Trump solar tariff could burden Island energy contractors

Some anticipated the 30 percent levy and stockpiled materials and components

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The Island's solar industry will be affected by a 30 percent tariff. - File photo

The Island’s solar energy industry woke up to a new 30 percent tariff on imported solar panels and related parts today. The Trump Administration announced the tariff Monday. One of the Vineyard’s foremost solar energy contractors saw the handwriting on the wall months ago while the issue percolated within the International Trade Commission, and despite his company’s preparations to counter it, South Mountain energy services manager Rob Meyers said the tariff will still be impactful.

“It has a broad affect across the country, not just here at South Mountain Co.,” he said during a telephone interview.

South Mountain began to place advance purchases of solar equipment and parts from California panel manufacturer SunPower months ago in anticipation of the tariff, he said. While SunPower builds panels in the United States, it imports components to assemble them, and therefore will feel the pinch of the tariff, he said. He added that it’s unclear whether that company in particular will pass those costs on to its customers or attempt to absorb them.

Mr. Meyers said he believes South Mountain customers will not feel the effects of the tariff for about six months. Thereafter residential customers could see a 10 to 12 percent increase in the cost of solar projects. He also said that he believes the diversified nature of South Mountain — not being a company solely devoted to solar energy contracting — will insulate it from any job losses. But other Island companies may not fare as well. “For those companies who only do solar work, it could be more challenging,” he said.

Nationwide, the effects of the tariff will be severe, and translate into thousands of job losses, he predicted. He described the solar industry as a strong “blue collar” trade that requires a “high level of technical competency.” He estimated that the solar industry employs 260,000 people in the United States overall. That not only includes installers, but those who assemble inverters, racks, cells, and metering systems, he said.

Mr. Meyers describes the new tariff as graduated, with 2018 being the highest year at 30 percent. For the next four years, it will decrease by 5 percent annually until it levels off at 15 percent, he said.

A mitigating factor is that by his estimate, panel prices have come down 70 percent since 2010, Mr. Meyers said. Permitting and project administration costs, which include costs passed on or required utilities, are where the next efficiencies are needed in the industry, he said.

David Smith, sales and product manager at Fullers Energy, said his company makes an effort to use American-made solar products. Their go-to company was Solar World “until about six months ago, when we couldn’t access panels.” He said Solar World ran into financial trouble, and added that Solar World was one of two solar manufacturers that complained to the federal government about cheap Chinese imports and triggered the current tariff.

“We’ve actually gone to LG’s, which is a South Korean company,” he said.

An American company would be preferable, but the LGs fit the bill for quality, and have a 25-year warranty, he pointed out. Many cheap panels on the market will only give a warranty for a decade, he said. The inverters and racking Fullers uses are made in America, he said.

Smith said he believes the tariff will have a knock-on effect on big commercial jobs, but not on residential ones.

“There’s going to be a slight [residential] cost increase,” he said. “But panels are just one component of an overall system. We’ll absorb a little of that cost to remain competitive. I don’t foresee a huge increase for our customers.”

Bill Bennett, owner of Bennett Electric and Solar Invictus, said he felt bullish about the solar market: “I see a mini-boom regardless of what Trump does.”

To illustrate his point, he said, new incentives called SMART came a week ago from the commonwealth. The SMART incentive mandates utilities provide an energy-production incentive, he said. For an average home this is about $400 per megawatt-hour in savings. An average home system will generate 8-plus megawatts of electricity per year, he said. And the mandate has a 10-year lifespan. That translates into big savings, he said: “That will more than make up for increased costs.”

There is a federal tax credit of 30 percent on any solar project, he said. The credit was not affected by the recent tax act.

A typical residential system that generates 7,000 watts costs approximately $33,000. The tariff would add about $1,500 to $1,800 to that figure, he said. Much of that figure isn’t materials.

“A lot of the cost is permitting and labor,” he said.

Like Smith, Bennett said large commercial and industrial systems will feel more of a sting from the tariff.

Like Meyers, Bennett stockpiled panels in anticipation of the tariff. Last fall he stowed some 650 kilowatts of panels, he said.

 

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24 COMMENTS

  1. Go solar! It’s hot! Cost are down 70% and if you buy American you can save the 30% tariff.

    • down 70 % from when ? and how do you “save” 30 % by buying something that is likely still cheaper than buying American. remember the Bush years, when we stopped doing research on more efficient solar panels? Well, the Chinese put in the effort to do the research and development– and they are WAY ahead of us.. So now you think it’s fair to put a tariff on their hard work ? Great logic..

      • I was just quoting the article
        A mitigating factor is that by his estimate, panel prices have come down 70 percent since 2010, Mr. Meyers said. Permitting and project administration costs, which include costs passed on or required utilities, are where the next efficiencies are needed in the industry, he said.

        Just some skeptical sarcasm

  2. making america great by making it more expensive to do business. That makes sense if you are a trump supporter, I guess.

      • hanlley– For some reason the site won’t let me reply to your comment about my comment to Andrew. You say you are tired of people anonymously playing the race card. Not sure what you mean by that.. In case you are curious, i am don Keller– live in v.h dkdondondon@gmail.com
        I am not playing the race card– But since you bring it up, we might as well confirm that if trump is not a racist, the word has no meaning– And since Andrew has let it be known that he thinks the countries in question are s-holes, and apparently the people who live in those countries are not worthy or “unclean” or “rapist, drug smugglers, and criminals” he is likely one also
        That’s not “loose” that’s to the point.. Some people are just racist– that’s a fact. I am not so politically correct that I won’t call a racist a racist– get over it

        • Actually, Don Keller of VH, you are not the one who played the race card (in this case), but your narrative suggests that you have a very flawed notion of what racism actually is.

      • I could swear that trump sent out a clear message that other countries were being “unfair” about their trade policies– wha wha wha — “China is cheating” So we respond to that by cheating also ? Yup — that’s America at it’s best all right . Lets teach that to the kids..

  3. I thought it was silly Obama put tariffs on some solar imports and now it’s just plain stupid that Trump is doing it across the board. Bad economics and bad jobs policy.

    • Dondon where were you when the unions in this country wanted tariffs and higher wages regardless of productivity and they essentially went out of business trying to make things made in america more expensive for the consumer. Yes the tariffs are a bad thing but funny how you dont like them now but you liked them under the Dems. Trump is wrong on the entire trade issue but you notice how the remaining Unions are silent on the matter. You are also talking about making business more expensive but you didnt mind over regulation for the last 8 years. I know you dont like Trump but at least be consistent.

      • I think you meant to post this comment under Dondon’s, but I don’t see anywhere in his post where it says he thought tariffs were good under “the Dems”. I’m not sure what regulations you’re speaking of, but over the administration the our economy grew itself out of a recession, the stock market exploded and unemployment plummeted.

        • I know Dondon and he has always been a Union supporter as have the Dems and they all want protectionism. Do you understand now?

          • @andrew What quality product do think auto assembly lines in Detroit’s hey day would have produced if management didn’t consider the morale of line workers?

          • @Andrew Protectionism: “You keep using that word. I do not think it means what you think it means.” ~ Inigo Montoya.

            Thank you for sticking it to dondondon12 about Dems, unions, and protectionism. You just acknowledged Obama & Dems & regulations get the credit for the recovery from Bush 43’s recession, also the improved stock market and reduced unemployment. Thank you for your support.

          • Unions get the workers survivable assembly lines, livable wages, and the chance for a lifestyle with benefits and education to raise their children to be responsible adults.

            Protectionism protects the owners of industry. It doesn’t matter where said owners get their resources or that the product is put together in sweatshops; what matters is the owners’ pockets are filled to overflowing with profits.

      • I recall a popular topic the end of Bush 43’s administration was austerity economics. I like to think the following Administration observed how the policy failed in some European countries and chose a more cautious path.

        I agree with Trump being wrong on trade. The world is smaller because communication is better, isolationism is a self-defeating practice. As for unions being quiet, I’ve the perverse wish overwhelming red states be made to do without what unions earned us and suffer the loss of benefits: financial, time, and other.

      • Andrew– you speak about me like you know something about me. my opinions are a little more complicated than you might think. I do not goose step in line with what you think are liberal values. You should know that by now. I would appreciate it if you quit putting your stereotypical opinions about me out there as if they were true.
        That is so typical of you conservatives ( sarcastic irony intended) .
        You say “we all want protectionism”
        That’s just a plain stupid statement, you know.
        Perhaps some of us want some protection from greedy corporations that would be willing to kill us all to make billions for their top exec’s.. You sent me a picture of a Haitian child standing on a landfill, and agreeing with the vulgar comments made by our “so called” president in regards to that country. Shame on you !!!
        I don’t quite understand how someone with your mental capacities can fail to recognize that America would be a filthy country with polluted waterways and unsafe air without regulations. Yes, I am for “protectionism” — I want my grand children to be protected from people like you who would willing to literally dump sewage into their environment to make a few wealthy people richer.

      • I was right here in this country– perhaps even in the military at the time I think you talk about. But let me get this straight– you think the motive to unionize in this country was to make things more expensive — Is that what you are saying ?
        And please find a quote from me where I have been in favor of any tariff ?
        Where do you come up with a statement like that ? It is not true– You are just throwing stuff out there to criticize me when you really have no clue– typical trump tactic. Your comment about me supporting tariffs that “dems” liked is a complete lie..
        Let’s get this straight– you are completely fabricating something about me and my opinions– Where do you come off with that arrogant bs ? At least if i infer that someone is a racist, i can back it up with their own comments..
        Shame on you Andrew Shame on you..

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