In January, President Trump signed into law a 30% tax on imported solar panels under the assertion that solar panel manufacturers in the US were being “decimated” by unfair trade. He claims that the new tariff will allow those companies to “come back strong.”
This is not unusual, and in fact during his last term, President Obama placed a similar tariff on solar panels from China and the Chinese manufactures simply opened plants in other countries.
Now, per the International Trade Commission’s (ITC) recommendation, Trump has placed the tariff on all countries. This tariff will hurt a lot of countries governed by the WTO due to its overly broad nature, and many speculate that it is likely to be overturned in the future. However, the tariff has already gone into effect, so let’s take a look at the expected consequences.
How will this affect companies like EnergyLink who buy and install solar panels as a core product? And how will this affect you as a business owner or manager interested in solar?
How Energy Service Companies Will Be Affected by Solar Tax?
When asked to comment on the new solar tax, EnergyLink’s CEO, Chris Ihler stated that, “while the price of solar may be going up 30%, the impact that this would have on an average project would result in somewhere between a 2% – 4% increase in cost.” Energy service companies that focus on more than just solar will not see a significant affect from this tariff, conversely those that only implement solar solutions will have to expand services to incorporate more holistic tactics, such as demand reduction services in order to compete.
How Will The Solar Tariff Affect You?
Through a mix of solar panels and other renewable energy systems like LED lights, thermal or ice energy storage, building automation, demand management, and HVAC controls demand is significantly lowered, resulting in more energy savings.
According to EnergyLink’s CEO, “Leveraging a variety of technologies will be the key to offsetting costs and driving significant energy savings for our partners companies.” Also, it is important to remember that many companies will still be eligible for a variety of tax incentives, such as tax credits, accelerated depreciation schedules, increased NOI, and increased property value.
When asked to comment on the tariff, former Vice President Al Gore defended President Trump, saying that “it really did not start with him. This was a trade action brought by private companies. They chose a kind of midpoint in the range of alternatives. It could have been handled differently, should have been handled differently but it’s not an utter catastrophe.”
It remains to be seen whether the World Trade Organization will overturn the new tariff, but the general consensus is that the end customer will see very little in terms of negative consequences as a result of this policy change.