Solar tariffs: Stupid policy, but it won’t kill the industry

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The death of solar has been exaggerated.

The Trump administration just levied a 30% tariff in imported solar panels from several countries (but not on India at this point). This is a a foolish policy. It will raises the prices on solar installation, and with some price elasticity, it will cost solar jobs. (SEIA estimates 23,000 jobs. Whatever the number, there will be a short-term hit.) This tariff will not create any meaningful manufacturing jobs in the U.S. And it will hurt consumers, businesses, and even utilities who are already seeing solar power as competitive with other generation sources. And no, it won’t bring back coal jobs, either–those jobs are gone.

Cost of solar over time

Check out the costs in this Mintz Levin article for example, and focus on the module costs and what a 30% bump does there.

Despite the short term dip, solar will continue to thrive. If you look at the cost curves, a 30% bump in module costs takes us back a bit more than a year. Most of the costs of solar are now outside of the module cost whether we’re talking utility scale, commercial, or residential. Let’s say conservatively, the the module cost is 20% of the cost of an average 5kW residential system. The 30% tariff adds 6% to the total cost of a system. This might be as much as $600 – 1,000 bump on the cost of the system…paid for by U.S. consumers, not the Chinese. Dumb. Dumb. It hurts consumers. But with the rate solar panel prices have been dropping, it really only takes us back about of it really only takes us back a year of so.

Residential solar companies are going to have to work harder to contain costs. This means smarter marketing and stronger sales skills to reduce customer acquisition costs. Focusing on lean operations to reduce waste and cost. And figuring out how to weather the short-term dip. But those who do this will be even stronger down the road despite this rough patch in the short-term.

Foolish jingoistic policy. It hurts reliability, hurts consumers, and yes, hurts climate change efforts, too. In the short term. But solar will continue to grow, and indeed thrive. Standing that old saying on its head, one step backward, three steps forward…it’ll just take a bit longer.

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About the Author:

Mike Rogers is the President of OmStout Consulting. A nationally recognized expert in residential energy-efficiency, he works with contractors and programs to scale sustainable market approaches to improving homes. More on Google+


  1. Chandler von Schrader  January 29, 2018

    Love you “glass is half full (of beer) optimism Mike… Yet a good friend of mine recently got the axe from being top dog crew leader from local solar company – he was making $30 hr… actually he was moved to commission sales, a change that he’ll likely excel in. The company pointed to these tariffs as the reason – but the truth boils down to piss poor business management… Sound familiar?

    And right before tariff hit – I purchased another 4 panels! I have not paid for electricity for over a year – solar works!!

    • Mike Rogers  February 3, 2018

      There is no doubt the tariffs will cost jobs on the install right now. It’s happening already. The long term trends, though, are pretty clear. And module costs continue to drop, soon enough to the point where even with tariffs they’ll be cheaper than a year ago.

      Now, on the business management side…still huge opportunities there. Many install companies likely have the ability to make up the whole price difference by increasing work efficiencies across the board. I’ve seen it happen!


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