What Trade Politics Might Mean for Solar Panel Prices

Purchasing home solar panels is a great option for people who care about environmental stewardship. Of course, pricing is also an important consideration.

When you ask yourself "Why should I go solar," it's only natural to follow up with "How much should my solar panels cost?"

As we've covered before, numerous factors affect solar panel prices. What often goes undiscussed, however, is the role that politics play in what you pay.

Here's a current, real-world example that might shed some light on the issue.

The Suniva Global Safeguards Case

China has a longstanding reputation as one of the world's largest producers of silicon solar panel technology, and its ongoing subsidization of this industry lets manufacturers produce panels at extremely low prices.

Although these products don't always represent the absolute best in residential solar panels, their affordability has prompted their adoption by many installers.

Near the end of April 2017, U.S. manufacturer Suniva Inc. decided to fight back against these unsustainable pricing practices.

After filing for bankruptcy, the firm registered a formal trade petition with the Trump Administration based on section 201 of the Trade Act of 1974, commonly known as the Global Safeguards clause.

Around a month later, the country's biggest manufacturer of crystalline silicon panels, SolarWorld Americas Inc., joined the legal action.

Understanding the Law

Lawmakers wrote Section 201 to provide relief when imports adversely affect domestic industries.

The U.S. International Trade Commission, or USITC, investigates all global safeguards petitions and has 150 days from the date of their filing to deliver a finding.

This means that we could hear of the decision as early as September.

The USITC must then suggest relief actions to the president no more than 180 days after the filing, which gives them until March 2018.

Unlike some other trade protection disputes, USITC section 201 investigators don't have to find that Chinese companies committed unfair practices. If the complainants can demonstrate that they sustained or were threatened with serious injuries due to the imports in question, the agency can recommend actions such as the imposition of new import taxes.

In this case, the fact that Suniva already sought bankruptcy protection could be all the support its argument needs.

If the USITC wants to level the playing field for manufacturers across the board, it might push for tariffs on all imported solar products, which would result in pricing volatility and mounting solar panel prices.

How Could the Section 201 Case Affect Solar Panel Costs?

If you're waiting to purchase roof solar panels for your home, this may not be the best time to hesitate. Thanks to a perfect storm of political factors, it's highly possible that prices will rise.

Learning From the Past

If the Suniva case is successful, it wouldn't be the first time that regulators have taken aim at Chinese solar products. In 2014, for instance, the U.S. Commerce Department instituted significant tariffs on Chinese PV cells and panels following its determination that such items were flooding the market far too cheaply.

Faced with the need to price its panels more competitively, Suniva went bankrupt.

Considering this fact, homeowners who must pick between domestic manufacturers and massively taxed imports will probably pay more in the future than they would by installing solar panels today.

Trade wars rarely benefit consumers in the long run. For instance, after the 2014 increase, China created its own import duties on American-made silicon products.

If a new Section 201 tariff prompts similar retaliation, domestic companies that formerly derived a percentage of their profits from exporting to China may lose once-viable revenue streams and find it necessary to raise their home solar panel prices even further.

The European Angle

The U.S. may become a less attractive export destination for other reasons. In February, the European Union, or EU, decided to eliminate duties on Chinese solar panels after 18 months of wrangling.

The EU tariffs were originally related to similar complaints from European manufacturers. Some analysts, however, believe that political circumstances such as U.S. President Donald Trump's protectionist policies prompted the EU to welcome Chinese products with renewed interest.

Although there may be benefits to the Trump Administration trying to protect U.S. industries, solar panel users could suffer the negative ramifications.

Higher panel costs might make solar technology less accessible for homeowners, which could result in a vicious cycle of companies having to charge more to recoup their revenue losses.

This Filing Isn't About Making Life Easier for Homeowners

Interestingly, Suniva's majority owner is a Chinese solar supplier with a stake in what some Bloomberg analysts describe as outmoded production line technology.

If tariff legislation blocks other alternatives, you can almost guarantee that you'll pay more for products with increased manufacturing overhead.

There's a chance that the Trump Administration might recognize the negative impacts that tariffs could have on domestic clean energy jobs.

Unfortunately, political theater often speaks louder than sound economic policy. The chance to make a show of protecting U.S. manufacturers may be too difficult for some regulators to resist.

Why Should You Go Solar?

The potential for market turmoil makes this an ideal time to purchase roof solar panels for your home.

Regardless of whether you're in search of a budget option or the best residential solar panels that money can buy, there's a fair chance that costs might rise across the board.

With more than 20 years of experience providing complete solar panel solutions for the Central Coast, Sandbar Solar is helping property owners keep their fingers on the pulse of clean energy.

As solar panel price trends evolve, the residents of San Jose, the Bay Area, and Santa Cruz and Monterey Counties depend on us to help them make educated consumer decisions.

To learn more, check out our portfolio of successful projects, or talk to us about the best time to buy: (831) 469-8888