By Tim Henderson
If you’ve heard about the solar tariffs, you know they may affect you and your solar panels in coming years. You might not, however, be sure exactly how. Do they change the solar panel tax credit? How will they influence your system or your annual bills? What is in store for the future of solar energy?
Today, lots of homeowners are looking for information about the tariff, including what it means, what the implications are, and when higher prices could be expected.
Don’t worry, though – while the tariffs do mean some changes for solar power, the industry as a whole is still holding strong and now is a great time to go solar.
Here’s what you need to know.
The new solar tariffs aim to support domestic solar power. These tariffs rose from Trump’s solar decision on the Section 201 trade case and were revealed on January 22 of this year.
The tariffs include a 30% solar import tariff on crystalline-silicon solar modules and cells, which decreases five percentage points annually to 15 percent in the fourth year. As it stands now, the first 2.5 gigawatts of cells imported are exempt from each year’s tariffs.
The background of the tariffs is this:
Back in September of last year, the ITC declared that imported CSPV cells were damaging the CSPV manufacturing industry and that tariffs and import licenses should be imposed. The ITC recommended a tariff amount that was higher than Trump’s final number, and an import exemption that was almost half the amount.
Wondering how these tariffs will affect the solar industry as a whole? Here are five things to know:
While there has been some fear that these tariffs will sink the solar industry, the opposite is true. According to Green Tech Media:
“Essentially, this has a meaningful but not destructive impact on solar installations, and at the same time it’s not exceptionally encouraging for domestic solar cell and module manufacturing.”
Experts are expecting the tariffs to experience a net installation reduction of about 11 percent in the coming years. That means about 61.3 gigawatts of solar will be deployed in the coming five years, rather than the original number of 68.9 gigawatts.
The solar tariff will also increase the price per watt of solar installation: experts are expecting a 10 percent price increase per watt during the first year, which will step down to a 4% price per watt premium in the fourth year.
Most of the effects of these tariffs will become present in the first year of the tariffs, 2019. Next year will see a 1.6-gigawatt decline in installations, and a forecasted decline of 525 megawatts because lots of installers locked in module orders before the tariffs could take effect.
Trump’s tariff on solar power lasts for four years. In the first year, it creates a 30% tax on imported panels. That tax decreases five percentage points each year after the first. This tax is actually lower than the 35% tax the ITC advised, and the tax-free exemption (the first 2.5 gigawatts of imported panels) was more than twice the ITC’s recommendation.
The tariffs are designed to help domestic solar manufacturers but will cause a slight ripple effect with local solar installers and solar energy companies throughout the industry.
According to The Sacramento Bee:
“Industry experts said Trump’s decision, announced by U.S. Trade Representative Robert Lighthizer, will make solar more expensive for homeowners and business owners. They don’t think the higher prices will kill the industry, but it could depress demand and slow a business that has made renewable energy a rising star in California’s economy.”
If there’s one thing the solar industry has proven in recent years, it’s that installers and innovators are exceptionally flexible. While these tariffs will create some change for the industry, the industry will adapt accordingly and is slated to remain strong. If you’re considering going solar at your home or business, you can trust that now is still a great time to take the plunge!
Ready to learn more about solar energy in California and what you can expect to see from these tariffs? Contact Sandbar Solar today to learn more.
Tim has worked in the solar industry since 2008. He has a Master's Degree in Energy Resources Engineering from Stanford University. His years of experience include working on solar energy projects for both homes and commercial properties. Tim enjoys sharing his knowledge of this evolving industry and making a difference in his community.
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