Solar Tariff Decision Undermines Growth of a U.S. 'Economic Engine'

Monday’s decision by the Trump administration to impose tariffs on imported solar cells and modules was anticipated by the industry, given the president’s “America First” agenda on behalf of U.S. manufacturing, energy and other sectors.

Tariffs were also an outcome that most of the solar industry in this country feared. While claims were made that the punitive duties would generate U.S. jobs, the consensus – even from impartial analysts – suggests any increase in manufacturing jobs would be minimal.

In fact, the Solar Energy Industries Association (SEIA), the key U.S. trade group in the sector, estimates the tariffs will drive up the costs of solar components, drive down demand for new utility-scale solar plants and rooftop systems, and cost the industry upwards of 23,000 jobs.

The U.S. Trade Representative’s (USTR) office announced that it would impose 30-percent tariffs on imported crystalline silicon photovoltaic (PV) cells and modules, though it excludes the first 2.5 gigawatts (GW) of imports.

The tariffs will decline by five percent over each of the next three years, coming to an end at 15 percent in 2022.

Analysts say the 30-percent levy will add another 10-15 cents per watt to the cost of imported cells and panels, which are now forecast to drop anticipated solar installations by 11 percent, or 7.6 GW – down to 61.3 GW – from now until 2022.

Despite those numbers, those supporting the manufacturers’ petition argue the levies will not significantly harm the U.S. solar industry.

But this is a burgeoning industry – an economic engine that is growing 17 times faster than the rest of the U.S. economy and employing more than 280,000 American workers. Over the last five years, the sector has added more than 100,000 blue-collar jobs to the economy, including those in installation and those in the manufacturing of other solar components such as sun trackers, inverters, and framing and racking systems. In 2016, the solar industry created one out of every 50 new U.S. jobs.

Despite administration claims the tariffs would launch a new wave of solar manufacturing, they are unlikely to be enough to even save the two financially distressed solar cell and panel manufacturers that went to the U.S. International Trade Commission last April seeking the relief.

Suniva, a bankrupt, Georgia-based firm principally owned by a Chinese company, and SolarWorld, owned by an “insolvent” German company, joined in a petition to the ITC in April, asking that penalty tariffs be levied on imported solar cells and panels. The commission determined in September that the imports were causing “serious injury” to the manufacturers. Following a hearing in October, the commission formally sent its recommendations to the White House in November.

The four ITC members each offered their own recommendations, most of which were generally more severe than what the USTR announced Monday. And the first-year, 30-percent tariff is well below the approximately 50-percent remedy sought by the two petitioners (Suniva also sought a 74-cents-per-watt floor price on solar modules). The 2.5 GW duty-free quota set Monday falls in between what SolarWorld sought for solar cells (0.22 GW) and panels (5.7 GW).

Even if the USTR set the tariffs at the level sought by Suniva and SolarWorld, the solar manufacturing sector would only be expected to gain about 6,400 jobs, a number that could now be significantly lower.

The tariff decision is an unfortunate market disruptor that fails to consider the consequences for other domestic industries. It is dismissive of this nation’s inevitable move to a clean energy future. It will also drive up consumer costs. And with the anticipated drop in installations, particularly in utility-scale solar, there will be a decrease in leases for solar facility location sites, which are mostly found in – and offer financial benefits to – rural America.

The tariffs will slow the solar industry, but not stop it. Stakeholders are urged to engage federal, state and local policy makers and urge them to adopt the programs and financing tools that will accelerate the development of solar and other low- and no-carbon power sources so critical to this nation’s energy security.

 

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