In January 2018, the Trump administration announced an array of PV tariffs on solar cells and modules imported into the United States. The new tariffs, which start at 30% and decline to 15% over a four year period, are expected to result in a price increase of 5-10% for new PV installations. What further effects can we anticipate as a result of the Trump tariffs, and how will they impact the PV manufacturing industry at large?
PV Manufacturing in the United States
The silicon solar cell was invented in the United States in 1954 by New Jersey-based Bell Laboratories. Solar cells first gained prominence with their incorporation onto the 1958 Vanguard I satellite. By the 1960s, American manufacturers had begun mass producing silicon PV cells, notably to power satellites during the space race. Ensuing decades would see dramatic increases in U.S. PV manufacturing capacity, as terrestrial solar cells were deemed a cost-effective power solution for a range of applications in the maritime and telecom sectors, as well as for off-grid homeowners.
For over thirty years, the United States was the undisputed global leader in solar photovoltaic manufacturing. But by 1990, the country was facing stiff competition from lower-cost manufacturing centers in Korea, China, Taiwan, and South-East Asia. The American PV manufacturing sector declined considerably throughout the 90s and 00s, as PV module prices dropped by roughly 90%.
About the Trump Administration PV Tariffs
Section 201, as referred to in shorthand, is a section of the Trade Act of 1974 (P.L. 93-618) that permits the President to grant temporary import relief, by raising import duties or imposing nontariff barriers on goods entering the United States that injure or threaten to injure domestic industries producing like goods. In 2017, a bankrupt, Chinese-owned module manufacturer with a plant in the U.S state of Georgia (Suniva) filed a 201 trade case with the U.S International Trade Commission (ITC). Shortly after, SolarWorld Americas, an Oregon-based PV manufacturer then-owned by SolarWorld Gmbh, joined the case. The basis of both companies’ claims was that the surge of Chinese-manufactured PV imports was causing serious injury to the American PV industry.
The imposition of tariffs based on 201 trade cases is rare. The last such example dates back to the 2000s, when the Bush administration imposed tariffs on imported steel. The World Trade Organization considers section 201 trade case tariffs illegal per international law.
Forecasting the Effect of U.S. PV Tariffs on Solar Manufacturing Worldwide
According to Greentech Media‘s inital estimates, the domestic impact of the Trump Administration’s 30% PV Tariffs will be evenly felt across the American residential, commercial, and utility-scale PV segments, resulting in a 10-15% drop in installed PV over the next five years. Most analysts agree such a drop would yield a net job loss for U.S-based photovoltaics industry workers, due to the fact that a majority of American PV sector jobs are related to the installation – not the production – of solar panels. But how will the tariffs play out on the global manufacturing front?
Due to advances in solar manufacturing and lower solar material costs, the cost of solar panels has fallen by at least 2% per year for the past several years. The combination of falling costs and enhancements to the global PV supply chain means Asian solar panel manufacturers will be unlikely to slow production as a result of U.S. tariffs. Ultimately, the Trump tariff may actually incentivize the acceleration of cost decreases over the next few years.
For over a decade, Targray PV material solutions have played an important part in making solar a competitive alternative to traditional energy sources. The company’s value-added solar modules, solar cells, and supply chain financing programs help PV manufacturers, EPCs, and solar project developers worldwide lower the cost-per-watt their solar energy solutions can deliver to end-users.
Article by: Olivier Benny