If President Trump decides to impose tariffs on foreign-made solar panels, it could make solar energy much more expensive in California and cost the state thousands of industry-related jobs, according to a trade group and other experts.
On Friday, U.S. International Trade Commission officials unanimously agreed that two American solar panel manufacturers have been harmed by the explosion of imported panels. Next week, they meet again to consider ways to fix the situation – which could lead to tariffs.
Nearly 90 percent of all solar panels installed in the United States are foreign made, so "if you raise the price on all of those imports by implementing tariffs, that will flow through to customers who will end up paying more for solar," said Shayle Kann with GTM Research.
The two companies that petitioned the government, Suniva and SolarWorld, are asking for a 40-cent per watt tax on imported solar panels.
The proposed tariff would have a profound impact on California. The state has a massive solar market: it is the unrivaled leader in solar energy production, producing five times more than the number two state, Arizona.
The price increase would mean Californians who purchase or rent rooftop panels would take much longer to recoup their return on investment, and may not save on electricity costs at all.
"It might be less attractive for you to put solar up on your roof," Kann said.
And if fewer people are opting for solar panels, that will drive down demand.
The Solar Energy Industries Association estimates nearly 16,000 Californians working in the solar industry would lose their jobs if the proposed 40-cent tariff were enacted – more layoffs than in any other state.
While 16,000 is a large number, it is less than 35 percent of the solar jobs in California. States with less well-established solar industries, like South Carolina, Montana or Iowa, would be devastated by a tariff, according to the Solar Energy Industries Association, with job losses exceeding 70 percent of total industry employment.
The difference has to do with what is driving solar installations, price or policy.
South Carolina, Montana and Iowa have very modest renewable energy requirements, so utilities’ decisions about electricity generation there are largely driven by price. If utilities decide that building a solar farm or buying solar power is cheaper than building a new natural gas power plant, they'll go solar. If not, they won’t.
California, meanwhile, has a requirement that all utilities get 50 percent of their electricity from renewable sources by 2030 – a figure that is likely to increase in the future. One of the major ways utilities comply with the mandate is by buying a lot of solar electricity from large installations in the desert.
"So the cheaper solar is, the cheaper it is to comply with that state mandate," Kann said. "If solar becomes more expensive, then ultimately the utilities are still going to have to procure that solar, but they’ll do so at a higher cost and that will eventually flow through to customers."
According to GTM Research, there are currently 72 gigawatts of solar scheduled to be installed between 2018 and 2022. That amount would fall to 36 gigawatts if the president enacts the tariff recommended by the two solar manufacturers.
The petitioners, however, argue tariffs would boost domestic solar manufacturing.
"We welcome this important step toward securing relief from a surge of imports that has idled and shuttered dozens of factories, leaving thousands of workers without jobs," Juergen Stein, CEO and SolarWorld Americas, said in a statement.
The U.S. International Trade Commission meets again on October 3 to discuss recommendations on how to assist the ailing domestic solar manufacturers. It is scheduled to send its recommendations to the White House on November 13. After that, the president has 60 days to make his decision.
On the campaign trail, Trump said he wouldn’t hesitate to slap tariffs on Chinese imports to punish Beijing for currency manipulation.
"I would certainly start taxing goods that come in from China," he said in a Jan. 2016 debate.
Abby Hopper, the president of the Solar Energy Industries Association, the trade group representing all aspects of the solar industry, said she planned to spend the next few weeks lobbying the International Trade Commission not to recommend a tariff to Trump, although she acknowledged he has the authority to ignore the Commission’s recommendation.
"My ideal outcome is that there is some relief granted to the domestic solar market," she said, "but it wouldn’t undermine the rest of the solar market."