The recent announcement of a 30 percent tariff on imported solar cells and panels has been cheered as a victory for President Donald J. Trump’s “America First” agenda. It’s also been blasted as a blatant attempt to shore up the fossil-fuel industry at the expense of a rapidly expanding, environmentally friendly energy source.
Among local solar-energy professionals, the response to the tariff has been muted. Most don’t expect the regulations to have much impact on a robust local market.
The regulations announced last month follow recommendations from the U.S. International Trade Commission based on petitions from two firms with manufacturing centers in the U.S. who claimed that cheap imports were harming their business. The new rules expand on solar-cell tariffs previously imposed in 2012 and 2014 under the Obama administration in response to Chinese firms dumping cheap panels on the U.S. market.
The latest tariff targets solar equipment from all but a handful of exempted industrialized countries. Supporters of the tariff say it will spur manufacturing of solar products in the U.S., which has been dwindling in the face of cheap imports. But opponents of the new rules, including the Solar Energy Industries Association, worry they will push up costs and slow the growth of a field that currently employs some 260,000 Americans. An SEIA statement on the tariff notes that just 2,000 of those 260,000 solar-sector workers are employed manufacturing solar panels. The vast majority work in the labor-intensive and impossible-to-export installation sector. Others are employed manufacturing steel mounting brackets and other solar accessories. The industry group estimates that the tariff will result in the loss of 23,000 American jobs in the coming year and result in the delay or cancellation of billions of dollars in solar projects.
Paul Mcmenemy, owner of SOLARGeneration, agrees with the SEIA assessment. The 13-year-old Kingston-based company supplies equipment and carries out installation of solar-energy projects. Mcmenemy said that he has already stocked up on solar panels to stay ahead of anticipated rising prices once the tariff takes effect.
Though Mcmenemy said that he didn’t expect to see a major falloff in business due to the tariff, he’s concerned that potential customers undecided about solar may delay or decide not to go ahead with it if prices rise. Mcmenemy said that he saw the tariff as an “inflationary political move” by the Trump administration, one intended to play to the president’s base and prop up the fossil-fuel industry. Mcmenemy points out that America’s solar manufacturing sector has been virtually dormant for years and is unlikely to roar back to life due to the tariffs. “At this point we’re not set up to really, really ramp up because we’re 10 years out of the game,” explained Mcmenemy. “Why would you jeopardize 260,000 jobs to create 10,000?”
While solar panel manufacturing may be dormant in the U.S., it’s not quite dead, as evidenced by Prism Solar Technologies in Highland. The company employs 30 workers manufacturing high-quality, high-efficiency solar modules. It has plans to add more workers. Tyler Stewart, who works in sales for the company, said the planned hires were more a reaction to a boom in demand than the effect of the tariff.
His employer, Stewart said, produced specialized equipment for installation on commercial property rooftops, a niche market largely unaffected by cheap imports. Nevertheless, Stewart saw benefits from the tariffs. “Were the tariffs necessary to help our business? No,” said Stewart. “But that’s not to say that it hasn’t sparked more interest in American-made products, and that’s a good thing for us.”
At Sunwize Power and Battery, company president David Eveland said that news of the tariffs actually came as a relief, despite the fact that his company relies almost exclusively on imported solar panels. Sunwize operates a manufacturing and assembly facility in Saugerties. Workers make solar equipment for “off-grid” applications like powering mobile highway signs and railroad signals.
Eveland said that the new tariff was less onerous and “made more sense” than some of the Obama-era penalties. More importantly, Eveland said, the announcement of the new tariffs brought some certainty to an industry that has been virtually frozen for the past eight to 10 months awaiting the USITC recommendations.
“This is not that special,” said Eveland of the new tariffs. “It’s been heavily touted and used as a political lever, but this round is relatively manageable compared to the last two.”
Bad for the farm
Local solar professionals agreed that the sector most likely to take a hit from the new tariff is producers who use solar farms to generate energy for sale to utility companies. While the price of solar energy has fallen 73 percent since 2010 (and is predicted to fall another 50 percent by 2020), utility solar producers still have a narrow margin when it comes to competing with gas and coal power plants for utility companies’ business. Any uptick in the cost of installing and replacing panels could cause utility producers to fall behind and lose market share to fossil-fuel companies. “To be honest, the only place I see a real impact is the utility sector,” said Eveland, “because that sector is very price-sensitive.”
Locally, however, that impact is likely to be minimal, at least in the short term. Central Hudson spokesman John Maserjian said the company gets just 1 percent of its energy from solar power. None of that is produced by solar farms. Instead, the energy comes from 7,700 commercial and residential Central Hudson accounts which have installed solar panels. The energy generated powers the customer’s own property while any excess goes back into the utility’s grid.
Another 329 solar installations on the pipeline are expected to boost the utility’s total solar-energy capacity from 71 megawatts to over 200. The utility is also working on community solar projects. Under this project model, municipalities or landowners install solar arrays. Local consumers can access the energy generated on a subscription basis. Maserjian said that the impact of the new tariff on those and other proposed projects remained unclear.
“We have not heard any comments from developers regarding the tariff,” said Maserjian. “So we’re not aware of any changes.”