This week the Trump Administration announced a four-year tariff program on imported solar cells and modules (solar panels), declaring an intention to provide relief for U.S. manufacturers against what they perceive as unfair trade practices. Based on a petition from manufacturers Suniva and SolarWorld Americas in mid-2017, the International Trade Commission (ITC) determined that increased solar cell and module imports “are a substantial cause of serious injury to the domestic industry.”
We are still in the early days, and awaiting official publication of the tariff in the Federal Register, but here is what we know about the tariff so far, and how we expect it to affect the Washington solar market:
Solar in National Headlines: Breaking Down the Numbers
February 7, 2018 is the start date for the tariff. It is scheduled to be in effect for four years, starting at 30% and stepping down by 5% each year. As prices for solar equipment are generally spoken of in dollars or cents per watt, this roughly equates to an average $0.10/watt tariff in 2018, ending in a $0.04/watt tariff in year four (GTM Research). While these are not the numbers we would like to see, the impact is not as negative as the industry as a whole initially feared; those most affected had already been preparing for the 50% tariff that Suniva and SolarWorld had requested.
The Solar Energy Industries Association (SEIA) issued a press release stating that this decision will cause the loss of roughly 23,000 American jobs. In the podcast Trump’s Solar Tariffs: We Answer Your Questions, GTM Research discusses the distinction that this is not current jobs being lost, but rather a reduction in jobs created based on the estimated solar demand models from the National Renewable Energy Laboratory (NREL). According to industry experts, job growth is expected to continue, but at a lower rate than recent employment trends indicated.
Where do we expect these changes to be felt the most? The 2016 National Solar Jobs Census found that the solar industry employed over 260,000 workers by the end of 2016, accounting for 1 in 50 new jobs created in the United States. Most of these jobs were in installation (137,000), and manufacturing accounted for 38,000 jobs, with the remainder in sales and distribution, project development, research and development, and finance. Proportionally, the biggest impact on jobs will be on the installation sector, however, more specifically, the impact will be weighted more toward utility-scale solar.
Of the expected 7.6 gigawatt reduction in new solar growth over the next five years, about 65% is expected from utility-scale. With projects of this scale, margins are very thin and module prices make up a larger percentage of development costs. The lead-up to the ITC ruling provided an opportunity for developers to plan for increased costs and led to advanced procurement of imported modules before the tariffs go into effect. As such, GTM Research expects 2018 to be relatively insulated from the tariffs, with 2019 having the biggest impact on the utility sector.
In the residential solar sector, tariff impacts will be reduced, due to modules making up a smaller percentage of system and installation costs. The exception will likely be new and emerging state solar markets. Southern states such as Texas, Florida, and South Carolina are expected to be among the most significantly impacted, with Suniva’s home state of Georgia the fourth most affected market. Oregon comes in as eighth most affected and is home to SolarWorld Americas.
The Outlook for Washington State’s Solar Market
Beginning with the implementation of the production incentive program in 2006, Washington’s solar market has functioned a little differently from other states. Our state incentivizes customers for installing locally-manufactured solar equipment. Because of this incentive, we have a healthy manufacturing base in Washington State that may initially benefit from this tariff decision. Thus far, Washington has not seen large development in utility-scale solar, with most solar installers in the state focusing primarily on the residential market.
An important detail in this tariff decision is an exemption for the first 2.5 gigawatts of solar cells imported to the United States. While this tariff does not currently have an exemption for imports from NAFTA countries, Canada and Mexico, these negotiations are sure to continue. Industry experts have suggested that the first 2.5 gigawatts of solar cells should adequately supply existing U.S. manufacturing facilities for one year, further mitigating the impact on American manufacturers. The vast majority of solar module manufacturers purchase cells on the international open market, due to the limited number of cell manufacturers worldwide.
Locally, it looks as though prices will stabilize at 2017 levels for the foreseeable future. With state incentive rates stepping down in July 2018, Washington customers considering solar for their home or business would be wise to start planning their solar installations now.
While U.S. trade policy may be beyond the direct control of the Washington solar industry, the state's solar businesses and customers can influence the long-term viability of solar in Washington State by advocating for solar-friendly policies at the state and local level. Right now, solar supporters can contact their legislators in support of the Solar Fairness Act (SB 6081). This bill would increase the number of new customers to which utilities' must offer net energy metering, allocate any excess net metered credits to low income relief, and adjust the net metering true-up date to better reflect annual production capacity in Washington’s market.
(An earlier version of this post appeared on the website of Western Solar.)
Washington’s solar industry remains strong in the face of the U.S. president's announcement this week to impose tariffs on imported solar cells and modules. Our state benefits from a diversified and integrated solar industry that provides jobs in installation, manufacturing, distribution, engineering, marketing, sales, finance, software development, consulting, and education. Such economic diversity provides resilience from potential market disturbance from external forces.
Here in Washington we are making big progress toward our clean-energy future. Solar Installers of Washington works actively to keep solar affordable for Washingtonians by advocating for the protection and improvement of state policies like solar production incentives and net energy metering. Our state’s solar industry is positioned for continued growth, enabled by pro-solar state and local policies, and the ongoing reduction in the non-equipment costs of solar installations, such as cost savings from more efficient permitting processes. Solar workers, businesses, customers, lawmakers, and supporters from around our state and across the political spectrum make Washington Solar Strong.
Right now in Olympia, legislators have the chance to support the Solar Fairness Act. Future Washington solar owners deserve to own their power: the Solar Fairness Act ensures their right to use the solar electricity they generate at their homes and businesses.
The Solar Fairness Act is an important way for the people of Washington to take ownership of our clean-energy future. Learn more about the Solar Fairness Act at http://solarstrongwa.org/solar-fairness-act-sb6081/.
For more information, contact:
Allison Arnold, Executive Director
Solar Installers of Washington
Seattle, WA, January 3, 2018 - The Board of Directors of Solar Installers of Washington (SIW) is pleased to announce Allison Arnold has been named SIW’s first Executive Director, effective January 2.
Allison says she is honored to join Solar Installers of Washington (SIW) as the organization’s first executive director. She brings to SIW nearly a decade of experience in renewable energy policy, marketing, and program management. Allison began her solar career in California, where she led policy advocacy, marketing, and communications for the U.S. solar business of global electrical products company, Mitsubishi Electric. Upon returning to her native Pacific Northwest, she served as Senior Fellow for E8 angel investment group, where she directed due diligence on early-stage clean energy companies.
As an active volunteer for the country's largest solar non-profit, GRID Alternatives, Allison participated in rooftop installations for low-income homeowners, promoted workforce development, and chaired the board of the organization's first affiliate in Los Angeles. She has also worked with the U.S. Department of Energy SunShot Initiative to expand solar access for low- and moderate-income households, and non-profits through the Solar in Your Community Challenge.
Allison has served on the boards of state and national solar industry trade associations, including the California Solar Energy Industries Association and the Solar Alliance. She holds a Bachelor of Science in Earth Systems from Stanford University, and was a Fulbright Scholar at Victoria University of Wellington, New Zealand, where she received an environmental policy Masters degree.
Allison is inspired by the role of solar in generating clean, affordable energy, while creating family-wage jobs and economic development. She looks forward to working with the board and members to grow and strengthen SIW and the solar industry.
"It is an exciting time for Solar Installers of Washington to build on its accomplishments to advance the solar industry in our state.” states Arnold. “I am thrilled to have the opportunity to work with the talented and dedicated members of Solar Installers of Washington to chart a course for the future of the association."
The Board of Directors conducted a national search for a collaborative, versatile, and resourceful leader. “After an extensive interview process with a number of highly qualified candidates, the Board stood unanimously behind Allison. Her experience, knowledge of the industry, and vision for the future made her the ideal choice to take SIW to the next level,” said Dana Brandt, Board President. “Having such a deep pool of capable applicants reflects the interest that people have in SIW’s excellent work.”
Since 2013, Solar Installers of Washington has worked closely with legislators, utilities, manufacturers environmental groups and other solar stakeholders to update and improve Washington’s policies in order to promote broader solar adoption and bolster a strong, sustainable solar industry in our state.