Last week, the International Trade Commission ruled that the importation of low-cost solar panels meaningfully harmed U.S. manufacturers. The case will now go to President Trump, who will decide whether or not to issue steep tariffs on foreign made panels—a move that would make U.S. solar panels the most expensive in the world and could effectively strangle the industry nation-wide.
Last Friday, the International Trade Commission (ITC) unanimously ruled in favor of a petition issued by U.S.-based solar panel manufacturers Suniva and SolarWorld to place a $.40/watt tariff on imported crystalline silicon solar panels, with a minimum price of $.78/watt, arguing that the glut of inexpensive foreign panels materially harmed the American companies.
The ruling has the industry in a tailspin, with manufacturers, distributors, installers, and even the major solar industry trade groups in fierce opposition to the ruling, avowing that an increase in the price of panels would quell the growth of the burgeoning industry and cause a ripple effect that would eliminate a substantial amount of down-channel jobs.
The exploding U.S. solar industry employs approximately 260,000 workers—a number that has been sharply increasing year over year (the total number of solar related jobs jumped 25% from 2015 to 2016.) Critics of the trade case are quick to point out that only approximately 8,000 of those jobs are with U.S. based solar manufacturers—the rest are with firms that install, design, sell, finance, or otherwise service solar systems.
The proposed tariffs would curtail the flow of crystalline silicon photovoltaic panels from countries like China, Taiwan, South Korea, Japan, Mexico, Europe, Singapore, and Malaysia, which analysts project will double the price of solar in the U.S., decrease demand by 65%, and eliminate approximately 88,000 jobs—all of which could take a collective toll on our nation’s economy, given that the solar industry has grown 17 times faster than the total U.S. economy and accounted for 1 in 50 new jobs in 2016.
Now, the ITC commission will devise a recommended course of action to remedy the injury that the inexpensive foreign solar panels have allegedly inflicted on U.S. manufacturers. After a public hearing on October 3 and a vote on October 13, the commission will present its recommendation to President Trump by November 13.
The President then has until January 12 to determine whether or not to move forward with a tariff or other injunctive actions. Sources inside of the White House have indicated that Trump is likely to protect American companies from “cheap foreign products” by approving this tariff.
The downside effects of such a decision are already manifesting—developers of large-scale solar projects are reporting a slowdown in the willingness of their customers to move forward with long-term commitments to projects that may soon become uneconomical, as pricing is projected to increase for utility scale projects by up to 45% (commercial project pricing is expected to increase by 25%, and residential pricing by 15%.)
Solar industry experts predict that if tariffs are imposed, solar will lose its competitiveness relative to other energy sources, causing the industry to sputter nearly to a full stop for at least 18 months. And, to add insult to injury, the federal tax credit that has been bolstering the solar industry is scheduled to begin phasing down in 2020, making it even more important to keep component costs low in order for the industry continue its explosive growth.
When it comes to the rapid adoption of clean energy sources and dealing with our changing climate, playing the long-game is no longer a viable solution. It’s much too late to be conservative.
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