What Do Solar Panel Tariffs Mean For You?

The Commerce Department has found that China provided trade incentives on Chinese made solar panels for the US market, and that this was unfair to US solar panel manufacturers.  The Commerce Department is in turn charging a tariff on all Chinese imports of modules starting this summer.   Here are some answers to help understand the dispute and what it means for consumers.

Image courtesy Getty Images

What do ‘trade incentives’ mean?

The US Commerce Department, through a complaint filed by American solar manufacturer Solar World, charges that the Chinese government subsidized the solar panel market with massive loan incentives, cheaper power costs, and actual cash disbursements.  In the world of international trade, this is considered unfair as it obviously lowered the manufacturing cost for Chinese producers.

Doesn’t the US government give incentives to US solar manufacturers?

The US government over the last 6 years has helped domestic solar production with its own incentives.  But they are very different than what China offered its own manufacturers.  The Department of Energy offered loan guarantees and tax incentives, which essentially made the US government a cosigner on loan applications.  And while it while it may seem like splitting hairs, the Chinese government’s actions had a far greater impact on the actual price of the finished product.

How much are the tariffs?

The tariffs are scaled to punish the biggest violators.  There are as such:

• Suntech, 2.9 percent    
• Trina 4.73 percent 
• All others, 3.59 percent

But this is likely just the beginning of the tariffs.  The Commerce department is not finished with its review and this decision opens the door to more sanctions.  The US government will review the charges of ‘dumping’ (meaning the industry sold its panels at a loss) in May.  Industry insiders believe (and hope) that the final tariffs will be closer to 10%. 

How will this affect solar panel prices?

It is anticipated that prices will rise briefly, and then continue their long descent down.  Many suppliers have spoken of raising prices 10% in April 2012.  But the long term economics of solar won’t change drastically, as technology and manufacturing efficiencies continue to drive the price per watt down.  Consumers should not be fearful that the prices will continue to rise.

Why will prices rise now?

Many solar panel manufacturers are operating at or near a loss to compete with the Chinese manufacturers.  This rise in price will better reflect the actual economics of solar panel manufacturing and allow some companies to turn a profit and reinvest in research and development.  The US buys over $3 billion in solar modules from China every year, and more of this money could be directed toward American made products.

So overall is this a good or bad thing for solar?

Of course everything depends on your perspective, but overall this is likely a good development.  Obviously the US solar makers are cheering this decision, and anyone who is a fan of American manufacturing would do likewise.  In the long term, this will probably be just a bump in the road for solar panel prices and they will likely keep falling over the long term.

The outlook for solar power is still bright, and with global economic recovery on the way, that outlook will only get better.

Kriss Bergethon is a writer and solar professional from Colorado.  Visit his website at Solar Panels today.

China: Making Solar, Burning Coal

China: Making Solar, Burning Coal

China presents more than one economic and ecological paradox. Perhaps one of the most troubling for purposes of global sustainability is that China, although the world’s leading producer of photovoltaic cells and solar panels, is also burning more and more coal.

According to an article in RTT News, China’s coal consumption grew by more than ten percent in the first three quarters of 2011. China also imported a radically-increased amount of coal, with net imports of 111 million metric tons, an increase of over 25% compared to last year.

China remains the world’s largest producer and consumer of coal, and the country’s trajectory of energy use is of great concern given the size of China’s population and the growth potential of its economy. There is some brighter news on the horizon.

China is expected to generate nine million new jobs in green energy over the next five years. That means that the country is serious about developing this sector of its economy. The problem however lies on the consumption side rather than the production side, as 90 percent of China’s solar-panel production is sold abroad rather than in China.

If China develops green energy as an export but produces its own energy for domestic consumption from fossil fuels – and at that, from coal, which is the dirtiest of all fossil fuels – the benefit of China’s green machine will be much less than if China makes more extensive use of that technology at home.

Currently, coal-burning meets some eighty percent of China’s domestic energy needs. Given that China’s energy consumption is sure to increase enormously as the vast country continues to industrialize, maintaining that ratio is simply not a good idea.

It may be, then, that the best news lies in the bad news. China’s export-driven economy suffered a blow due to the faltering of the first world, from which neither the West nor China have fully recovered at this point. In the long run, no country can maintain a net trade surplus of the magnitude China now enjoys; this is just as unsustainable as a trade deficit although for different reasons.

China must shift to a more consumer-oriented economy with wider dispersal of wealth in order to have sustainable prosperity. China’s growing labor movement will help make that happen (whether the government wants it to or not). As it does, China may reevaluate its current investment and development strategy and hopefully will adopt a more balanced approach, seeking net trade parity with other countries rather than the lopsided trade surpluses that have been the goal up to now.

If this happens, as part of the shift, China may elect to use more of its green energy technology at home and sell less of it abroad. While this will mean higher prices for solar power in other countries, it will also mean a net increase in the global green-to-brown energy ratio.

Tom is a green blog writer, but also dabbles in stories on nj bed bugs.

Solar Incentives Being Reconsidered

How long does solar have?

Over the last year we’ve seen an incredible growth in solar photovoltaic installations. In fact, it’s the largest growing industry in America today. 2010 saw a 60% increase in residential and commercial solar installations over 2009. The primary reason being that homeowners and business owners are enjoying the benefits of several financial incentives. But those incentives are at risk of being canceled with the latest budget cuts and if you’ve been on the fence about going solar, you’ll want to be sure to beat the clock.

The first incentive is the Federal ITC (Investment Tax Credit) for 30% the cost of the system. But, that’s not where it stopped. In 2009 congress voted into the legislation the ability for businesses to receive a 30% tax GRANT for installing solar systems. In other words, instead of having to fund it ALL up front and then wait for your rebate/refunds, you now only need to pay for the remaining balance. When you combine this with local utility incentives you’re looking at several thousand dollars’ worth of savings.

In congress these incentives are being reconsidered. Federal and state budgets are tighter than a Humvee squeezing under a garage door, and big ticket items like the ITC program are being targeted. Solar manufacturers and contractors and their employees are the ones who will lose out as most families and businesses won’t be able to justify the cost of going solar without these incentives. As it stands now, most systems will have a 5-7 year return on investment, but without these incentives it’ll likely be closer to 10 years or more... A cut off most buyers just can’t justify. Does it still make financial sense? Yes, but there’s other things homeowners and businesses can do with that money that might suit their needs better during those ten years.

The bottom line is this. While the solar photovoltaic industry has seen an incredible gain in market share, it’s largely the result of these substantial subsidies that make it affordable enough for the common home and business to participate. Without those we’ll see a significant decline in sales that will hurt the industries growth, technological advancement, and acceptance.

Nevada has been an up and comer in the solar industry. While the rebates were offered sales were brisk, keeping contractors, construction workers, and consultants in work. Now that those rebates have been exhausted, sales have grown stagnant resulting in some layoffs as previous work comes to a close.

What does this mean to a prospective buyer? Deals are to be had. Contractors are eager to earn your business and are offering their best internal prices yet. The days of big rebates might be coming to a close, and for the prospective buyer, should provide the motivation to get while the gettin’s good.

Chris Keenan is a green and general blog writer. He writes for many sites including Precision Garage Door. Chris also maintains a personal blog at The Keenan Cookbook