President Trump’s decision this week to slap a 30 percent tariff on imported solar cells – a key component of solar panels – isn’t an attack on renewables, but the industry should not expect help from him either.
The move is straight out of a protectionist’s playbook and fits squarely in Trump’s America First trade policy. He wants to aid manufacturing at home by keeping cheap, state-subsidised solar equipment from China and elsewhere in Asia out of the US market. Imported panels account for more than 80 percent of US solar installations, with the majority coming from Asia, according to Bloomberg New Energy Finance.
In fairness, it’s a move not so different from when Obama imposed duties ranging from 18.56 percent to 35.21 percent on importers of Chinese solar panels in 2014.
Trump’s tariff affects silicon panels, does not apply to a company’s first 2.5GW of imported solar cells and phases out after four years.
Residential solar will hurt less because projects are small and the business model is based on customers repaying a lease agreement with money saved on their electricity bill.
Costs for utility-scale solar will likely increase for projects using silicon panels, but they will still be cost competitive. The price-per-watt of utility-scale solar continued to fall after Obama’s tariff in 2014 and now hovers around $1.
Investors we spoke with said they’ve anticipated the tariff and have built it into their pricing models. Some were expecting worse, and others are glad the uncertainty has been lifted. No one thought this would kill the industry.
Trump’s calculation here isn’t to attack solar.
The solar industry is an impressive economic engine of growth that employs over 260,000 Americans and is increasing by around 25 percent per year. Solar energy is cost competitive with any other source, and in some parts of the country it’s clearly the cheapest. US investments in clean energy last year amounted to $56.9 billion and around of third of that went to solar, according to BNEF.
Considering how much Trump touts his job and economy record, he doesn’t want to rock the boat.
However, he’s not going to go out of his way to help renewables either. Trump proudly pulled the US out of the Paris Agreement and is tight with the fossil fuel industry. His energy secretary had his power plan rejected earlier this month because he wanted to use taxpayer dollars to prop up coal and nuclear plants. While the Republican tax reform legislation left wind and solar tax credits untouched, a supposed leaked draft of Trump’s infrastructure plan does not mention any federal funding for renewables.
So while the president seems content letting market conditions propel the solar industry forward, reaping the economic benefits of job growth and lower electric bills, he’s not bending over backwards to provide real support. And if solar – or any other clean energy source for that matter – is matched up against something else on his political agenda, you can guess which one he will let take a hit first.