Solar Tariff decision has been approved
Earlier this week, the Trump Administration announced the approval of the U.S International Trade Commission’s (ITC) recommendation to impose a 30% solar tariff on imported solar panels. The tariff's goal was to boost U.S manufacturing and level the playing field with Asian manufacturers. The ITC determined that imported solar cells and modules were a substantial cause of serious injury to domestic manufacturers. While this will increase the costs of solar panels, the effect on the average consumer will be muted. It will likely rise in system cost to be between 5-15%.
What this means for American consumers
A tariff is a tax on imports or exports. In this case, there are two types of tariffs: a fixed percentage on the item and a fixed dollar amount. The solar tariff will be percentage-based, since it will levy a 30% tax on imported solar panels during year. The actual impact on prices will shrink each year as the price of imported solar panels continue to fall. According to a fact sheet released by the U.S Trade Representative, this tariff will last for 4 years and will fall by 5% annually, dropping to a 15% tariff in 2021.
The result is that these tariffs are relatively moderate and certainly less extreme than many had feared. Even still, there are no Amaericna companies that manufacture solar in the US so there can't be any impact on companies that don't exist.
How will this affect homeowners interested in solar?
With Trump’s decision approved, this tariff will most likely affect higher efficient solar panels. For groups that buy these panels—like homeowners and smaller commercial systems—a 30% solar tariff will increase costs for an average solar shopper by $0.15-$0.25/W. For instance, an LG or Panasonic panel that costs about $0.50-$0.90/W at import will see a price increase of $0.15-$0.27/W.
That increase applied over the average system installation size of 5kW will mean an additional cost of $750-$1,350 plus profit margin. Or if the average system costs $3/W, the increase on solar panels will be approximately 5-15% on the overall system. Surprisingly, after the tariff increase is applied, the 30% Federal Tax Rebate will be applied as well. This means that although your system will increase in price by 5-15%, your Federal Tax Credit will get knocked off your 30% Solar Tariff, increasing your solar panels by 3.5-9% instead.
Even with the tariff, installing solar energy will result in real savings. The savings for commercial shoppers installing large systems would be even higher. The real challenge is getting the system installed before the solar tariff take full effect.
What happens now?
Even though the tariff deals a blow to the industry, it does not reverse the solar market’s growth trajectory. The upper efficiency half of the residential market will be hurt, however the lower efficiency half will be less affected. So, although Trump’s tariffs are unhelpful, they are also not much of a change from the policies of the past several years. They are unlikely to have too big of an impact on anything except for the profits of a few foreign solar-manufacturing companies.
While we regret that the Trump Administration has made the decision to go forward with the solar tariff, HelioPower still provides value which more than offsets the tariff’s impact. If you’re interested in going solar, we encourage you to 'Beat the Tariff' and get started today.