In January 2018, President Trump announced new tariffs on imported solar cells and modules. This was in response to a reported crisis that local manufacturers were losing business to imported suppliers of solar cells and modules. Solar cell manufacturers typically operate facilities in countries where there is a lower operational and labor cost in order to generate more profit from their products. With a lower cost in labor and operations, this allows solar manufacturers to sell their products at a lower retail price. Lower pricing has helped make solar panel systems accessible for more consumers by increasing both affordability and availability. Outsourcing the production of solar panels has created a greater opportunity for profit for these businesses, which has allowed them to pass on lower costs to consumers. However, outsourcing has also affected the U.S. economy.
Local solar cell manufacturers have an opportunity to supply the monocrystalline and polycrystalline solar needs of the market. What is the difference between polycrystalline and monocrystalline solar panels? Among other things, monocrystalline panels are more efficient while polycrystalline panels are more affordable. No matter the technology, however, large manufacturers do not have the capability to match the price of imported products without their tariffs. Aside from the price, Section 201 also has the potential to affect the jobs of Americans. More costly products may result in a lower demand in the marketplace. Consumers have been turning to solar energy because of the rising accessibility and lower cost.
The typical solar owner has evaluated how long can a solar panel last, used a solar panel savings calculator to assess their potential savings and decided that the long-term benefits outweigh the initial costs. With tariff-driven cost increases, that equation could change moving forward.
The typical solar owner has evaluated how long can a solar panel last and decided that the long-term benefits outweigh the initial costs. With tariff-driven cost increases, that equation could change moving forward.
Higher tariffs on any product first and foremost affect the price of the product. To mitigate the tariff placed on imported solar cells and modules, manufacturers can be expected to raise the price of their panels and components. While locally produced solar products will not be affected by the tariff, their production and labor cost is already higher compared to those of imported products.
Local solar cell manufacturers have an opportunity to supply the solar needs of the market but they do not have the capability to match the price of imported products without their tariffs. Aside from the price, Section 201 also has the potential to affect the jobs of Americans. Most costly products may result in a lower demand in the marketplace. Consumers have been turning to solar energy because of the rising accessibility and lower cost.
When the price of solar energy production rises, consumers may choose a more affordable option to get their energy. Without the demand from consumers, the industry could potentially lose a portion of its business and, in turn, the American jobs it supports.
There are more than 600 facilities in the United States that manufacture components in the solar industry. These manufacturers create 38,000 jobs for Americans. Engineers, electricians, installers and people in several other careers benefit from the solar industry. Among the local solar panels manufacturers in the industry are Fronius, Attala Steel, Schletter, RBI Solar, Solectria, Quick Mount PV, Game Change Solar, DuPont and GroundWork Renewables. These manufacturers mainly produce the steel and frameworks for solar power systems across the industry. When the price of solar panels increases, it also affects the jobs available for the industry. The price of solar panels is inversely proportional to the jobs available in the industry: the higher the price of the product, the fewer solar industry jobs are available.
The top three countries in solar cell and panel production are Germany, China and Japan. The top solar cell manufacturing companies are Trina Solar, Canadian Solar and Jinko Solar. These manufacturers mainly operate outside the U.S. and are subject to the tariff. The United States represents one of the largest markets for solar products. Since most suppliers come from overseas and the consumers are located in the U.S., the higher tariff will create higher prices for the products of solar cell manufacturers. The manufacturers do have the option to bring their businesses to other countries where there are fewer tariffs, but a huge chunk of consumers are in the U.S. and solar energy is not as prominent in other countries as it is in America.
The geographical location of certain states where there are sunny climates makes these states a prime target market for the solar industry. The U.S. would still be a driving market for the solar industry even if certain mitigations were implemented for the industry.
While Section 201 pacifies the concerns of bankrupting local solar ventures, it has the potential to harm or kill a thriving industry. Even if the solar industry aims to produce and provide cleaner energy for consumers, the industry is still affected by and subject to typical financial forces.
Despite the lofty goal of creating greener and more sustainable energy, the industry is still fundamentally a business. Part of the success of solar cell manufacturers outside the U.S. may be attributed to the cost of operations in producing their products.
Lower labor costs, as well as favorable conditions for businesses in other countries, make it feasible for manufacturers to choose to operate outside the U.S. even if most of the consumers reside in America. The implementation of tariffs significantly changes the playing field of the solar industry.
The following is a list of the top solar panel manufacturers that manufacture some amount of their panels in the US:
While these solar panel manufacturers assemble their products locally, the different components and parts of their products may still be imported from other countries. Local manufacturers may opt to assemble their products locally for the convenience of transporting disassembled goods. However, the parts produced from other countries which would be imported to the U.S. to be assembled locally would still be affected by the Section 201 tariffs. This would drive a higher price even with local manufacturers since they would also be subject to the tariff charges.
The tariff has the potential to affect the number of solar deployments because of the higher price of solar products. This economic move would ideally localize the solar manufacturer production, but it is not well-regarded. It has huge implications and may cause a chain reaction that is detrimental to the different stakeholders throughout the solar industry. While this can cause issues at various stages in the solar industry, the industry at large would likely still thrive in the long run by finding ways to adjust to the economic changes implemented across the industry.
Most of the top manufacturers of solar panels are headquartered overseas. They are largely owned and operated out of China, Canada, South Korea and other prominent countries. Solar panel makers such as JinkSolar, Trina Solar, Canadian Solar, JA Solar and Hanwha Q Cells have large production capacities and drive the price of solar panels. There are local producers of solar panels – such as Tesla, Panasonic, Solaria, SunSpark, Seraphim and Suniva – who also produce quality solar panels, but the price is driven by the importers because of their lower cost of production and their greater supply capacity.
With a higher tariff on importers, this would drive the supply to local suppliers but increase the price of the solar products. Tesla and Panasonic are a few of the local manufacturers whose prices are already higher than other suppliers and would be at risk of becoming unaffordable for the average home.