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May 18, 2012

The Way Forward for Solar After Disappointing Tariff Ruling

 

The U.S. Commerce Department on Thursday levied hefty tariffs on Chinese solar panels imported to the United States, raising concern that resulting higher costs will stunt strong growth in the U.S. solar market.

The tariffs of just over 31 percent are meant to offset Chinese prices that the government found were “dumped” on the U.S. market at below market value. Chinese manufacturers had seized the lion’s share of the U.S. market, but most in the American industry opposed tariffs as a threat to growing employment from installation work. The Solar Foundation estimated last year that U.S. employment in the sector grew 7 percent last year, topping 100,000.

Thursday’s tariffs, which are subject to review, are in addition to antisubsidy tariffs of 2.9 to 4.73 percent set in March.

Those low figures were viewed with cautious relief at the time. But RMI’s Ned Harvey noted then: “This is an industry where, at least for the foreseeable future, market growth is driven by cost reduction. Unfortunately for everyone downstream of the module manufacturers, the ‘step’ increase in module costs resulting from tariffs represents an immediate hit to the industry’s already-slim margins. More importantly, if the higher costs are passed on to consumers, it threatens to put an unwelcome brake on the potential for continued demand growth.”

Thursday’s decision, then, was even more disappointing.

However, RMI solar analyst Jesse Morris notes that it remains to be seen how much the tariffs on Chinese manufacturers will actually impact consumers. Some industry participants believe that any increased costs will be absorbed throughout the increasingly competitive solar supply chain and insulate end users from cost increases. Other analysts have also pointed out how many China-based manufacturers will simply avoid the tariffs by moving their goods through countries like Taiwan enroute to the U.S. RMI is working to accelerate deployment of photovoltaic solar across the U.S. by working with industry partners to decrease non-module ("balance of system") costs and finding ways to increase investor confidence, among other steps. The Institute’s hope is that the tariffs will force the global industry to be more efficient and innovative. We’ll write more about that on the Outlet next week.

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Showing 1-3 of 3 comments

May 21, 2012

All things considered. I have to disagree with the description that tariffs are a disappointment. The premise that solar installations will be adversely effected may be true, but the manufacturing of photovoltaic panels here in the US is essential for re-establishing manufacturing growth in the future.
Electric vehicles are going to require a cost effective means of charging. The nuclear energy industry has been devastated by Fukishima, so photovoltaic cells will likely experience exponential growth in the not so distant future.
The point made in regards to the China based companies possibly doing an end run through Tiawain may pose a serious problem. In my opinion we need to start prosecuting anti American companies headquartered in the US.

Just for prospective, iPhones would cost $65 more to manufacture them here rather than at Foxconn. Business media refers to Apple as a wonderful success story rather than the American tragedy that it really is.
~Paul


June 7, 2012

The majority of the value in solar PV project development, operations, and maintenance goes to construction/installation, non-module hardware, and other soft costs (such as marketing). RMI sees US business retaining much of this value for US installations independent of the cell or module source. Longer term, grid integration and communication solution products and services will garner much of the economic value of the PV-space, particularly for distributed generation, an area we believe US firms are also well positioned to exploit.

Thanks,
-Dan


June 13, 2012

I applaud your work at RMI. The solar industry needs a much needed push to gain traction, so the more info the better. The break down of cost is important in determining the effects on the economy. Data that I have is from late 2009 and shows PV panels totaling 60% of the cost of a 3kW project. Another 25% for mounting hardware, wiring and the inverter, leaving 15% of the system going to installation. Considering my data is old (almost 3yrs) is the PV cost of a project decreasing due to advanced PV technology or the outsourcing of the manufacturing? ... or both?
Long term I see the utility companies like Excel Energy being the biggest hurdle as they try to impede any real progress.
American manufacturing needs this industry BADLY!

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