For the U.S. solar community, nothing has raised the uncertainty level more and generated as much industry angst over the past year than the Section 201 trade action. Now that the case has been “settled” (more or less, stay tuned), with an initial 30% tariff slapped on most imported modules and cells, the consensus seems to be that the decision, although not great, could have been a whole lot worse. The tariff number was in line with expectations, and no one was really taken off guard when the word came down.
Yes, it still sucks. We’ve all heard the doom-and-gloomsters rage against the dying of the light. There will be job losses, company cutbacks and closures, and a curtailment in the velocity of deployment across all solar market sectors. But let’s take a moment and mindfully meditate on this mess.
It’s not a terminal event for the long-term health of the solar industry. Not even close. On the residential side, the additional “tax” on a rooftop PV system will likely be in the few hundreds of dollars, although the margins on some larger projects may be too thin to pencil out as “easily” as before. Those familiar GTM market forecast charts will be soft and flattish for a few years. This glass-half-full guy sees us all looking back at this 5 or 10 years from now, and calling it a blip, a course correction, a hiccup – not a game changer.
Rather than go into chapter and verse into the details, implications and likely impact of the Section 201 determination—which many media outlets and analysts have covered (here, here and here, for example)—I’d like to offer a few remarks about the decision and ways to overcome this temporary setback and keep the solar train rolling down the tracks.
For starters, the U.S. module manufacturing capacity will see some increases, but don’t hold your breath waiting for more cell production. We’ve seen just in the past few weeks that foreign companies like Jinko Solar and domestic suppliers like Mission Solar have announced plans to build new module factories or expand existing lines, while the Tesla/Panasonic site in Buffalo is hiring and ramping. With 2.5 GW of tariff-free cells allowed for import, there’s room for growth. But a module and cell-making manufacturing “boom” in the U.S.? Fuhgetaboutit.
While module lines are relatively easy to set up, cell-making requires a much more sophisticated, timeline-extending and expensive manufacturing setup to ramp to production capacity. There will still be plenty of imported modules coming in—in addition to the gigawatts warehoused by developers, engineering and construction firms, and distributors in advance of the 201 decision. (For a cogent analysis of the impact of Section 201 on the U.S. solar module manufacturing sector, check out Shayle Kann and MJ Shiao’s article here.)
The role of policy issues, soft costs, financing options, and balance of systems innovation will continue to be more important than the cost/price of modules. If your local utility is trying to game time-of-use rates or your state legislature seems intent on gutting net metering or, on the upside, permitting and code compliance paperwork becomes smoother and less costly, that will have a much bigger impact than an extra dime or so per watt on the module side. And the rapidly improving state of plug-and-play solar racking and system solutions, combined with ever-more-prevalent “smart” solar (and storage) platforms, will help to bring installation costs down and efficiencies up.
Since this is a marketing forum, here are a trio of suggestions for residential and small commercial folks to help you weather this passing storm:
- Up your education game. If there was ever a time to get your customers excited about going solar, this is it. An educational sales approach is more important than ever. Adding a few months or a year to the payback period is a weak excuse not to pull the PV trigger, so teach your customers to see the big picture and join Team Solar.
- Design every system to be storage ready. Although energy storage batteries are still not economical for most consumers (except in Hawaii, parts of California, and a few other areas), that price point will become increasingly attractive as the costs come down over the next few years and more utilities jigger their peak-demand charge and TOU rates. When the time is ripe, you can be the hero and swoop in with a few batteries to bolster your customers’ home energy systems. Return business is a good thing, right? Besides, the future is smart solar-plus-storage, not dumb-as-a-bag-of-racking-bones solar.
- Get active and engaged. If Section 201 and the various and sundry local and state moves by utilities, PUCs and legislatures to curtail solar have taught us anything, it’s that raising your voice in support of the industry needs to be part of your business plan. Let your policymakers know how you feel and make sure they understand that being anti-solar (or anti-clean energy in general) is a deal-breaker. “A vote for me is a vote for solar” has a nice ring to it.
If you have any comments or suggestions on how to weather the Section 201 stormlet, please send them to email@example.com, and we’ll keep the conversation going.