What We Don’t Hate About the Solar Tariff

What We Don’t Hate About the Solar Tariff

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courtney
COURTNEY JOHNSTON, Purchasing Manager at Wholesale Solar​

If you have any interest at all in solar energy, you’ve probably heard the news—effective February 7, 2018, the Trump administration is imposing a 30% tariff on imported solar panels and solar cells.

In other words, the price of solar has just gone up. (Or maybe not… But I’ll get into that in a second.)

There have been many “doom and gloom” news articles discussing the impacts of this decision on the US solar industry—and yes, there will be impacts.

Now, clearly I can’t predict the future. But I do want to talk about why this decision will likely not affect the solar industry quite as drastically as many of the industry experts are claiming.

As the purchasing manager at Wholesale Solar, I spend a lot of my time researching the fluctuation in the solar market. So you can imagine that—even more than you might have—I’ve been paying close attention to the trade case that led to this tariff.

And now that the decision has been finalized, I’m less worried than you might think.

Yes, this tariff will impact the commercial solar industry and will lead to about 23,000 American jobs lost, according to SEIA.

But when it comes to residential solar—in other words, the kind that you need for your home—my estimate is that this tariff, at its worst, will increase the retail price of an average grid-tied system by about 5% and an off-grid system by around 2%.

So for example, a grid-tied system that used to cost $14,000 will increase to $14,650. An off-grid system that was $22,000 will now be priced at around $22,440.

Impact of solar tariff on home solar

Well heck. That’s not much of an impact at all, is it?

I’ll dive deeper in a minute, but first, let’s look at how we got here.

“Section 201” and the solar tariff Trade Case & Solar Tariff

In May 2017, module manufacturer Suniva petitioned a Section 201 trade case. That’s a piece of legislation which is designed to protect against imports causing serious harm to a U.S. industry.

Suniva claimed they were being harmed by excessive imports from China and requested a large tariff in response—approximately 50%.

But they had help: SolarWorld backed their claim that the industry was suffering.

Because of this case, a tariff—a tax, basically—on imported crystalline-silicon PV panels and cells was proposed, and then approved on January 22, 2018.

The tariff steps down over time:

We’ll need more information—and more time—to fully understand the long-term impact of the tariff. But based on what we know now, it doesn’t look like the tariff will mean much for the price of residential solar systems.

Here’s why.

The solar panel tariff—how will it affect you?

Yes, large-scale commercial installers will feel the impact of the tariff, because they buy and install so many solar panels.

In home systems, solar panels represent a smaller cost. That means the tariff is expected to cause only modest price increases for residential consumers—anywhere between $500 and $1000 for a typical customer.

But for you, the Wholesale Solar customer, there are several pieces of good news.

First, we stocked up on solar panels before the tariff was implemented, which means our prices aren’t going up any time soon.

Second, solar panel prices were relatively high already, which means manufacturers will likely end up absorbing some of the tariff. So even if prices do go up, they may not increase by as much as you’d think.

Third, the tariff applies for a relatively short time period and is already facing a challenge from South Korea. Module manufacturers may simply lower their prices to offset the impact of the tariff—in the hopes of maintaining or growing market share here in the US.

And yes, there is the chance that the tariff will get overturned by the World Trade Organization.

Don't wait

And even if every one of those pieces of good news turns out to be bad, you’ll STILL experience a smaller impact at home.

Here’s why.

Modules only represent a small portion of the overall cost of installing your system. You’ve got all the other components to think about, as well as permitting and installation.

[ Download our Free Solar Permitting Guide that saves you up to 8 hours ]

Another reason is that module prices had already increased—the uncertainty surrounding the trade case and subsequent tariff decision increased demand in late 2017 and early 2018, which led to higher prices towards the end of last year. Prices are already up, in other words, so you won’t see much difference between where they sit now and where they might go with a tariff.

Before you breathe a sigh of relief, however, I should mention that as a homeowner, you do stand to suffer… If you don’t take action and buy now.

You may be saying “I’ll just wait a couple years until the tariffs go down!”

It’s a common refrain, but that’s a bad approach.

Why? Because of the tax breaks—a 30% Federal Tax Credit means you can save big on your taxes by buying solar.

But that credit will start shrinking in just 2 short years.

Until then, the 30% tax credit will more than make up for any extra money you might pay on solar panels.

So if you’re playing the waiting game, hoping the tariff will disappear, you could simply end up losing credits on the tax side.

In other words, if you’re worried about saving money…

It makes the most sense to go solar as soon as you can.

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