America Prepares for the Year’s Second Solar Eclipse

The International Trade Commission (ITC) made a ruling today that could reshape solar power here in the United States. Solar has been growing rapidly lately, growing from .01 percent of the country’s power generation in 2007 to just under 1 percent last year, and having increased another 50 percent this year to date. Much of that growth has come as the result of precipitously falling costs for solar systems, and in particular solar panels. But a Georgia-based solar power company may be spoiling the party: It blamed an influx of cheap Asian panels for its slide into bankruptcy in April, and soon afterward dusted off a section of the 1974 Trade Act to ask for import tariffs and minimum prices for foreign panels. The ITC ruled in favor of domestic panel producers today, and so now the ball is in President Trump’s court, who gets to decide whether or not to levy tariffs on these bargain products from abroad.

But make no mistake, this isn’t being hailed as a victory by the U.S. solar industry. Sure, panel producers like the one that filed for Chapter 11 bankruptcy this spring will be pleased not to have to keep veering into the red in order to compete with Chinese companies (whose product quality is questionable, and whose finances are no less shaky), but every other link in the supply chain will loathe the ITC ruling just as much, and will hope that President Trump will choose to ignore it. Tariffs on panel imports will make solar panel systems much more expensive and therefore much less attractive to the consumer. As the CEO of San Jose-based SunPower put it, tariffs could “undermine an American industry that has been experiencing exponential growth and creating jobs at an unprecedented rate.”

Solar developers have been snatching up and hoarding panels in anticipation of these potential tariffs for months, leading to a shortage and a 40 percent spike in panel prices. Analysts estimate that tariffs could lead to a doubling in panel price, as compared to what they were at the start of the year, before Suniva went belly up and subsequently threw a wrench in the works.

Now, all eyes turn to the White House. Most in the renewables industry will be crossing its fingers that Trump will side with free trade over protectionism, but given Trump’s rhetoric about China, inaction seems unlikely. If Trump decides to put import tariffs on solar panels in place, we’ll surely see a reversal in the U.S. solar sector as companies struggle to adapt to higher costs. We’ll also likely see China retaliate in some way—we saw a trade war erupt in the solar industry back in 2013 and 2014, when the U.S., China, Taiwan, and Europe all blamed one another for illegally subsidizing domestic production and “dumping” it abroad.

Trump has an opportunity to play to his base that he may well find irresistible, but looking beyond domestic politics, this is a serious sign of concern for the health of solar power today. New and growing markets like this one are often dogged by shady state-backed first movers, but in recent years we’ve heard a lot of noise about how solar’s day in the sun had finally arrived—that the fledgling energy option had at long last matured. But if the U.S. solar sector can’t survive without cheap Chinese panels often sold below cost, that clearly isn’t true.

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