Yet another area of speculation and uncertainty in the Trump
era.
The election of Donald Trump raises a lot of questions for the U.S. solar industry. Trump hasn't exactly been supportive of solar energy, but he hasn't made it an explicit target of his ire either.
President Trump's impact on the solar industry could come
through trade policy, an area where the president has fairly wide latitude to
make rules. If he labels China a currency manipulator, as he has promised, it
would give him wide authority to draw up tariffs on Chinese imports, which he
has suggested may be as high as 45 percent -- although a
25 percent across-the-board tariff seems to be a more common proposal. Tariffs
that high could have a mixed impact on the economy broadly, and could lead to a
trade war between the world's two biggest economies.
The booming U.S. solar industry -- heavily reliant on China
and other countries in Asia for low-cost supplies -- is caught in the middle of
this rhetoric.
There are already tariffs on Chinese solar products and
materials. And the solar industry has already figured out how to deal with
them. Given long-simmering tensions with China over solar, it's likely that
tariffs wouldn't have a major impact on the solar industry. But it's worth
looking into, assuming Trump decides to provoke China further.
When it comes to trade, there's rarely a simple single-order
cause and effect. Trade follows something more like the butterfly effect, with
broad impacts on the solar industry that would be both positive and negative.
Tariff cheerleaders: U.S. solar manufacturers
Solar manufacturers would certainly like to see additional
tariffs on Chinese imports. SolarWorld led previous trade cases against Chinese
solar companies, and it's easy to see how U.S. manufacturers Mission Solar,
SolarCity and Suniva could see a slight advantage if additional tariffs are
placed on competitors' products. The U.S. solar manufacturing industry has been
one of the most damaged by low-cost Chinese panels and, in theory, it would see
the biggest benefit from tariffs on Chinese imports. But America's
manufacturers must still work hard to be competitive.
To put the impact of tariffs into perspective, GTM
Research's PV Pulse Q4 2016 estimates
that blended module prices were $0.42 per watt last quarter. A 25 percent
import tariff would add about $0.10 per watt to the cost of a solar panel, or
$600 to the cost of a 6-kilowatt system, and a 45 percent tariff would add
$0.19 per watt, $1,140 for a 6-kilowatt system. (That's assuming tariffs are
100 percent effective.)
Barry Cinnamon, who owns residential installer Cinnamon
Solar, said customers would be willing to pay a few hundred dollars more to buy
American-made modules. But he also said the upside for installers pushing
domestically made panels is limited. With that in mind, he said he's "not
supportive of tariffs on solar modules since they jeopardize approximately
180,000 installation jobs at the expense of 20,000 manufacturing jobs."
SolarWorld is the only cell manufacturer in the U.S., so
even Mission Solar, SolarCity and Suniva would see higher costs on imported
cells if subject to a tariff. If tariffs are put in place on all products from
China, there would be a much wider impact to American manufacturing.
China is the lowest-cost source of supply for glass and
aluminum for module frames, which are some of the biggest costs in module
assembly. Then there's junction boxes, inverters, racking, connectors, and
other balance-of-system components that come from China and other countries in
Asia. The U.S. can't simply flip a switch and start manufacturing these
products at scale, especially commodity components like glass or extruded
aluminum that are needed in massive quantities. Tariffs on imports from a
country like China could give a small boost to U.S. manufacturers, but it would
also raise raw material costs for every module manufacturer in the U.S.
Growing U.S. solar manufacturing jobs isn't as simple as
adding a few tariffs to imports from other countries. The infrastructure to
make polysilicon, solar cells, extruded aluminum, junction boxes, glass, and
dozens of other components in the U.S. at a cost-effective level simply doesn't
exist today.
It's hard to make tariffs stick
The feasibility of tariffs helping U.S. manufacturers may
also be wishful thinking.
If the solar industry learned one thing from the tariffs on
solar cells and modules put in place a few years ago, it's that suppliers can
adapt more quickly than tariffs can. First, manufacturers started tolling modules in places like Taiwan and then they
began building plants in countries across Southeast Asia. Some of those
decisions were even motivated by a drive to find lower costs than China could
offer. For example, labor costs in Vietnam are
now lower than in China, changing the calculus about where to build manufacturing
plants.
That's consistent with manufacturing expansions in Southeast
Asian countries other than China. And the newly diverse set of suppliers and
countries of manufacturing in the solar industry would likely mute the effects
of any trade war, whether you're looking from the lens of a U.S. solar
manufacturer or an installer.
In other words, a trade war with China alone would have a
minimal impact on U.S. solar manufacturing given its supply diversity today. To
have a real impact on the solar industry, the Trump administration would have
to start a trade war with all of Southeast Asia. And if that happened, the
crossfire would hit nearly everything Americans buy -- not just solar --
creating very unpredictable and very unintended consequences for the solar
industry.
Installers -- and U.S. jobs -- would take the brunt of solar
tariffs
There's one area of the solar market that will see a
negative impact in any trade war: Solar installations.
Installers who are buying components on the open market will
undoubtedly face higher costs. However, the scale of the impact may be
different depending on where you sit in the solar industry.
For residential systems, the impact of tariffs would be
minimal because most costs are very local in nature. According to GTM
Research's Solar
Market Insight Q4 2016report, the average cost of a residential solar
system was $2.98 per watt in Q3 2016 -- so the impact of a 25 percent tariff on
solar modules alone would be fairly small at just 3 percent of the total
installation cost. Tariffs on other components like inverters or mounting
brackets may raise costs further, however.
The impact of tariffs would be more meaningful in the utility-scale
sector. A $0.10 per watt increase in a fixed-tilt utility project that costs an
average of $1.09 per watt would result in a 9 percent increase in costs. And
that's not including any impact from tariffs on inverters, mounting structures,
or any other balance-of-system components. This could have a material impact on
installers in a low-margin environment. Some solar projects may not pencil out
if costs increase by that much.
Tariffs would raise costs for companies installing solar at
every scale, from residential rooftops to large utility projects, although the
scale of the impact would depend on the scope of tariffs. Rising costs
could mean less demand for solar energy at every level, which would also
mean less work for installers themselves.
The Solar Foundation's National Solar Jobs Census for 2015
estimated that 119,931 workers held jobs installing solar, 57 percent of the
208,859 U.S. solar jobs documented by the organization that year. A reduction
in solar energy's competitiveness could put those jobs at risk.
It's impossible to predict the exact impact of tariffs,
given how fast costs change in the solar industry. Solar panel prices fell more
than $0.10 per watt in the third quarter of 2016 alone -- so a tariff would
likely have to be over 25 percent to make installers really worried.
The solar industry of 2017 is diverse enough to handle
one-off tariffs without too much adjustment. And if additional tariffs do come
(which is still just speculation), the industry has adapted to bigger disruptions
before.
Source
Source
No comments:
Post a Comment