Many in the solar energy industry threw their arms up Monday as the Trump administration announced 30% tariffs on imported solar panels. The move, the first concrete tariff from the tough-talking president, was considerably under the 50% figure requested by the foreign companies that petitioned.
On the face, the 30% tariff has the potential to stymie the industry, with 80% of installed panels in the U.S. being manufactured abroad, according to Bloomberg. But despite the high numbers, industry insiders and analysts don’t necessarily think it will have a big impact.
Goldman Sachs analysts estimate that costs will go up only 3% to 7% for residential solar and for larger utility-scale operations. In a circulated research note, the analysts called it a “relatively benign impact.” For residential solar, the higher total costs are approximately twice that of utility-scale solar production, diluting the price hike for imported panels and lessening the impact.
Others in the industry have had potential tariffs priced in for a while. Scott Brown, CEO of New Energy Capital, an alternative asset management firm that invests in solar energy, told Yahoo Finance that a 35% tariff has been built into solar module prices since last July.
“We don’t think the announcement will have a new material impact on the market,” he said.
At the same time, however, he suggested there is significant opportunity cost that might be lost from tariffs. According to Brown, the overall market growth has slowed because of that pricing.
The big picture
Currently, there is disagreement about whether the industry will be helped or hurt because of these tariffs. Suniva and SolarWorld Americas, the foreign-owned companies that manufacture in the U.S. that petitioned the government for the tariffs, contend that this will create manufacturing jobs. Some estimates concur with the companies’ viewpoint, but the Solar Energy Industries Association estimated that 23,000 American jobs may be lost.
“The unfortunate thing is that the tariff won’t help the two (foreign-owned) US petitioners because they can’t manufacture at a competitive cost even with the new tariff factored into their price,” said Brown. “The tariff will hurt US solar developers, installers, racking manufacturers, and other domestic workers without helping any US manufacturing workers.”
It’s these workers that will likely end up being the largest factor in the conversation. Though the Trump administration has been almost singularly focused on manufacturing over other types of jobs, many industries chiefly employ service workers, the people who install, repair, and perform other essential functions, over manufacturing. Based on current trends in production per employee and advances in automation technology, there’s only so much a tariff can do to help domestic production.
The tariffs may be the loudest thing to hit the solar industry this year, but Brown noted that there’s much more going on, with many factors contributing to the industry’s growth.
“It’s very hard to parse the impact though because other costs are falling and the tax law is reducing the value of certain tax benefits,” he said. “It will be an interesting year for the industry.”