You’ve heard about the tariffs now being applied to imported solar panels. You’ve heard the criticism, the outrage, maybe the praise for saving domestic jobs… it’s confusing. Is the tariff good or bad? Does it make solar more expensive for consumers, and if so how much? Let’s break this tariff decision down by the numbers and you can decide for yourself.
The decision came as a direct result of bankrupt domestic solar panel companies (two, specifically) that felt threatened by the wave of cheap imported solar panels being utilized in the US. The domestic companies couldn’t produce the panels at the same low cost, and were being forced to operate at low profit margins, forcing them into bankruptcy. These two companies came to the federal government for relief, proposing a tariff on imported panels. The federal administration granted that request.
By doing so, the employees of those two companies are assured continuing employment. This saved between 2,000 and 3,000 jobs which were in jeopardy.
However, the solar installation sector employs at least a dozen times as many people. An estimated 35,000 installers job are now in jeopardy because the increased price of solar will cancel or delay jobs which were designed with conscientious budgets. Without new projects to install, those installers will be unemployed. The difference between the number of jobs saved and the number of jobs jeopardized is roughly 30,000.
The affect of the price increases varies depending on the type of consumer. Residential projects, which use only a few dozen panels, will be affected the least, with an expected 3 to 5% increase. For the average household, that translates to between $400 and $900 on a solar project that costs between $11,000 and $23,000 and saves an average of $35,000 over a lifetime. The savings could be significantly more as the price of electricity rises. At today’s rates, you can expect save a minimum of twice as much as you spend, though it will likely be more.
Commercial and industrial projects will be more acutely affected by the solar tariff, as they require hundreds or thousands of panels. The higher the number of panels, the more the tariff affects the price. It is these commercial and industrial projects that are most in jeopardy, and most deeply injure the solar industry.
It is worth noting that the affects of the new tariff will not be felt for months. In anticipation of the announcement, panel distributors have been stockpiling panels so that they can sell them at yesterday’s rates. In addition, the first 2.5 gigawatts of imported panels are exempt from the tariff each year, so tariff-free panels are still coming into the country, for a limited time. All of this means that if you are considering solar energy, you should start inquiring NOW, as the stockpiles of tariff-free panels will last an estimated 3 months, plus or minus.
I will be teaching a free workshop on residential solar on Thursday February 1st at Westerville library. At that workshop, we will going into even more depth on the economics of solar, as well as basic design, cost, financing, and vetting installers. Please register to save your seat!