In the Solar Industry, Ignorance Isn't Bliss

 As the SolarWorld extravaganza awaits a ruling from the Commerce Department next month, more studies and organizations are coming out against the motion to impose tariffs on Chinese solar panel imports. What's unfortunate about the case isn't that Chinese manufacturing will continue to grow into other markets with or without access to ours. And it isn't that, regardless of the final ruling, this dispute has raised legitimate concerns about the risk of solar investments among firms that drive industry growth and innovation. The real downside of the SolarWorld Saga is that all the costs and havoc it creates for the residential PV market is the byproduct of ignorance.

First of all, empirical evidence suggests that the origin of panels bears little relevance for residential PV system owners than a number of factors, including: upfront costs, trust in technology, electricity savings, and neighborly adoption, to name a few. These are the things that influence a homeowner's decision to adopt solar, not inside politics within the solar industry. It's pretty clear how SolarWorld stands to gain from potential tariffs on their Chinese competitors, but what are the costs?

Panel prices have fallen significantly for solar installations of every size and location across the US. Residential PV prices have on average dropped less than other sectors, largely due to inventories stacked with system parts purchased at higher prices. At first this might seem as though residential PV won't be hurt as badly in terms of prices, since they have not benefited as much as other sectors have from price reductions, partially credited to the influx of Chinese imports. Setting aside for a moment that costs of going solar will nonetheless increase for homeowners if SolarWorld has its way, the tariffs would deteriorate the networks of installers, designers, distributors, and sales/marketing groups that have coalesced to put residential solar on a path to market maturity. 

This blog highlights programs that help homeowners go solar in all forms: soft cost reductions, providing leasing options, rebate incentives, community pooling programs, social media and marketing innovations, etc. Remember that these areas - design, sales, maintenance, installations and production monitoring - are the ones in which the bulk of private sector jobs exist. These are the American workers that team up with public entities to make solar a viable option for homeowners. More than half of the 100,000 jobs in the industry are in these fields, and nearly all of them (and their companies) stand to lose big if tariffs are imposed on the market. The inventory problem common to the residential solar industry briefly mentioned above is only compounded when these relationships and networks are diminished, not enhanced.

This is all without mention of the fact that damaging our position in the global market will probably hurt the very sector (other than perhaps SolarWorld), the tariffs are meant to protect: American solar manufacturers. Slap these tariffs around our borders and wave goodbye to the $1.5-$2 billion in exports from the polysilicon industry here. This obviously presupposes China's retaliation, but given the unilateral nature of the Chinese government in directing industry growth, it's hard to imagine a scenario in which tariffs are applied with no consequence to our domestic interests.

We'll keep an eye on the developments after next month's ruling from the Commerce Department!

Posted by Stuart Ivy