Nearly one year after President Donald Trump slapped a 30 percent tariff on solar cells and modules, industry leaders said the tariffs have suppressed growth but aren’t hurting the industry as much as expected.
A report from the Solar Energy Industries Association, a nonprofit trade group representing the solar industry in Washington D.C., found that solar installations decreased 9 percent compared to last year.
“Without the tariffs, we would be growing,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association. “But ours is a story of suppressing our growth as opposed to stopping the growth.”
The 30 percent tariff will decrease by 5 percent each year, until it’s at 15 percent in 2021.
The greatest cost to the industry, which employed more than 250,000 people last year, according to the Solar Jobs Census, may be opportunity.
Since the tariff took effect in January, the Solar Energy Industries Association believes 9,000 jobs were lost or not created. The group also estimates that $2.5 billion of additional investment in solar wasn’t deployed as a result of Trump’s trade war.
David Bywater, chief executive at Vivint Solar, a residential solar provider in 22 states, said the tariff required his company to tinker with its strategy to ensure they continue to grow.
“It definitely slowed us down a bit,” he said. “We have continued to grow, but we have reallocated where we are going. We have shifted our work to states that are pro solar.”
That means focusing on states such as California, Illinois and Nevada. In Utah, where Vivint Solar is headquartered, Bywater said the tariff “impacted the overall economic savings of going solar.”
“It didn’t destroy the market,” he told NBC News, “but it cut volume from the market.”
Hopper has also noticed the effect.
“In the places where we are cost competitive, that margin gets thinner when the tariff is added to the cost of solar,” she said. “There were states where we were competitive and are not anymore.”
She added that the tariffs are "not having the desired effect."
"They wanted to create more domestic manufacturing and that just isn’t happening," Hopper said. "And that is part of the frustration on the industry’s part. No one is domestically making solar panels."
Aside from a shift in strategy, the solar industry is managing to post more growth than expected due to a 30 percent investment tax credit on solar installations that are under construction by the end of 2019.
Solar power also continues to get cheaper and is now more cost effective than coal and natural gas, even without tax subsidies, according to a new report from Lazard, a financial advisory firm, which said solar prices have dropped 13 percent in the past year.
The tariffs on clean energy stand in stark contrast to a bleak climate change report released earlier this month that shows more than 10 percent of the U.S. GDP could be wiped out by 2100.
Tesla is feeling the effect in China. The electric car maker sold 211 cars in the month of October, down 70 percent from the same time last year, after China hiked up the cost with a 40 percent import tariff. Last week, CEO Elon Musk said the company would absorb some of the costs of the Model S and Model X cars to make them more affordable in the world’s largest automotive market. While Trump and President Xi have reportedly reached a 90-day truce that will eliminate the 40 percent tariff, the real-world impact remains to be seen.
While Bywater is optimistic about his company’s growth next year, he said the tariff is a roadblock to their greater ambition of serving more states.
“I would love to be in 30, 40 states,” he said. “And anything that prohibits the cost of solar stops us from participating.”