January 26, 2018

Effects of Trump Solar Tariff Could Put Net Metering Back on the Table

This week, the Trump administration ruled in favor of two U.S. solar technology manufacturers to place a tariff on solar panels imported from abroad. The imports will be taxed by 30 percent, a move that some say will slow growth of the solar adoption in the U.S. and which may eliminate jobs in the solar installation sector.

The news arrives at a time of uncertainty for solar installers in Indiana who are still reeling from the decision to phase out an incentive for rooftop solar. The 2017 law was intended to sunset what some called a subsidy for an industry that had outgrown it, but critics say it could strike a blow to an infant industry in the state.

The tariff was imposed after the International Trade Commission found that cheap solar panels imported from China caused serious injury to the U.S. manufacturers. The cheaper panels are credited with creating a booming installation industry.

Installation jobs grew by 212 percent from 2010 to 2016, according to the Solar Energy Industries Association. According to the same report, solar manufacturing jobs grew by 53 percent, which includes manufacturing solar panels as well as other infrastructure needed for installation that the tariffs don't address. Over half the jobs in the U.S. were in installation in 2016.

An IndyStar review found that the law could lead to the loss of solar installer jobs in the state. When then-Sen. Brandt Hershman, R-Buck Creek, crafted the legislation, he did so to address the steep drop in prices of solar panels from other countries. The new law would undermine the assumptions Hershman had when wrote the legislation.

Hershman has since left the senate, but Sen. Jim Merritt, R-Indianapolis, the law's co-author and the current chair of the Senate Utilities Committee, said that he would monitor the situation and propose solutions if any became necessary. 

"One of the reasons we did what we did was because of the federal government’s treatment of this industry," Merritt told IndyStar. "We all want solar in the state, and we need to give it as much of a push as possible, and we will react should this change the circumstances."

Merritt said that the upcoming interim study term would likely be the earliest that the general assembly could take up the issue.

The tariff imposed by the Trump administration is not as steep as what was originally requested in May 2017, but just the suggestion of a tax on imported solar panels caused a slight rush to market in the U.S., according to GTM Research.

It is unclear the full extent of the impact the new tariff would have on the solar installation industry, but it is likely that the decision will kill some jobs, according to analysts. The SEIA estimates that the tariff will cost the industry 23,000 jobs over the next year.

"In a state like Indiana, our jobs in solar are overwhelmingly in the installation arena," said Jesse Kharbanda, executive director of the Hoosier Environmental Council. "I think, in general, this is policy that is hurting the very people that the Trump administration had pledged to help."

The solar market as a whole could also take a hit. GTM Research estimates that the tariffs could curb solar installations in the U.S. by 11 percent over the next few years.

That reduction could slow adoption of the renewable energy technology, which could stall efforts for individuals, organizations and governments who are trying to move away from carbon-producing sources of energy.

"These tariffs will hamper those efforts by increasing the cost of solar energy. That makes no sense, especially when you add the net job losses into the conversation, said Kerwin Olson, executive director of Citizens Action Coalition.

"This tariff is bad economic policy, and bad environmental policy. It’s a lose-lose." 

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