Trump's solar penalties are lighter than the industry feared
The conventional wisdom quickly hardening around the White House decision to impose four years of tariffs on imported solar panel equipment is that it will likely slow solar power deployment to some degree, but is not nearly as aggressive as developers and their allies feared.
Why it matters: The solar trade case has been among the biggest energy policy battles of the young Trump administration and, more broadly, is an early test case of President Trump's willingness to translate his hawkish trade stance, especially toward China, into firm policy.
"The bottom line is it could have been much worse," Ethan Zindler, a top analyst at Bloomberg New Energy Finance, tells Axios.
ICYMI: Yesterday the White House announced 30% tariffs on imported solar cells and modules that decline by 5% annually to 15% in the final year, with 2.5 gigawatts worth of cell imports exempted.
What we're hearing: Goldman Sachs analysts, in a note late last night, predicted a "relatively benign" impact — they see a "potential 3%-7% cost increase for residential and utility-scale solar costs, respectively," with a declining effect as the penalties lessen.
And here's the firm ClearView Energy Partners in their initial report last night:
- "At first blush, it appears that internationalist, free-market advocates within the Administration may have successfully redirected the President away from more aggressive trade remedies that hew to his America First policy platform and persistently strong trade rhetoric."
- They estimate that the 30% tariffs could increase residential rooftop system costs by around 4% and utility-scale systems by around 10%.
Reuters reports that MJ Shiao, head of renewables research for the consultancy Wood Mackenzie, predicts the tariffs will likely cut new U.S. solar installations by 10%–15% over the next 5 years.
What they're saying: Suniva and SolarWorld Americas, the financially distressed panel makers that petitioned for the tariffs, applauded the move, even though the the penalties are less aggressive than they sought.
- "We are still reviewing these remedies, and are hopeful they will be enough to address the import surge and to rebuild solar manufacturing in the United States," said Juergen Stein, president of SolarWorld Americas.
Looking forward: Zindler said the market will be looking for specifics around how the penalties will be implemented. “The limited amount they have said about this has the potential to create some real confusion,” he said of the administration’s announcement.
Quick take: The relatively modest penalties are another reminder that Trump's aggressive rhetoric isn't always fully consistent with the policy decisions that emerge from the administration.
- But that said, the Solar Energy Industries Association, the sector's main lobbying group that opposes tariffs, claimed the the decision will cause the loss of 23,000 U.S. jobs. The group has argued that import penalties will raise the costs of new power projects enough to significantly slow down new development.
Be smart: Varun Sivaram, a solar expert with the Council on Foreign Relations who opposes tariffs, sized up the decision in our Expert Voices section. Here's a snippet:
- Expect minimal investment in U.S. solar factories (any that are built will be highly automated), net U.S. job destruction as higher solar panel prices shave the boom in solar installations by 10%, and Chinese trade retaliation.
Go deeper: Bloomberg takes stock of some of the companies that stand to gain from the decision.
This story has been updated to reflect a revision to Goldman Sachs' research note on the potential effect of import tariffs.