Trump’s solar plan has industry nervous
WASHINGTON — The Chinese solar panel industry, flooding U.S. markets with cheap solar panels, has engaged in a musical chairs-type effort in recent years to avoid tariffs on its products by periodically shifting production to Malaysia, Thailand and other Southeast Asian nations.
So far, the U.S. government has held back on further tariffs as it has tried to balance the competing interests of American panel makers struggling to survive the Chinese onslaught against rooftop installers and solar farm developers who are prospering from cheap panels as they expand the nation’s solar energy capacity. But the prospect that the pro-fossil fuel,
“America first” President Donald Trump could upend the status quo has solar developers and environmentalists increasingly worried as the White House reviews a series of trade and energy policies.
The White House has offered little indication for its plans on solar, but the president’s toughon-trade rhetoric and support for coal raises the possibility that Trump would increase tariffs — and thus prices — on imported panels to protect domestic manufacturers while weakening federal incentives that have encouraged the growth of solar energy across the country. On a recent trip to Washington to lobby Congress, John Berger, CEO of Houston rooftop solar financing company Sunnova, said Trump’s promises to bring back the coal sector and protect American manufacturing jobs could come at the expense of companies like his.
“If they go ahead,” with the tariffs,” Berger said, “it decimates the utility-scale solar industry and hurts us.”
Four-year tariff sought
Panel prices have plunged roughly 70 percent since 2010, making solar power increasingly affordable and driving growth of solar energy in the United States. But those falling prices have also have driven domestic manufacturers out of business, most famously the California panel maker Solyndra, which burned through some $500 million in taxpayer money before filing for bankruptcy.
Last year solar accounted for almost 40 percent of new generation on the U.S. power grid, more than any other source, according to data compiled by GTM Research. Solar capacity in Texas doubled last year to 1.2 gigawatts, enough to power more than 200,000 Texas homes.
The centerpiece of the decisions moving towards Trump’s desk is a petition filed earlier this year with the U.S. International Trade Commission. The Georgia-based manufacturer Suniva, which filed for bankruptcy earlier this year, claims that tariffs imposed by the Obama administration in 2012 and 2014 failed to raise prices on the flood of cheap panels flowing into the U.S. market because Chinese companies moved manufacturing to other countries. Now, to prevent China from shifting its manufacturing hubs again, Suniva wants a fouryear tariff on foreign solar panels — of the type it makes and is most in-demand.
Such a move could devastate the country’s solar power industry, wiping out more than onethird of the industry’s 250,000 jobs, according to an estimate from the Solar Energy Industries Association, a trade group.
The White House declined to comment on the case.
For Trump, a tariff on Chinese solar could serve as a win, win. He could slow down solar developers that are steadily taking market share from the coal power plants he promises to keep open, while cementing his pro-manufacturing rhetoric.
Changed priorities
But building the U.S. solar manufacturing sector represents a colossal hurdle. Despite loan guarantees and other support from the Obama administration, the U.S. solar manufacturing industry is struggling to keep up with the Chinese companies that have come to dominate the global market, with many of the world’s largest solar manufacturers headquartered there. While some of that growth stems from low labor costs and government financing for the industry, it is primarily built around the same massive supply chains that allowed the Chinese to dominate the manufacturing of technology like the iPhone, said MJ Shiao, head of Americas research at GTM Research.
“Scale is a huge factor of driving down the cost of solar module manufacturing,” he said. “We’ve never matched the scale of manufacturing in China. And the question is do we even want to? Can we?”
Trump and his administration, meanwhile, have signalled that expanding renewable energy is no longer a priority in the nation’s energy policy. Trump last month pulled the United States out of the Paris climate while trumpeting a policy of American “energy dominance” that focuses almost exclusively on coal, oil and natural gas. Earlier this year Energy Secretary Rick Perry, asked if the administration would interfere with state policies that require utilities to buy electricity from renewable sources, said, “That’s a conversation that will occur over the next few years.”
Perry in April ordered a study into whether federal tax credits for wind and solar were threatening the reliability of the U.S. power grid by driving out coal and nuclear plants. An early draft of the report leaked to the media said no, but the department has yet to release an official version.
Then in May the Federal Energy Regulatory Commission — which is chaired by Obama appointee Cheryl A. LaFleur — held a meeting to examine how state efforts to shift towards cleaner forms of electrical generation are affecting power markets. That raises the specter of a change to a decades-old federal law requiring utilities to buy electricity from outside generators such as solar farms and small hydroelectric projects.
All this is happening as China, United States and Europe compete to develop and advance carbon-free technology that most economists see as the future of energy as governments impose ever stricter rules on fossil fuels and carbon dioxide emissions to combat climate change. The competition has already come close to sparking trade wars: When the European Union was considering tariffs on Chinese solar panels in 2013, the Beijing government threatened to take punitive action against European exports to China until the EU relented.
China looms large
In determining a solar policy going forward, China looms particularly large for Trump. The president has criticized his predecessors’ trade deals with China as a poor deal for American workers and question remains whether the administration is willing to further antagonize China over protecting solar panel manufacturers.
“There are large forces at work,” said Mark D. Herlach, a Washington-based trade attorney who represents solar companies.. “If you’re looking at our global economic situation and you have an industry asking for relief, the president should take into account a broader range of interests.”