New Federal Tariffs Can’t Stop US Solar Industry, But States Still Can

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Just a couple of months ago, renewable energy advocates warned that President* Trump’s new solar tariff would kill off 80,000 jobs in the US solar industry this year. Whelp, the 30% tariff on imported photovoltaic panels went into effect on February 7, and new evidence shows that the industry is still alive and kicking. That’s great news as far as the national picture goes. However, when you break it down to the state level, the devil is in the details.

Tariff or not, solar job growth is likely to continue at a healthy clip in some states, but not in others.

What’s Keeping The US Solar Industry Afloat?

If the intent of the new solar tariff was to throttle clean power in the US, it worked better in 2017, when Trump was still mulling it over. Uncertainty over the tariff is one factor cited by The Solar Foundation, which reported a loss of 9,800 jobs compared to the peak employment year of 2016.

Now that the tariff is actually in effect, solar jobs could meet the record-setting pace of 2016, or even beat it by a small margin.

So, what saved solar?

One important factor is that PV modules only account for a fraction of installation costs. In the residential rooftop solar field, for example, the average breakdown is 25% for solar panels plus racks and other hardware needed to install them. The other 75% goes also to your installer’s budget for marketing, administration, permitting, labor and other “soft” costs.

PV prices have fallen off the roof (so to speak) in the past several years, which also helps to counterbalance the tariff. Tariff or not, you’re still getting a bargain compared to the early days of rooftop solar.

In addition, new financial instruments — power purchase agreements, to be precise — enable property owners to pay off their solar panels through their monthly electricity usage, typically at a lower rate than the grid mix. The solar line item disappears after the panels are paid off, so the tariff simply means that owners could see a solar line item on their bill for a longer period of time.

Small scale solar power also dovetails with the US Department of Energy’s support for distributed energy resources (DERS, for all you Workaholics fans out there). Local governments and businesses are attracted by the rate stability, reliability, and energy security afforded by small-scale, decentralized solar installations, and the new tariff is not likely to change that focus.

In any case, the new Trump tariff will ratchet down to zero (yes, zero) in four years. To top it all off, some companies have already started the process of getting an exemption altogether, so there’s that.

In other words, even with the new tariff there is good reason to anticipate growth in the solar industry in 2018 compared to 2017.

Why State-Level Action Is The Key

The glass is not nearly so half full in South Carolina. The state is a perfect example of how local policy makers can influence solar job growth to a far greater degree than the White House.

South Carolina is not at rock bottom, but then again it’s not in the PV vanguard either. SEIA gives it a solar ranking of just 24 out of 50 states. According to one retail trade association, South Carolina ranks 36 out of 50 states for access to solar.

Could that change? Just two weeks ago, CleanTechnica spotted a daring move by the state’s House of Representatives. The legislators moved forward with a bipartisan vote in favor of a bill that would lift an existing 2% cap on solar growth. That thing about “bipartisan” is unusual for a state where elected representatives have been less than friendly toward renewable energy, so there was plenty to cheer about.

However, the bill still had to make it through the state Senate, and last week it did not.

Solar Energy Industry Association officer Sean Gallagher had plenty to say on that topic:

“We are deeply upset that the jobs of 3,000 South Carolina workers are now at risk due to a technicality, especially after the House voted with a clear majority to move the bill forward. We urge the state Senate to take up this legislation. It is vital to protecting South Carolina jobs and giving consumers the choice they deserve to lower their energy bills.”

By some estimates electricity rates in South Carolina are the highest in the nation, and it looks like they will stay that way for now.

Now compare that situation to New Jersey, where both the House and Senate have just approved a series of bills providing for a 50% increase in the state’s renewable energy portfolio by 2030 along with new goals for behind-the-meter solar and energy storage.

The package also includes a hefty subsidy for the state’s nuclear power plants. As of this writing, the energy bills haven’t made it to Governor Phil Murphy’s desk yet, so stay tuned for more on that.

The US Solar Industry Is Coming Up Roses

Getting back to the bright side, last week Bloomberg reported that on a national level, gloom and doom over the new tariff isn’t panning out. Bloomberg notes that solar companies had ample time to stockpile solar panels at pre-tariff prices:

The industry is still in growth mode, the tariffs weren’t as onerous as feared and developers hoarded panels. The tariffs will last only four years, will gradually decline in each of the last three and there are exceptions to them.

Here’s the bottom line according to Bloomberg reporter Brian Eckhouse:

While 2018 is unlikely to be a banner year for the U.S. industry, solar proponents now say the number of new jobs could inch past a 2016 record.

Looking ahead to the long term, another important factor is innovation in other key elements of the PV industry, which drives down costs. A growth in the energy storage market will also help keep things humming along.

Then there’s the Department of Energy, which has continued its renewable energy and climate change missions. For example, the agency’s rooftop PV guide is still online with this cheery message for homeowners:

Since 2008, hundreds of thousands of solar panels have popped up across the country as an increasing number of Americans choose to power their daily lives with the sun’s energy. Thanks in part to the Solar Energy Technologies Office’s investments, the cost of going solar goes down every year.

Come to think of it, though, there may be trouble up ahead for the agency. All through last year and into this January, Energy Secretary Rick Perry was vigorously tooting the renewable energy horn. That lasted into January with a strong signal to the global wind industry. However, in recent weeks the flurry of good news about renewables seems to have slowed to a trickle.

Anybody else notice the shift? Any bets on whether or not Perry will shift back into renewables mode after the federal budget questions are settled?

If you do, drop us a note in the comment thread.

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*As of this writing.

Image (screenshot, cropped): via energy.sc.gov.