Solar Section 201: What to Know and How Contractors Can Roll with the Changes
By: Christy Howley, Solar Program Manager
Recently, President Donald Trump imposed tariffs on imported solar panels, a controversial move that will force the entire industry to adapt. Advocates for the change believe that it will bolster the domestic manufacturing of solar panels, as evidenced by the stock price surge of several U.S. solar manufacturers.
However, the majority of the U.S. solar market is supported by foreign-made panels from countries like China, South Korea, and Canada. Critics, including the Solar Energy Industries Association (SEIA), argue that the extra cost tagged onto those panels will not reverse the trend. Instead, it may delay and even halt major solar projects.
As outlined by Time Magazine, an estimated 80 percent of solar panels are made outside of the United States and the duties on foreign-produced solar equipment could be as high as 30 percent. It doesn’t take a CPA or a mathematician to recognize the seismic shift that this decision may have on solar energy as a whole.
The SEIA estimates that the move will put roughly 23,000 American employees out of work while “billions of dollars in solar investments” will be either put on hold or cancelled outright. The group is less-than-pleased with the rule change, but SEIA has stressed that there is no need to push the panic button.
“While we believe the decision will be significantly harmful to our industry and the economy, we appreciate that the president and the administration listened to our arguments,” SEIA President and CEO Abigail Ross Hopper said in a press release. “Our industry will emerge from this. The case for solar energy is just too strong to be held down for long, but the severe near-term impacts of these tariffs are unfortunate and avoidable.”
It’s also important to remember that we, as an industry, have faced serious roadblocks like this before and successfully navigated around them. Even before the tariffs, the current U.S. administration imposed other measures that may hamper renewable energy companies, such as its proposed repeal of the Clean Power Plan and removal of the country from the international Paris climate agreement. Despite these obstacles and others from years past, the industry has continued to grow.
The tariffs will likely affect utility-scale solar contractors to a large degree, while residential and even commercial solar contractors will probably not feel as much of the sting. Equipment costs are proportionately higher for utility-scale projects, so an incremental increase in module cost will have a more significant impact on utility-scale project costs. Commercial and residential jobs, on the other hand, require fewer panels but more in the way of deft labor to handle trickier roofs. Therefore, those operating in the residential and commercial space will not be impacted as much by the likely cost increase of the panels as utility-scale developers and contractors.
There’s also a sliding scale to the tariffs over time, which makes them less odious than at first glance. The tariffs begin at up to 30% in 2018, but will decrease to a maximum of 25% in 2019, 20% in 2020, and 15% in 2021. This may not be ideal, but it is not as devastating as an across-the-board 30% tax, especially as technological innovations will likely drive down the costs of the modules themselves.
The tariffs will conceivably have an impact on the way that most solar businesses operate in the short-term, but companies can remain successful if they quickly, and properly, adjust. Here are some key things to keep in mind as you focus your energy on a healthy and thriving operation in 2018:
Budget for 2018 responsibly
During times of uncertainty, the initial inclination to make drastic cuts is natural. While U.S. employment in the solar field may be impacted, solar contractors should consider holding on to essential workers who have the expertise to properly install panels and protect the integrity of the final product.
Be overly communicative with your customers
The solar tariffs have made headline news worldwide, so solar contractors have no choice but to be proactive and reach out to their customers to discuss what is going on and how it may affect the bottom line.
Some customers may warrant a direct email, phone call, or a face-to-face meeting, but there are plenty of efficient ways to reach out to your base en masse and get everyone up to speed. You can take to social media and give your take on what is happening in the industry. By positioning your company as a customer-centric thought leader, you can reassure customers and strengthen your bond with them in this time of turmoil.
Sitting back and waiting for panicked customers to reach out to you is not the wise course of action. If you project yourself as informed, calm, and rational, you’re more likely to have that reciprocated by your business partners.
The tariffs may not be reversed in the near future, but the desire for economically viable clean energy is ongoing. The Eagles didn’t give up after they lost their starting quarterback to a torn ACL and they’ve managed to reach the Super Bowl. Ask anyone in Philadelphia, and they’ll tell you that persistence pays off and quitting, frankly, gets you nowhere.
Now is not the time to hide and hope for the best. Talk to your constituents and local representatives about how your company is benefiting the community, and you can do even more with further investment in renewables.
Social media outreach is effective, but connecting with influencers on a personal level can really drive the point home. Let those in power know what your company is doing on a day to day basis. Explain to them, respectfully, why people are seeing new use of municipal land, as well as solar panels on both commercial and residential roofs. It’s not just about business – it’s about making the world a better place.
Talk to your insurance broker and provider
There’s no doubt that the tariffs will bring about some changes, at least in the short term. With that in mind, it is crucial that you talk with your insurance broker and provider to make sure that your policies provide you with the proper coverage against these new variables.