Trump Has a Big Decision to Make About Solar Energy

Trump Has a Big Decision to Make About Solar Energy

The U.S. International Trade Commission (ITC) ruled that President Trump will get to decide whether to slap sanctions on foreign solar panels.[1] This comes after the ITC agreed with two solar manufacturing companies Suniva and SolarWorld.[2] The companies filed complaints alleging that the recent flood of cheap solar-panel imports has negatively impacted domestic panel manufacturing.[3] They have asked for the federal government to impose a four-year tariff on foreign solar cells and panels, starting at 25 cents per watt and 32 cents per watt, respectively, and becoming less severe over time.[4] SolarWorld requested an import quota on cells and panels, while Suniva asked that imported solar panels face a price floor of 74 cents per watt.[5] In response to this decision Suniva said, “We brought this action because the U.S. solar manufacturing industry finds itself at the precipice of extinction at the hands of foreign market overcapacity.”[6]

The case has garnered a lot of attention because it has created a rift in the industry, pitting manufacturers against installers.[7] On one side are Suniva and other manufacturers who say that a tariff will help grow the solar industry in the United States. Suniva and other manufacturers allege that cheap imports have forced them to close down sites and lay off employees.[8] They estimate that the tariffs will allow them to hire 115,000 people, a figure that installation companies view as ridiculous.[9]

The installation companies argue that Suniva and other manufactures failures were due to mismanagement, not cheap imports.[10] Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, was disappointed with the decision and said that Suniva and other manufacturers are “attempting to exploit American trade laws to gain a bailout for their bad investments.”[11]

The installation companies argue that the cheap imports have caused tremendous growth in the solar industry since 2011.[12] Installations of large, utility-scale solar generation plants grew by an average rate of 72 percent from 2010 to 2016, the fastest among all power-generation technologies.[13]

These companies say that because panel costs typically account for 40% of total costs, the proposed tariff would cause such a steep price hike that solar installations would drop by more than 50% in two years.[14] This could have drastic consequences since 85% of the 260,000 jobs in solar industry are related to rooftop installation and solar project development.[15] Additionally, the solar advocacy group, Solar Energy Industries of America, says that the industry could lose 88,000 jobs if Trump decides to implement the tariffs.[16]

Whether or not the tariffs will have good or bad consequences for the industry is not the main problem at the moment. The main problem is that this situation creates uncertainty in an industry that has been gaining steam in the United States. Texas specifically has experienced tremendous growth in the solar industry. It added 2,366 workers in 2016, a 34% increase from 2015.[17] Now companies in Texas and throughout the US are in a sort of limbo waiting to see if a tariff is imposed.

The ITC is expected to come up with recommendations for President Trump this month. President Trump, who is expected to make a decision in either December or January, has a lot of latitude in deciding what to do. There appears to be a strong possibility that President Trump will favor a policy that imposes tariffs given his protectionist rhetoric throughout his campaign and his promise to bring manufacturing back to the United States. This seems like an ideal situation for President Trump to fulfill these promises.

Some companies that are betting on President Trump imposing a tariff are buying up a lot foreign panels right now while they are still cheap and storing them for later use.[18] This has led to an increase in panel prices that is likely to continue until President Trump makes his decision.[19] President Trump may decide not to impose tariffs, but the mere possibility has created uncertainty that has impacted and will continue to impact

[1] Tom DiChristopher, US trade agency rules imports harmed solar panel makers, setting up Trump tariff decision, CNBC, (last visited Oct. 5, 2017).

[2] Id.

[3] Suniva & SolarWorld Modify Requested Remedies In Section 201 Solar Trade Case, (last visited Oct. 4, 2017).

[4] Shannon Najmabadi, Texas solar industry watches as trade case moves forward, The Texas Tribune, (last visited Oct. 4, 2017).

[5] Id.

[6] DiChristopher, supra note 1.

[7] Megan Geuss, Solar Panel Maker Wins Trade Commission Finding, Tariff Decision to go to Trump, Ars Technica, (last visited Oct. 4, 2017).

[8] Id.

[9] Id.

[10] Matthew Daly, Cheap imports hurt U.S. solar industry; Trade panel, USA Today, (last visited Oct. 4, 2017).

[11] Id.

[12] Id.

[13] DiChristopher, supra note 1.

[14] How First Solar And SunPower Could Be Impacted By The U.S. ITC Ruling, (last visited Oct. 4, 2017); Daly, supra note 10.

[15] Daly, supra note 10.

[16] Geuss, supra note 7.

[17] Najmabadi, supra note 4.

[18] How First Solar And SunPower Could Be Impacted By The U.S. ITC Ruling, supra note 14.

[19] Id.