Solar manufacturing dodges the tariff bullet, for now

The United States’ Section 201 goal is to preserve sections of American manufacturing that are under threat from being extinct by imports. Once upon a time, there was a vision of creating a renaissance in U.S. cell and module production, rebuilding a sector that was destroyed a long time ago. Now that tariffs are in place, the solar market is greatly impacted and is scrambling to change gears. The Solar Energy Industries Association (SEIA) approximates the cost of 23,000 jobs. Recent developments report that solar companies are staying flexible by   either expanding their U.S. manufacturing, hiring within the U.S., relocating  factories to the U.S. It’s not an issue of whether or not the tariffs will stimulate U.S. manufacturing, but to what degree they do  and how long  the effects last.

The state of the solar industry
 
In order to fully grasp how state of solar manufacturer came to be, its best to understand where they came from. There’s evidence that the failure of solar companies are due to the inability to compete with low-cost imports. These imports originated from China and later developed in other Asian nations. Our country only contributes a small portion of its annual demand with domestic content . The U.S. module capacity is only around 20% of the projected  market in 2018. Unfortunately, there are only two domestic solar cell and module makers with the capacity to produce more than 500 MW of modules yearly. Pretty meager compared to what China and other asian countries have been manufacturing. There are about 14 companies that make modules the U.S., but not cells. The U.S. only produces about 200 MW of modules annually, and all dependent on merchant cell supply. This imbalance of function and power between cell and module capacity came from the 2014 Department of Commerce ruling imposing antidumping duties (ADD) and countervailing duties (CVD) on products from China and Taiwan. The asian companies would  source cells from other locations and assemble in the U.S. This would bypass the ADD/CVD. The limited modules have higher ASP with a higher price segment here. By contrast, building cell lines takes significantly longer and  more capital intensive, thus being more risky for a solar company to take on. 
 
The Trump Administration shockingly gave an exemption for 2.5 GW of cells yearly to ensure that module makers won’t pay tariffs on imported cells for at least the near future. This is a dramatic and surprising shift for the entire cell and module production under the tariffs. Module makers with U.S. factories will enjoy a competitive edge against imports and won’t rely on a limited volume of tariff-free cells. Despite the good news, imports will still continue to dominate the large majority of modules installed for at least 2 years. The shortage of local supply chains to support cell production is another hindrance for the cell and module production race. Due to this,  U.S. module capacities will expand. 

Government and the private sector steps in 
 
The availability of state-level and local policy support may finalize whether or not any particular factory gets built. Public support has been utilized in recent online  U.S. cell and module production sites. Solar manufacturers will shop for locations based on  the best incentives. This encourages cities to generate big incentive packages to capture economic benefits of having more manufacturing at their location. For example, Jacksonville City Council  approved $23 million in incentives for a Solar company. This is only the first phase of a $54 million package that includes state grants for hiring veterans.
 
The Section 201 tariffs ended up helping expand U.S. module assembly. If you want to move into the future and join the solar revolution, or if you want to find out what solar panels are right for you, go to HahaSmart.com and try our price checker tool. You can see how much a system will cost, and how much you can save over the next 20 years. For more information relating to going solar, don't forget to visit our solar blog section for more handy guides and articles.