The Energy Gang Takes On Trump’s Solar Tariffs


The Trump Administration just imposed 30 percent tariffs on imported solar cells and modules. How much will it stunt solar growth in America?  Will it spark a broader trade war?   There’s a lot of questions about the impact, in this podcast The Energy Gang Covers:

  • What does a 30 percent tariff mean for project economics in the residential and utility-scale sectors?
  • How will the 2.5-gigawatt cell quota work?
  • Will the decision help domestic U.S. manufacturing? Will it hurt domestic installation jobs?
  • What kind of challenges will we see at the World Trade Organization?
  • Is there a pathway toward negotiation with China?
  • How could local policy blunt the negative impact of these tariffs?

Summary: The US International Trade Commission ruled this fall that domestic solar manufacturers had faced serious injury from imported solar cells and modules.  After review of that case the Trump administration largely followed the tariff recommendations of commissioners, on Monday January 22nd the Office of the US Trade Representative issued 30% Tariffs on cells and modules coming from outside the US.  Those tariffs step down 5% each year over the next 4 years, the tariff took effect on February 7th.   Here is Corey Honeyman’s  (Associate Director of GTM Research’s Solar Practice) take:

  • Not the Worst Case: The 30% tariff equates to about 10 cents/watt tariff stepping down to about 4 cents a watt in year 4.  This is not a worst case scenario however, GTM forecasts ~10% reduction in demand which they predict may slow solar job growth by 20K positions.
  • Utility Scale Solar is Sensitive: utility scale solar will be the most sensitive segment to the introduction of tariffs.   GTM’s expectation is that 7.6 GWs of lost demand from their base case forecast  over the next 5 years.  ~65% of that lost demand is expected to come from the Utility Scale solar segment because with every additional 10 cents/watt increase to system pricing equates to an additional 0.25 to 0.35 cents/kWh to competitive PPA pricing for Utility scale solar.
  • Emerging Markets Pushed Back: this additional pricing hurts competitiveness within new build natural gas and displacement of coal fleets retiring early.  10 cents/watt is enough of a difference to emerging markets for example the south east; Florida, Georgia and South Carolina.  Residential solar is expected to be more resilient, except for again, those emerging markets where parity is close, these tariff levels will ultimately push back the economic attractiveness for solar in these areas.
  • 2.5 GW Cell Quota:  2.5 GWs of cells won’t be subject to the tariffs.  In any given year the US will be able to import up to 2.5 GWs of cells without paying any tariffs.  This will benefit existing US based module assembly manufacturers such as Tesla/Panasonic in Buffalo and Solarworld who won’t pay the tariffs if they can import under that limit.

There have been price increases over the past 6 months in advance of the announcement of tariffs, this has pushed module pricing over 40 cents/watt, here are two factors that can mute the downturn effects in 2018:

  • Advance Procurement: developer and suppliers have been scooping up a lot of product in advance of these tariffs.   This has created some buffer through the 1st half of 2018 since somewhere around 2 GWs of tariff free panels have been procured by these activities especially related to Utility Scale solar.
  • Domestic Manufacturers: are a source for tariff free solar modules.  For example, 1st Solar with it’s thin film supply, and other domestic manufacturers like Suniva and SolarWord (residential segment) won’t pay these penalties.

Read the briefing and listen to The Energy Gang podcast here:

Joel Rhodes from Forbes Magazine has some good ideas on how to minimize the impact of this tariff in his article:

Trump’s Solar Tariffs Go Into Effect Today. So What?

Getting ReWired – Predicting the New Solar Electric Economy

Predicting the future is a tricky business.  In The Art of Charm podcast Episode 587, Bold in Abundance, @PeterDiamandis, the Inventor of the X Prize, describes how in his book Abundance – The Future is Better than You Think, he predicts that we’re headed for what he calls the Solar Economy.

To support his prediction Peter goes on to say “Solar energy will be so prevalent, so cheap, so available, and decentralized that it will be far more the driver of the world’s economy.”  The Solar Economy future is speeding towards us at an ever accelerating pace, exactly where in the future is that destination?   In the podcast Peter describes the human tendency toward Linear Thinking and why it causes us to miss the mark when coping with technology, innovation, and the advancement of the human race.

In contrast to Linear Thinking, Peter challenges us with the idea of Exponential Thinking in the form of a Moonshot  “A Moonshot is a radical solution to a large scale global problem using breakthrough technology.  The Moonshot is a term that comes out of Google, Astro Teller who’s the captain of Moonshots who heads Google X, in talking with Larry Paige asked what should Google X should be doing?  It ultimately came out that Google X should be taking Moonshots, it was envisioned as what the Apollo program was, doing something that was daring, big which had a chance of failure.  As they got down to defining it better, what Astro Teller says is that companies are trying to grow incrementally, for most of the world 10% is a great step, 10% more revenue, 10% less cost, 10% more customers.  You can get 10% more growth by working harder, working Fridays and Saturdays, squeezing more out of your employees.  But a Moonshot is where you go for 10X bigger, the difference between 10% and 10X is a hundred fold.  It’s the notion of can you set a crazy objective that everyone in the company says that there’s no way we can grow there linearly and you’re effectively forcing the company to throw away it’s previous methodology of doing things and start with a clean piece of paper.”  I believe that ReWiring our old economy to transform to the New Solar Economy has all the characteristics of a Moonshot.

How do we predict this?  Are these trends towards the Solar Economy already here for us to see?  Is Net Zero becoming the new black or is this part of the evolution of our society away from fossil fuels towards a clean energy future?  These questions are now in the forefront in my mind, solutions to end climate change, ensure  sustainability, clean energy and the end of fossil fuels.

This begins a series of blog posts where I’ll review these top trends through the compelling ideas of current Solar Economic thought leaders like Kevin Kelly, Elon Musk, Jigar Shah, Ray Kurzweil and Peter Diamandis.  join me on this journey, we’ll discover where we are, where we’re going and how we’ll know when we get there.

I’m both concerned and excited about the future, I’m hopeful that technology will step in again and show us a way forward, let’s go help make the world a better place.

Warren N Evans