Shear: Tariff on solar creates damaging uncertainty
Shear: Tariff on solar creates damaging uncertainty.
On Jan. 22, the White House announced that President Trump has issued a 30 percent tariff on imported solar cells and while the ultimate impact of this action is yet to be determined, the uncertainty over this matter has been around for a while, and as a Dubuque-based solar developer, we have to deal with this self-inflicted wound to our industry right now.
I have been a solar installer for seven years. When we started in 2010, solar systems sold for about $7 per watt and was only sellable to early adopters (such as the Telegraph Herald) that could look past the raw economics. Now installation costs are often below $2 per watt while selling better-quality components.
When we started seven years ago there were approximately 25 domestic module makers, including the foreign-owned and virtually insolvent Suniva and SolarWorld module makers, who petitioned the trade case.
It was always obvious that Asian module-makers had a different definition of success than U.S. and European manufacturers had. To a significant extent, they view success as gaining market share and not necessarily profitability.
In 2010, Asian module-manufacturers had a 6 percent market share of our domestic market. In 2016, the Asian market share for solar panels and cells exceeded 60 percent. The aforementioned domestic module-manufacturers were largely unable to withstand the market share strategy of these Asian manufacturers.
The question must be asked, is this tariff good for the U.S.? The answer is no.
This market strategy is not unique to solar panels. When was the last time any of us bought a color TV made in Illinois or Ohio? According to the Solar Energy Industry Association, there are currently 38,000 domestic jobs in solar manufacturing, with 2,000 of those jobs in solar panel manufacturing. This tariff is a very high price to protect those 2,000 jobs in a country with more than 300 million citizens.
Solar installations have doubled every two years since the year 2000, with no end in sight to this growth. This growth, which I have experienced in my business, is largely attributable to the economic investment and scale of these Asian module-manufacturers.
Now to the uncertainty.
The rules of the road for how this tariff will be implemented are unclear at best.
How do I as a businessman make pricing decisions in the future when I don’t know how much the products I sell will cost?
How do I and my competitors rationally make employment and capital decisions in light of the tariff?
I wish I had a better answer than, “Let’s wait and see …”
What effect will this tariff have on the Clean Energy Economy, the Industrial Revolution of the 21st century? While high-tech manufacturing in the U.S. is challenging, our economy is performing well, unemployment and inflation are low. The policy decisions on how to make U.S. manufacturing competitive again are very complex and span countless industries beyond solar.
As a solar developer and concerned citizen, I hope that the implementation of this tariff is done in a controlled, well-reasoned manner that allows for predictable planning.
While many of the components in a solar array are manufactured elsewhere, my installers, salesmen, system designers, electricians and others live here and work here. They pay taxes, buy goods and services that help the local economy. These solar jobs can’t be outsourced or offshored, they are here and need a predictable economic environment to continue the growth.
This tariff, in my opinion and that of the industry, does not foster that necessary stability.
On Jan. 22, the White House announced that President Trump has issued a 30 percent tariff on imported solar cells and modules.
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