Employees assemble brackets for solar tracking equipment at Array Technologies in Albuquerque. (Dean Hanson / Albuquerque Journal)
ALBUQUERQUE, N.M. — A new 30 percent tariff on imported solar cells will hurt solar companies in New Mexico and elsewhere, but industry representatives say they can withstand the impact.
President Donald Trump approved the tariff on Monday based on recommendations by the U.S. International Trade Commission to protect domestic manufacturers against a flood of inexpensive foreign imports in recent years.
Under the president’s order, another 2.5 gigawatts of foreign-made solar cells can still enter the country tariff free, but after that, a 30 percent charge will be imposed on the cost of each imported cell. On solar modules — finished assemblies that contain multiple cells — the 30 percent tariff will take effect immediately.
The commission had recommended tariffs based on complaints from two domestic solar cell manufacturers, both subsidiaries of foreign companies, which said cheap foreign imports had undermined their ability to compete.
Still, the new tariffs are far lower than originally requested the companies, which had asked for a 40-cent-per-watt charges on imports. The 30 percent tariff will likely mean an extra 10 cents too 12 cents per watt.
“From our viewpoint, it’s definitely not as bas as it could have been,” said Jeff Krantz, vice president for North American sales at Albuquerque-based Array Technologies Inc., which makes solar trackers for photovoltaic systems. “Some projects won’t price out, but it’s only a relatively small percent. The domestic market is still poised for growth.”
But the tariffs will hurt component manufacturers and system installers by driving up costs and decreasing demand, said Ryan Centerwall, CEO of Albuquerque-based installation company Affordable Solar. That’s particularly true for companies that supply and install utility-scale systems because solar cells constitute the largest cost in those projects.
“It hurts us tremendously,” Centerwall said. “We had a pipeline of about 120 megawatts of near-term utility-scale projects. All of that pipeline is at risk with these tariffs.”
Utility-scale projects represented about 70 percent of Affordable Solar’s revenue in 2017.
The national Solar Energy Industry Association estimates that about 9 percent of utility-scale projects being planned in the U.S. will end up being cancelled this year.
Because the tariffs will be phased out over four years, few new domestic cell manufacturers are likely to set up operations because tariff-free imports will begin again by the time new factories are set to open, Centerwall added. “By the time investors build a facility in the U.S., the tariffs will be low enough again that they’ll have trouble competing with imports,” he said.
Nationally, the Solar Energy Industries Association, which represents installation companies, said billions of dollars of solar investment will be delayed or canceled, leading to the loss of 23,000 jobs this year.