Taking a step towards answering one of the big questions in the renewable energy industry, the Commerce Department just put major tariffs on certain imported Chinese solar panels. The tariffs will be as high as 35%.
Cheap solar panels from China have played a major part in shaping the solar industry in the U.S. in recent years, so this ruling – which would effectively raise the floor on solar panel prices – should have a big effect on the industry, both good and bad.
In some ways, this isn’t surprising. The U.S. is essentially reinforcing tariffs on Chinese solar panels put in place in 2012, when they decided that the Chinese solar panels were unfairly subsidized by the Chinese government. Chinese manufacturers skirted that tariff by moving their production to Taiwan. The U.S. arm of German solar manufacturer SolarWorld pushed back on that loophole, leading to today’s decision.
SolarWorld must be thrilled to see the end of undercutting by Chinese manufacturers, which the president of SolarWorld called “illegal Chinese government intervention in the U.S. solar market.” But it will mean difficulty for the budding field of rooftop solar panel installers. These businesses traffic in cheap solar panels with the promise that the energy savings will recoup the cost of the panels in just a few years. Raising prices on solar panels changes that calculus, and makes solar panels on homes and businesses less attractive.
But while this decision helps some U.S. businesses and hurts others, in the long run, it should mean a healthier energy industry and energy system for the U.S. With the EPA’s long-coming move earlier this week to cut emissions form power plants, states will be looking for renewable energy on a utility scale. This tariff will keep American manufacturers competitive. And those imported solar panels were cheap for a reason, and not necessarily a healthy one. They received subsidies from the Chinese government, but the U.S. doesn’t want to let Chinese companies dominate an entire burgeoning industry. And the low prices reflect lower environmental standards and a higher environmental cost. A recent report estimated that Chinese solar panels have twice the environmental cost of solar panels manufactured in Europe.
This tariff means mixed things for the renewable industry. But it shouldn’t be too much of a surprise. And in such a new, volatile, fast-growing field, there will be plenty more sudden changes to come.