By Chris White
The solar industry is preparing for the worst as federal trade officials announce Tuesday measures to protect struggling domestic solar panel manufacturers against cheap imports.
The U.S. International Trade Commission (ITC) is set to craft a series of tariffs or quotas that will be delivered to President Donald Trump, who will make a final decision later this year. The push comes after two bankrupt solar companies claimed cheap imports are destroying their business.
Suniva and SolarWorld, both of which are owned by foreign companies, orchestrated a campaign to enact tariffs on cheap technology from China a week after they filed for bankruptcy.
Suniva, which has also received $8.8 million in federal grants from 2010 to 2016, was founded in Georgia but sold to Japan-based International Clean Energy in 2015. It also has access to millions more from the state government and communities in Michigan.
New tariffs on imports have roiled the solar industry, that has benefited from a 70 percent drop thanks to cheap imports and federal subsidies in the cost of solar since 2010. People began purchasing up panels at record rates ahead of the ITC’s vote.
“This tells you what’s going to land on the president’s desk, though there is a fair amount of unpredictability here given that the president has wide leeway and this president is pretty unpredictable in general,” Shayle Kann, head of solar market research firm GTM Research, told reporters Tuesday.
The solar industry has grown by leaps and bounds during the past decade, mostly because green energy providers have capitalized on hefty government subsidies and tax credits. Solar prices have declined by more than 50 percent since 2011 as a result and has allowed the industry to add more than 50,000 jobs in 2016.
Kann and others are worried any tariffs could seriously crimp the gains made in the industry – and their concerns about the president’s positioning on the matter are well-founded. Trump is generally supportive of heavy tariffs on imports that he believes hurt American businesses, though he has not yet weighed in on solar tariffs.
“For the last six months, this same group of geniuses comes in here all the time and I tell them, ‘Tariffs. I want tariffs.’ And what do they do? They bring me IP. I can’t put a tariff on IP,” Trump reportedly told his Chief of Staff, John Kelly, in September.
Suniva asked for a tariff in September of 25 cents per watt on solar cells and 32 cents per watt on panels, while also seeking a minimum price on panels of 74 cents a watt, a cost that would nearly double current costs. Free market groups, which don’t routinely find themselves aligning with industries that receive government support, have also called out the proposed tariffs.
Washington, D.C., based think tanks R-Street Institute and the Competitive Enterprise Institute were two of a handful of groups to write a letter Oct.27 to the Trump administration urging the president to shy away from the push.
“If trade restrictions are imposed, the cost of solar products in the United States could double, endangering tens of thousands of good-paying domestic jobs within the solar industry,” the organizations wrote.
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There is a lot of whining going on.
Various Subsidies for Wind and Solar:
We pay for electricity through our monthly electricity bills and through taxes that finance various subsidies for wind and other energy producers, such as:
– The federal ITC, 30% of the qualified portion of the turnkey capital cost. The federal ITC is an upfront, tax credit that can be applied against any of owner’s taxes.
– The state ITC, usually a percentage of the federal ITC. The state ITC is an upfront, tax credit that can be applied against any of owner’s taxes.
– The federal production tax credit, PTC, of 2.3 c/kWh for the first 10 years of operation, a subsidy of 2.3/5 = 46% of the US average wholesale price. No wonder owners are crowing about underbidding traditional generating plants. For example, in areas with good winds, low construction costs and low operation and maintenance costs, if an owner’s cost is 7.3 c/kWh and he deducts 2.3 c/kWh as PTC, then his bid price could be 5 c/kWh, which is sufficient to get the contract, in most cases, and “competitive” with traditional plants.
– The federal and state tax savings due to rapid depreciation write-offs in about 5 to 6 years, much more rapid than normal utility equipment write-off schedules of 10 to 20 years. Having tax savings earlier, instead of later, is financially more advantageous.
– The exemption of equipment purchases from the state sales tax and from the education property tax.
– Selling at generous feed in tariffs of about 9 – 10 c/kWh in areas with high capital costs and low capacity factors (CFs), such as New England.
– Selling renewable energy credits, RECs, which lower the utility purchased RE energy cost by up to 50%.
– Loan guarantees by the federal and state government, which lower the interest rate of the funds borrowed from private entities, because the federal and state government assume the risk of the loans.
NOTE:
Wind ITC and Wind PTC decrease in 2017, 2018, 2019, and expire in 2020.
Solar ITC decreases in 2020, 2021, and expires in 2022.
Why are we making something that is far from cost competitive and only survives with massive government subsidies, particularly since it adds only a minuscule percentage to our generating capacity – and only when it’s working, which is sporadic at best? The research into novel methods of generating and storing energy is noble – but that’s research, not a drive to broadly implement a costly non-competitive energy source. Research into fusion heat sources seems a more practical application of our taxpayer billions.