West Virginia’s solar energy industry players expect solar panels will soon be a bit costlier, at least for the next few years, as a result of President Donald Trump’s decision to put a tariff on imported parts needed to build those panels.
Yet most aren’t expecting that to throw the state’s burgeoning industry off course for long.
Last week, Trump approved a tariff on imported cells and modules used in solar panels after the U.S. International Trade Commission recommended he do so. It’s a 30 percent tariff that will be reduced by 5 percent each year before it’s removed entirely after the fourth year.
The Trump administration said the tariffs would make U.S. manufacturers more competitive in solar component production, where China currently has the edge, protecting American jobs as a result. But the Solar Energy Industries Association harshly criticized the decision, saying it would instead lead to roughly 23,000 jobs lost due to increased costs stymieing demand.
Solar United Neighbors, an organization representing solar owners and advocates, estimated the tariff will increase the cost for the typical 7-kilowatt residential system by $1,050. Factoring in the 30 percent federal tax credit lowers that cost to $735.
For a solar panel investment, that additional cost doesn’t make a significant difference, according to Autumn Long, program director of Solar United Neighbors of West Virginia. It amounts to about 6 percent of the system’s total cost, based on current SUN estimates, with the long-term benefits still there, she said.
“It’s a real thing,” Long said of the tariff’s effect on prices. “We aren’t happy about it, but we aren’t freaking out about it, either.”
Solar industry players have been preparing for the move by the Trump administration for some time, Long said, mitigating the price bump.
“Large companies were buying up panels in anticipation of the tariff, like buying up specific equipment,” she said. “Prices have already gone up at the wholesale level.”
The state’s largest solar installation company, Mountain View Solar in Berkeley Springs, supports the move by the Trump administration.
Mike McKechnie, CEO of Mountain View, said the tariff concerns are overblown. Mountain View sells products exclusively from SolarWorld, one of the companies that brought the original complaint requesting tariffs to the U.S. International Trade Commission.
McKechnie said any price bump would be offset by manufacturing jobs saved by the tariffs, adding that China has been “gaming the system” by overwhelming the market with cheap, lesser-quality panels.
China “now dominates” the global market for solar cell production, according to a fact sheet on the tariff from the office of U.S. Trade Representative Robert Lighthizer. China produces 60 percent of solar cells and 71 percent of solar modules in the market after it implemented incentives like subsidies and tariffs for solar companies in 2005, according to the fact sheet.
“The final ruling did not have as much of a tariff as the petition asked for, but what they got will preserve some manufacturing jobs,” McKechnie said.
Larry Kopelman, owner of Solar Green in Charleston, said he doesn’t expect the tariff decision to slow his solar panel supply and installation business, which began in early 2017.
Solar Green imports its solar panels from Canada, one of the countries expected to be excluded from the tariff, but Kopelman said the company may look to buy Chinese-made panels in the future.
“I think the tariffs will just make a Chinese panel cost a little bit more, and panels and hardware are not the major costs — installation is,” he said.
Two factors trump customer concerns about upfront costs, according to Kopelman. One is the appeal of being environmentally conscious. The other is saving on electric bills in the long term — Kopelman said it takes about 10 years for a residential customer to pay off the upfront cost via energy savings.
Bill Anderson, CEO of Milestone Solar, a solar energy equipment supplier in the Eastern Panhandle, echoed Kopelman’s view. He said Milestone isn’t making any significant changes in the wake of the decision, despite the company importing the modules it installs.
The tariff will likely slow down the growth of large-scale commercial solar projects popular in Western states, Anderson said. West Virginia concentrates on small-scale residential projects that won’t suffer as much cost-wise, he added.
“People who really want to do solar will do solar,” he said.
But the origins of the tariff being implemented in the first place are suspect, said Doyle Tenney, founder of the Buckhannon-based solar company DT Solar. He said plenty of American manufacturers have had success producing solar equipment, with the ITC petitioners being the exception rather than the rule.
“I think it’s poor business management,” Tenney said. “If they are going under, it’s their own fault.”
Tenney buys most of his equipment from a New Jersey company, but he said he believes the tariff will have a ripple effect that causes prices from American manufacturers to increase. He estimated wholesale rates for solar panels will be 79 cents per watt by June as a result of the tariff. In June 2017, rates were 59 cents per watt, he said.
Those projections would affect DT Solar’s bottom line “by quite a bit,” Tenney said. But he cautioned that those figures aren’t guarantees, which he thinks is part of the problem.
“You can be Democrat, Republican — everyone’s for American jobs — but there’s no way of knowing how it’s going to affect the industry,” Tenney said. “The way it was going, it was the fastest industry in the country. It’s pretty stupid to mess with that. They should have just left it alone.”
Still, the state has plenty of solar optimists, including Solar Holler. The Shepherdstown-based solar developer and installer expects the industry will handle the tariffs just fine.
“It’s getting more affordable,” said Dan Conant, founder of Solar Holler, of solar energy. “While the tariff is a little bit of a blip, it’s not going to be able to get in the way of constant improvement and our vision.”