By Nathan Young, Melink Solar & Geo
In addition to the uncertainty around the effects of coronavirus and the economy, the growth of solar in the United States continues to be prohibited by tariffs placed on the industry in 2018.
The tariffs impacting the solar industry vary by amount and regulation.
The most well-known solar tariff is Section 201 of the Trade Act of 1974. Section 201 composes a four-year program targeting imported solar crystalline silicon photovoltaic modules. These tariffs — which started at 30% and is dropping by 5% each year through 2021 — were designed to boost U.S. manufacturing and to lock out unfair competition from foreign countries, primarily China.
Section 232 of the Trade Expansion Act of 1962 declares a 25% tariff on steel and 10% tariff on aluminum. In turn, this increases the cost of solar racking, wiring and ground-mount posts.
Lastly, Section 301 of the Trade Act of 1974 taxes U.S.imports from China. In regard to solar, the tariffs target companies that manufacture products with semiconductors from China. This plays into solar inverters and modules.
THE TARIFFS’ IMPACT
Ultimately, the tariffs have slowed the flow of lower-cost product available to U.S. developers, keeping the overall cost of solar projects cost-prohibitive to many, especially in the residential sector. Consider the average homeowner: the higher cost of a home solar project due to tariffs does not make the technology as easily attainable.
In fact, according to energy research firm Wood Mackenzie Power & Renewables, solar modules imported into the United States are 45% more expensive than those sold into Europe and Australia.
The tariffs (and the resulting lost projects due to the cost of investment) equate to 10.5 GW in missed solar energy installations, according to SEIA.
THE FUTURE OF U.S. SOLAR TARIFFS
At this time, approximately 98% of solar panels and their components are manufactured outside the United States, according to the Congressional Research Service. In light of the tariffs, many solar manufacturers are circumventing the restrictions by cutting prices and moving production factories from China to Section 201-exempt countries such as Mexico and the Philippines.
Currently, the U.S. administration is conducting a midterm review of the tariffs. Experts suggest that a complete removal of the tariffs would result in a 30% drop in solar pricing, potentially creating an influx of large-scale solar projects for developers.
Melink Solar is a commercial solar installer based in Cincinnati, Ohio.
MARK ZWERIN says
THE MORE SOLAR/WIND ENERGY THE LESS CARBON FOOT PRINT AND MORE JOBS. IT’S A WIN WIN SOLUTION. GET TRUMP AND REPUBLICANS OUT OF THE PICTURE AND WE WILL PROSPER. SAVE THE PLANET. LESS POLUTION FROM FOSSIL FUELS CAUSES LESS MEDICAL CONDITIONS, SAVES MONEY AND PROTECTS US ALL.
Mark McAda says
30% of the worlds CO2 comes from China. The single largest contributor. Stop bringing politics into this. All past presidencies have promoted China and encouraged their massive pollution generation. But I guess that goes against your fanatical values. Your Local legislators make the rules in your state not the president. Pick your local leaders right and you won’t have to worry about who sits at the White House. BTW try disassociating yourself from BOTH political parties, and suddenly you develop an open mind. Amazing….
Tobin Booth says
Unfortunately, legislation drives action in the energy markets. If we could decouple politics and energy policy I would be the first to volunteer my time and energy to help make it happen. But, the legislation and regulations which allow interconnection to the electron superhighway (the grid) are unique in every state and with every utility company. We need federal leadership on the subject just as we needed federal leadership when we formed the Federal Aviation Administration in 1958 to increase safety and fairness in airplane travel.