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The Economic Chilling Effect of Proposed Solar Tariffs

The solar sector in America makes enormous contributions to job growth and the economy, as evidenced by the National Solar Jobs Census, which found that in 2016 the solar industry was responsible for 2% of all jobs created as well as a contribution of $84 billion to the U.S. GDP. This impact continues to grow alongside the solar sector: job growth has increased by at least 20% per year over the past four years. Solar and other alternative energy sources are making our economic and environmental future brighter by the day.

However, a recent initiative by the U.S. International Trade Commission (ITC) seeking to move the United States away from a free market and towards a regulated solar market could significantly slow this growth. It’s an experiment that has failed before, and one that would have a drastic chilling effect on solar job growth, accessibility, and viability. Let’s look at the facts behind these proposed tariffs and how they could dampen the solar sector’s economic contributions.

The Basics

SunPower President and CEO Tom Werner writes in Huffington Post that “With America’s energy future in mind,” there is “a unique opportunity to embrace a solar sector that is helping to grow our nation’s economy, creating high-paying jobs and reinforcing a competitive free market.” This move from the U.S. ITC, prompted by a trade complaint from a bankrupt panel manufacturer, would instead slow job growth, decrease economic impact, and inhibit a free solar market.

The proposed tariffs, at 40 cents per watt on solar cells and a minimum price of 78 cents a watt on solar photovoltaic modules, would “drive up prices for solar panels for residential consumers, corporate customers, and electric utilities.” For the last several years, solar prices have been falling, allowing greater access and adoption by consumers across the US and driving job growth in solar design and installation. These tariffs, which the ITC is scheduled to decide on in September, would destroy that pattern of growth.

The Background

In an article for Bloomberg Markets, Joe Ryan examines the impetus behind the trade complaint that has set the stage for such a drastic reversal of fortune for the solar sector. Suniva, a manufacturer based in Georgia, filed the complaint after filing for Chapter 11 bankruptcy.

Ryan notes that “Solar installations in the U.S. have soared in recent years, largely because of low-cost panels imported from Asia.” As a result, “The price of photovoltaic cells within these panels has declined nearly 50 percent since 2012,” allowing residential and commercial consumers the ability to afford large-scale installations and driving growth across the solar sector. The Suniva case “would cause equipment prices to spike in the U.S. and prompt installations to fall.”

As reported by GTM Research, the resulting tariffs “could devastate the U.S. industry, wiping out two-thirds of solar systems forecast to be installed over the next five years.” The threat of this crushing blow has split apart domestic manufacturers and installers by leveraging one against the other. While many in the solar design and installation business would be very happy to see more U.S.-manufactured solar panels, Suniva’s tariff-based approach remains highly problematic for the solar sector as a whole. Why?

The History

A recent article on ThinkProgress takes a deep dive into the history of trade tariffs and their impact on burgeoning US industries. One parallel example demonstrates the flawed logic behind the proposed tariffs on solar panels: in 2002, George W. Bush placed heavy tariffs on imported steel in an effort to shore up US steel production. The writer notes that “While the tariffs gave a fleeting boost to the domestic steel industry, they dealt a blow to U.S. businesses that depend on cheap steel.” With steel prices soaring, “U.S. manufacturers started buying parts from overseas suppliers with access to cheap steel,” and because industries that use steel employ more workers than those that create it, the tariffs resulted in massive job losses.

History has shown that this new attempt to aid domestic manufacturers would backfire in spectacular ways. As was the case for steel, solar installers employ far more Americans than solar manufacturers and any gains made by manufacturers would be offset by the installers losses. In fact, “The proposed tariff would put an estimated 88,000 solar workers out of a job, according to the SEIA.”

Our Commitment

At Solar Design Studio, we are committed to providing our customers the highest level of service at the lowest possible cost. We help residential and commercial clients make the most of their investment in solar energy because we believe in the positive impact of the solar sector for consumers, local economies, and the environment. Our commitment to you is the reason we stand against the imposition of tariffs that harm consumers, installers, and the industry as a whole.

If you have any questions about solar energy design or installation, need help with the complexities of a solar project, or are ready to invest in solar for yourself or your business, contact us today to learn more!

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