By: Tim Curtis, Business Writer for The Daily Record, July 16, 2018
Geoff Mirkin, CEO of Solar Energy World in Elkridge, says even before the Trump administration tariffs kicked in, the industry was used to price fluctuations as various local subsidies around the country wax and wane. ‘The fact is that the solar industry, some people call it the solar coaster or bipolar solar,” he says. ‘We’re kind of used to that.’
Solar energy companies have faced a volatile market since President Donald Trump’s administration imposed tariffs affecting the business, but that volatility is just part of doing business in the still-young industry. While the tariff raised the prices by 10-to-15 cents on modules that are part of a solar panel, many in the industry were already used to prices rising and falling as various subsidies in states around the country wax and wane. “The fact is that the solar industry, some people call it the solar coaster or bipolar solar,” said Geoff Mirkin, CEO of Solar Energy World in Elkridge. “We’re kind of used to that. We’ve seen subsidies come and go. Most subsidies by design have been either reduced or eliminated.”
In January, the Trump administration announced that the United States would levy 30 percent tariffs on solar modules and cells greater than 2.5 gigawatts. The tariff, which went into effect in February, will then decrease by 5 percentage points each year for four years. But Mirkin had seen prices go up well before the tariffs became official. He said they spiked last May when the United States first opened a trade case for the solar modules and washing machines. The prices for the modules at the time rose from somewhere in the mid-30 cent range to more than 50 cents.
Solar Energy World, which installs residential solar panels, tried not to adjust its pricing to account for the tariffs, but some firms, especially smaller firms, had to respond. “A lot of companies have raised their prices,” said Mirkin, who is also a board member of the region’s Solar Energy Industries Association. “We’ve raised them minimally.”
A Chinese surprise
But while prices rose in the face of tariffs, news from China has caused the prices for the modules to fall, to the point that their price range is now in the upper 30 cents and dropping. China announced in late May it would be significantly cutting its subsidies for solar panels, creating a massive amount of supply available worldwide. Without the tariffs, in fact, the price for modules would be even lower.
“In order for them to try to get rid of some of these modules, the prices have come down dramatically,” said Tony Clifford, chief development officer at Standard Solar, a leading commercial solar installation firm based in Rockville. “The tariffs by themselves should hurt a lot, but they’re not hurting as much as we thought they were going to hurt.”
Still, many firms have already had to deal with the effects of steel and aluminum tariffs that affect the brackets used to install solar panels. Other possible tariffs could directly affect inverters used in solar panels.
Along with the washing machine tariffs, the solar module tariffs were the first of what has become a long list of tariffs imposed under Trump.
Price increases, job losses and other negative consequences have been predicted as a result of the tariffs, but the solar industry executives say the last few months have shown business savvy will carry the day.
Mirkin, for example, said his company has found savings based on inverters manufactured in the United States and Israel, rather than other foreign sources. “It’s really caused our company and I think other companies to look, to dive deep into what we and they are doing,” Mirkin said. “It really causes you to look at everything.”
Clifford at Standard Solar said in its case, the Chinese decision has helped to offset most of the burdens of the tariffs.
“I think what’s going to happen is that the industry is going to keep plugging along,” he said. “It’s thanks to the Chinese, not thanks to the Trump tariffs. …We’re in better economic shape than we were when this first started to come into effect six months ago.”
The tariffs have added an extra layer of volatility to a market already used to dealing with a patchwork of tax subsidies and benefits across the country.Most subsidies for solar installations across the United States come at the state level. “It would be nice to have less volatility, but we’ve been dealing with this since day one,” Mirkin said.
A federal stepdown of its tax credits is expected to begin after 2020. At that level, there has been next-to-no help for the solar industry, Clifford said. “I think we could be a lot further down the industrialization path if we didn’t have to deal with the level of uncertainty that Trump has introduced now,” he said. “At the same time, I think the solar industry has grown to the point that it’s a significant economic factor in the United States now.”
Successful solar companies keep up with the different markets that exist within each state. Each state has its own incentive programs, whether for commercial or residential development, and that is what Clifford is watching. “I would much rather spend time worrying about growing my business than trying to keep up with the crazy policy changes at the federal level,” he said.
Article source: The Daily Record: https://thedailyrecord.com/2018/07/16/solar-companies-carry-on-under-cloud-of-trump-tariffs/