How Would The Solar Industry Adapt To New U.S. Tariffs?

As I’ve blogged about before, two U.S. solar manufacturers are petitioning the Trump Administration to levy steep tariffs on foreign solar panels.  The solar industry is rightfully scared that the administration will approve them, given Trump’s anti-trade rhetoric and efforts to privilege coal over clean renewables.

The Solar Energy Industries Association recently estimated that the industry would lose 88,000 jobs, a third of the total, if the government approved the two U.S. manufacturers’ petition to levy a 78 cent floor on the price of solar modules and a 40 cent tariff on solar cells.

As E&E news reported [paywalled]:

The module price floor would slash solar demand by half over the next five years, from a cumulative 72 gigawatts to 36 GW. Add the tariff on cells, the report said, and demand would drop further, to 25 GW.

The biggest impact would be to utility-scale solar. Recently, and remarkably, big solar projects have been growing fastest in states that aren’t requiring their utilities to buy it through a policy known as the renewable energy portfolio.

Almost three-quarters of the project pipeline is in these states that are buying on economics alone, the report said. With tariffs, the report said, “most of that is at risk of cancellation unless PPA [power purchase agreement] prices are renegotiated.”

The impact on residential rooftop solar would be dramatic but less severe.

There’s no doubt that the tariffs would cause economic harm to the industry.  But could manufacturers adapt to avoid the most cataclysmic price impacts?

I’ve heard anecdotally that Chinese manufacturers would respond to the tariffs by locating their plants in the U.S. to avoid them.  While some U.S. protectionists might cheer this move for creating domestic jobs, the manufacturers claim that most of their plants are essentially fully automated anyway, so it would not result in any significant jobs benefits in the U.S.

And ultimately, there will be cost increases that will be passed onto consumers, which would not only depress the industry, it would hurt all the people employed in selling, installing and maintaining solar panels here.  And these individuals vastly outnumber coal miners.

So we should still hope that the tariff case is rejected.  But if the Trump administration goes the other way, we may have some hope that the industry can limit the damage.