar is still a great choice because it’s clean, cost-effective and still competitive with other clean power generation sources. Keep in mind the panels themselves may only comprise 20-25 percent of the total cost of a project. While these tariffs unfortunately reset the price of panels roughly to what they cost a year ago, we have worked hard to drive down the other cost components of the project in the interim, leading to a product that is still compelling and offering savings when compared to other energy sources.

 

Will CEC’s future business suffer because of the tariffs?
We anticipated the tariffs and the increasing cost of imported panels, and we’ve adjusted our product and growth model appropriately. This year we may not be able to grow as quickly as we could before the tariffs, but the Trump Administration’s decision is a temporary hurdle that we – and the solar industry as a whole – will overcome. The long-term trends of customer demand for clean energy and the cost-competitiveness of solar remain unchanged.

 

What if I’m a utility considering implementing a community solar program? Should I be worried about the tariffs?
Despite the tariffs, we anticipate community solar to continue its impressive growth and expansion into new and existing markets. Enormous majorities of customers want utilities to adopt more solar energy, and the explosive growth of community solar over the past few years allows us to offer better options and continued cost-effectiveness to utilities. These tariffs will not change those dynamics, especially given the long-term perspective that utilities generally have.

 

What’s Next?
Although we have already taken steps to ensure our customers and future customers are minimally impacted by these tariffs, we’d like to stress that the negative effects of the tariffs could extend far beyond the industry. For example, solar workers are not the only ones who stand to lose their jobs. For the installation and completion of all solar projects, the industry depends on specialists like electricians or structural engineers, and if these projects are delayed or cancelled, it could trigger a domino effect within the industries solar is closely tied to. Moreover, the tariffs end up being a tax on all consumers, in the form of higher energy bills.

 

At the end of the day, the tariffs are ultimately making solar more expensive, but this shouldn’t make solar less compelling. We’re still working hard to reduce costs in as many areas as we can to make up for this, and we urge advocates and policymakers to continue fighting against anything that blocks access to solar energy. For additional commentary on what the solar tariff decision could mean for America, please see the following links: