Tariff impact on the U.S. solar market in 7 charts from GTM Research

GTM research solar tariff prediction

The imposition of tariffs on imported solar cells and modules is more a matter of when than if at this point considering the Administration in charge, so GTM Research has been furiously crunching the numbers to understand the fallout across the U.S. solar market based on different tariff scenarios. Here’s a glimpse into that crystalline ball.

Reminder: The ITC will vote on Oct. 31 on a remedy recommendation, submit that recommendation to the White House on Nov. 13, and then Trump will have until January to make a decision. That decision will be imposed 14 days later.

A note from the GTM team: “Our team has been working on this analysis for over a month, so our scenarios (which range from $0.10/W-$0.40/W cell tariffs, in increments of $0.10/W) don’t perfectly match with either Suniva or SolarWorld’s proposed remedies. But SolarWorld’s request aligns closely with our $0.30/W cell tariff, and Suniva’s request is close to our $0.40/W cell tariff scenario.”

Current situation

GTM solar tariff chart_global selling average

Tariff risk has caused module prices to increase, a phenomenon unique to the U.S. While cost reductions in other parts of the system make up some of the difference, the cost to install solar has increased for the first time in ages.

GTM solar tariff chart 2_EPC turnkey pricing

So what comes next?

GTM solar tariff chart 3_tariff free capacity

If tariffs are imposed, GTM estimates that there will be nearly five GW of solar capacity that is not subject to tariffs, either because it is not subject to the scope of the petition (i.e. thin film) or because both the cells and modules are manufactured in the U.S., Korea, Singapore, Canada or Australia, all of which may be exempt. In addition, over 2 GW of modules have already been procured for 2018 projects, which will temporarily dampen the tariffs’ impact on demand.

Those five gigawatts won’t be nearly enough to sustain the market, which is otherwise expected to reach nearly 11 GW in 2017, rising to over 16 GW by 2022.

Tariff impact demand

GTM solar tariff chart 4_PV capacity

GTM estimates that the net impact to its base forecast could range from just 9 percent under a 10₵/W tariff to 48 percent under a 40₵/W tariff. The biggest impacts would be in the utility-scale solar sector, which is most sensitive to price in-creases, while the residential sector would be the most resilient.

GTM solar tariff chart 5_residential solar impact

Every segment, in every state, will be unique. In the residential sector, the biggest volume impacts would be felt in the largest state markets, but nascent states that have just begun to develop vibrant residential solar sectors could disappear almost entirely.

The utility-scale market would be most sensitive because two-thirds of the project pipeline is driven by solar’s razor-thin economic competitiveness with other generation sources.

GTM solar tariff chart 6_utility pipeline

But even the utility solar market could weather a 10₵/W cell tariff with relatively minimal disruption – just over 10% by our estimate.

GTM solar tariff chart 7_utility installs under tariff scenarios

— Solar Builder magazine

This week’s sign that solar import tariffs are coming: DOE pushes to prop up coal plants

EPA DOE clean power plan

In our upcoming Nov/Dec issue, we summarize everything about the International Trade Commission (ITC) injury decision and lay out the competing remedy suggestions from the petitioners and the Solar Energy Industries Association (SEIA) to set the stage as we await the official recommendation on Nov. 13. It’s an interesting exercise to consider the pros and cons of each and hear analysts weigh in on the possible impact of each remedy.

But I can’t shake the feeling that none of it matters. In the end, Donald Trump gets to make a decision independent of any recommendation, and given his administration’s track record of politically motivated decision-making, there is zero reason to believe in a thoughtful outcome. The solar industry’s hope that he will be swayed by “losing 88,000 solar jobs overnight,” assumes he considers that a bad thing. His administration, including the head of the EPA, is on record as having an unfavorable view of the solar industry while coveting coal jobs.

Further proof: After the EPA declared it would roll back the Clean Power Plan, DOE Secretary Rick Perry requested that the Federal Energy Regulatory Commission (FERC) push through a rule that would guarantee cost recovery for power plants with 90 days of fuel supply on-site — basically a new subsidy for failing, outdated plants — with only a 60-day timeline to implement. The request to extend that was rejected by FERC.

This move came out of left field to many, and runs counter to the insights of the DOE’s own study into this issue. There was an immediate uproar from literally every group you can think of, in a coalition of odd bedfellows: Advanced Energy Economy, American Council on Renewable Energy, American Petroleum Institute, American Wind Energy Association, American Public Power Association, Electric Power Supply Association, Electricity Consumers Resource Council, Interstate Natural Gas Association of America, National Rural Electric Cooperative Association, Natural Gas Supply Association, and Solar Energy Industries Association.

SB Buzz Podcast: SunLink VP on tech, data, diversity and the path forward for solar

Consider the stance taken by the Industrial Energy Consumers of America (IECA), which issued a letter to the U.S. Congress urging it to communicate with the Secretary of Energy Rick Perry to request the withdrawal of the Grid Resiliency Pricing Rule.

From President IECA Paul N. Cicio:

“IECA has testified on several occasions on the importance of coal and nuclear baseload electricity generation to the manufacturing sector. And, though we remain supportive of both coal and nuclear, we are opposed to providing subsidies that would damage competitive markets.

“As large stakeholders, who consume 26 percent of U.S. electricity and spend approximately $65 billion on electricity each year, the manufacturing sector is very concerned about this proposed rule. The proposal is anti-competitive and if implemented, it would distort, if not destroy, competitive wholesale electricity markets, increase the price of electricity to all consumers, and directly negatively impact the competitiveness of U.S. manufacturing.

“The proposal would force U.S. manufacturers to pay billions of dollars in subsidies to the owners of uneconomic and obsolete coal and nuclear power plants. The retirement of certain uneconomic power plants represents a normal and efficient functioning of competitive markets and has been ongoing for decades. The owners of these plants have already been fully compensated for their costs.”

Anyway, I’m taking this as just the latest sign that you need to prep for solar tariffs and a big slowdown of solar activity in 2018, regardless of any well-considered ITC recommendation.

— Solar Builder magazine

California to standardize disclosures for solar contracts, protect solar customers

California solar power

Gov. Brown signed AB 1070 (Gonzalez Fletcher) into law last week. The bill previously unanimously passed the California Assembly and Senate. AB 1070 creates new and important consumer protections measures, including standardized and simplified disclosures, for all residential solar customers.

“CALSEIA greatly appreciates the efforts of Assemblywoman Gonzalez Fletcher to protect consumers and applaud Governor Brown for signing AB 1070,” said Bernadette Del Chiaro, Executive Director of the California Solar Energy Industries Association (CALSEIA). “We support this new law because it simultaneously helps eliminate confusion in the marketplace while also reigning the handful of errant contractors. It does this without inadvertently harming the ethical California business men and women who are critical architects of California’s clean energy future.”

AB 1070 requires Contractors State License Board (CSLB) on or before July 1, 2018, to develop a disclosure document that must be provided to consumers prior to sale, finance or lease of solar installation. In addition, the law requires the California Public Utilities Commission to develop standard inputs for calculation and presentation of energy savings to potential buyers.

“We should make it as easy as possible for Californians to use solar power and other clean-energy sources,” added Assemblywoman Gonzalez Fletcher, author of the bill. “But it’s very expensive and very intimidating for homeowners to invest in solar power. It’s a challenge figuring out the honest companies from the ones trying to rip you off. The more protection we can provide consumers, the more comfortable they’ll be purchasing solar power at a time when each of us must do our part to combat climate change.”

California solar thermal incentives officially extended until 2020

Last week, the Governor previously signed two other important consumer protection bills, SB 242 (Skinner) and AB 1284 (Dababneh), which provide additional consumer protections for Property Assessed Clean Energy (PACE) financing of clean energy projects. SB 242 mandates PACE providers call homeowners to ensure they understand the terms, and AB 1284 requires the Department of Business Oversight to regulate PACE providers and that PACE lenders to ensure borrowers have the ability to repay their loans obligations.

Since solar investments are independent, voluntary choices made by consumers, consumer protection is considered the cornerstone of the solar industry. With the signing of these three strong bills – AB 1070, SB 242 and AB 1284 – California took major steps to increase protections for consumers in the 2017 legislative session.

— Solar Builder magazine

SEIA: Massachusetts net metering cap stalls $78 million in potential solar projects

SEIA

More than $78 million in solar projects are on hold in Massachusetts, according to new analysis from the Solar Energy Industries Association (SEIA). SEIA and Massachusetts partner organizations convened at the State Capitol on Oct. 3 to testify in support of two bills that would raise the net metering caps. The waiting list totals 124 projects, which have a capacity of 51.2 megawatts (MW) and could power nearly 5,400 homes.

“Massachusetts has been one of our nation’s clean energy leaders, but one of its fastest-growing industries is being stifled by delayed action on net metering,” said Sean Gallagher, SEIA’s vice president of state affairs. “With projects now on hold in more than half the state, the Legislature should raise the net metering caps this year. Doing so will ensure significant investment in the Commonwealth, create new jobs, protect thousands more, and help meet the Governor’s clean energy goals.”

The counties with the largest stranded investment include Berkshire County ($28.1 million), Worcester County ($12.8 million) and Hampshire County ($9.1 million). Three of the state’s utilities, including National Grid, WMECO, and Unitil have reached net metering caps in their service territories.

Under Massachusetts’ current policy, only a certain percentage of a utility’s total distribution load can use net metering, a policy that allows businesses and other end-users to get credit for the electricity they generate and send to the power grid. They are only billed for their “net” energy use. The Massachusetts net metering caps apply to commercial, industrial, public and community solar projects. This means entities such as school districts, municipal buildings, and small and large businesses that want to adopt solar and take advantage of its benefits are unable to do so when the caps have been met.

To provide the long-term certainty needed for businesses to grow, SEIA, on behalf of its more than 45 member companies in Massachusetts, is proposing raising the statewide net metering cap by 5 percent for public and private projects, the same level proposed in the bills S. 1824/H. 2712.

This cap increase, in conjunction with the state’s solar incentive program, SMART, would help solar companies install more than 1,000 MW of solar by 2022, which is necessary to meet Governor Baker’s goal of doubling the size of Massachusetts’ solar market, which today ranks sixth in the nation with 1,743 MW of installed solar capacity.

— Solar Builder magazine

California solar thermal incentives officially extended until 2020

california solar thermal bill

After Gov. Brown’s signature last week, California’s solar thermal incentives are officially extended, much to the delight of CALSEIA and the state’s solar industry.

“Using California’s warm sunshine to do something as simple as heating water is sensible for our state and a key way to protect public health, clean up our air, and support local good-paying jobs,” said Assemblymember Jacqui Irwin (D-Thousand Oaks), author of the bill. “I am pleased Governor Brown signed into law the extension of this important program.”

AB 797 extends the existing California Solar Initiative (CSI)-Thermal program for two years to 2020, seamlessly continuing the natural gas rebate program for homes, businesses and commercial swimming pools, such as at schools and community centers. The bill targets half of the funds for low-income housing and buildings in disadvantaged communities. It also expands eligibility for these rebates to homeowners in the San Joaquin Valley who currently use propane or wood to heat their water.

“The California solar thermal market is growing, especially in the multifamily housing sector – with 32% annual growth between 2015 and 2016 in annual natural gas savings,” said Kelly Knutsen, Senior Policy Advisor of the California Solar Energy Industries Association, a cosponsor of AB 797. “Governor Brown has been a long-time champion of clean energy and solar thermal technologies, and we applaud both Governor Brown and Assemblymember Irwin for their leadership in building California’s clean energy economy.”

Solar thermal Q&A: What are the trends in 2017, and how does an installer get started?

“A major challenge to meeting our state’s climate goals – and one that not enough people are talking about – is that we have to heat our homes, businesses and schools without relying on dirty fossil fuels. Solar thermal fits the bill, while reducing our energy bills at the same time,” said Michelle Kinman, Clean Energy Advocate with Environment California, which cosponsored the bill. “We thank Governor Brown and Assemblymember Irwin for their leadership on encouraging low-carbon heat energy for cleaner air for all Californians.”

To date, solar thermal projects installed under the CSI-Thermal program reduced natural gas use across the state by over 6 million therms each year, equal to the annual amount of natural gas used to heat water for nearly 34,000 homes.

The new law states that the California Public Utilities Commission “shall implement program changes in phases, if necessary, to enable seamless continuation of the availability of rebates, and the administration and promotion of the program, as of January 1, 2018.”

— Solar Builder magazine