The Rise and Fall (and Rise Again?) of US Solar Manufacturing
Well, folks, it’s been quite the rollercoaster ride for the US solar industry over the past few years. Just when you thought the future was looking bright (pun intended) for our homegrown solar manufacturers, along came a series of tariffs that threw a wrench in the works.
In early 2018, the Trump administration imposed tariffs of 25% on imported steel and 10% on imported aluminum, which were soon followed by tariffs of up to 30% on imported solar cells and modules. The goal, it seemed, was to protect and revive the struggling US solar manufacturing sector, which had been hit hard by cheap imports from China and other countries.
But as with many well-intentioned government policies, the reality on the ground ended up being a bit more complicated. While the tariffs did provide a temporary boost to a few US solar manufacturers like Suniva and SolarWorld, the overall impact on the industry as a whole has been decidedly mixed.
The Tariffs’ Impact on Solar Jobs and Costs
According to a market impact analysis released by the Solar Energy Industries Association (SEIA), the solar tariffs have led to the loss of more than 62,000 US jobs and $19 billion in new private sector investment. And that’s not even the full extent of the damage – the SEIA estimates that the tariffs have also caused the cancellation of 105 gigawatts (GW) of solar installations, enough to power 18 million homes and reduce 26 million metric tons of carbon emissions.
Ouch. That’s a pretty heavy toll, especially when you consider that the primary goal of these tariffs was to boost the US solar manufacturing industry. As my friend Bill Nussey over at Freeing Energy points out, even if the tariffs manage to create 1,000 to 2,000 new manufacturing jobs, that’s still a far cry from the 23,000 (or potentially even 88,000) installation jobs that have been lost.
And it’s not just the job losses that are concerning – the tariffs have also had a significant impact on the cost of solar. While the initial tariff request called for a 70-cent-per-watt minimum floor, the actual tariffs ended up being a bit less severe, starting at 30% in 2018 and gradually declining to 15% by 2021. But even with this relatively “smaller” tariff, the impact on solar prices has been substantial.
The Tariffs’ Impact on Solar Prices
Before the tariffs were announced, solar was selling at around 30-35 cents per watt. But with the uncertainty and spike in demand that followed, prices shot up to 40-45 cents per watt in the last month before the tariffs went into effect. And even with the tariffs in place, solar prices have remained stubbornly high, with Goldman Sachs estimating that the actual impact on residential solar is around 3% and on utility-scale solar is around 7%.
Now, I know what you’re thinking – “But wait, if the tariffs are only adding a few percentage points to the overall cost of solar, that doesn’t sound too bad, right?” And you’d be partially right. After all, solar prices have been dropping so quickly that even a 40-45 cent per watt price tag is still a far cry from the 62 cents per watt we were seeing just 15 months ago.
But here’s the thing – in the hyper-competitive, price-sensitive world of solar, even a small percentage increase can be the difference between a project being economically viable or not. As Bill Nussey notes, “In the hyper-competitive price-sensitive world of solar, even a percentage point can make or break a project.”
The Uncertain Future of US Solar Manufacturing
So what does all of this mean for the future of US solar manufacturing? Well, the jury is still out, to be honest. The tariffs were originally requested by the now-bankrupt Suniva and SolarWorld, who had been hoping for much higher tariffs of 40 cents per watt on top of the then-current 30-35 cent per watt prices. But the actual tariffs that were implemented, while still significant, were far less punishing than what they had hoped for.
As a result, it’s unclear whether the tariffs will actually be enough to revive these struggling US manufacturers or attract new investment in domestic solar production. There have been rumors of major foreign investors eyeing the US market, but the 3-4 year window of tariff protection is likely not long enough for them to recoup their massive upfront costs.
And let’s not forget that the global solar industry has been on a relentless march towards ever-lower prices, driven in large part by the incredible efficiency and scale of Chinese manufacturers. As Bill Nussey points out, “China has been managing to make high quality solar in massive volumes profitably for many years” – a feat that US manufacturers have struggled to match, even with the temporary protection of these tariffs.
The Bigger Picture: The Slow Retreat from Clean Energy Leadership
Ultimately, the solar tariffs are just one part of a larger story – and it’s not necessarily a happy one. As the SEIA’s analysis reveals, the tariffs have had a significant negative impact on the broader solar industry, slowing the deployment of clean energy and handing a victory to the coal and nuclear power industries.
In other words, while the tariffs may have provided a temporary boost to a few struggling US solar manufacturers, the overall impact on the industry as a whole has been decidedly negative. And that’s not just bad news for the solar industry – it’s bad news for the environment, for our energy independence, and for the long-term competitiveness of the United States in the global clean energy race.
So as I look at the current state of the US solar industry, I can’t help but feel a mix of emotions. On the one hand, I’m encouraged by the resilience and innovation I see in the sector, and I’m hopeful that we can continue to drive down costs and expand access to clean, affordable solar power. But on the other hand, I’m deeply concerned by the short-sighted policies that have put a damper on our progress and threatened to undermine our position as a global leader in clean energy.
At the end of the day, I believe that the path forward for the US solar industry – and for our country as a whole – lies in embracing the enormous potential of renewable energy, rather than clinging to the outdated technologies of the past. And that means not just protecting our domestic manufacturing base, but also fostering an environment that supports the widespread deployment of solar and other clean energy solutions.
After all, as my friends at Solar AS Systems always say, the future is bright – and it’s powered by the sun. So let’s do everything we can to make that future a reality.
