Trump’s Tariff on Solar Panels Could Drastically Set Back Renewable Energy Initiatives
In January, President Trump decided to place tariffs on solar panels imported from countries such as China. The rates will start at 30 percent and gradually decrease to 15 percent over four years. The first 2.5 gigawatts (GW) of panels will be exempt from the tariffs .
Many U.S. solar companies and renewable energy advocates have spoken out against the decision, saying it would harm the solar industry and discourage progress toward clean energy goals.
The decision to approve the tariffs caused some significant shifts in the industry and has already had some damaging impacts. Adding the costs of duties to projects, of course, makes them more expensive. In some cases, this has made it impossible for them to compete. Initially, it’s expected to increase the cost of large solar installations by 10 percent.
Reuters recently reported that American renewable energy companies plan to cancel or put on hold large installation projects totaling more than $2.5 billion. The industry completed $6.8 billion in total utility-scale installations last year.
Job losses and gains
The Solar Energy Industries Association has said that the duties could cost workers up to 23,000 jobs due to this stunted growth. Most of the losses will come from installation.
Manufacturing jobs, on the other hand, have increased slightly. The tariffs have contributed to the creation of approximately 700 jobs thus far in manufacturing facilities in Ohio and Florida .
With the cost of imported panels raised, buying foreign panels is less advantageous. This has inspired several companies, including foreign-owned institutions, to expand or build solar manufacturing facilities in the U.S.
SunPower Corp. and First Solar Inc., both U.S. companies, have said they plan to increase production in Oregon and Ohio. Hanwha Q Cells Korea also recently announced plans to build a manufacturing facility in Georgia, and China’s JinkoSolar Holding Co. will construct one in Florida .
Bloomberg New Energy Finance has forecasted that the duties could boost U.S. solar panel production capacity by 3.4 GW, as compared to 1.8 GW at the end of the previous year.
Bloomberg New Energy Finance analyst Hugh Bromley said that, despite the impressive numbers, the benefits to the American economy would be minimal. Solar manufacturing is becoming increasingly automated and, therefore, requires fewer workers than in the past. Much of the profits will also flow out of the United States to the foreign corporations that own the facilities .
Solar bounces back
Trump’s solar tariffs may cause increased solar manufacturing in the United States but result in fewer jobs for the overall solar industry, as well as fewer U.S. solar installations. However, it appears that the negative impacts won’t last long.
The solar industry had a strong first quarter in 2018, installing 2.5 GW for a 13 percent year-over-year increase, according to the U.S. Solar Market Insight Report. The report goes on to forecast that solar deployment this year will match last year’s 10.6 GW. This may be a sign that the sector is strong enough that the tariffs did not have as much of an impact as expected.
Besides, there’s a chance we may soon see this decision reversed. Various companies have already requested exemptions from the tariffs, which are still under consideration. Senator Dean Heller, a Republican from Nevada, recently introduced a bill that would eliminate the taxes. Sen. Heller cited protecting jobs and the economy as the reason he introduced the legislation.
This is a guest post written by Emily Folk.