Solar Tariffs in the Balance

2-21TIANWEI-PVmodules-300pxFeb. 9, 2012 — The U.S. Department of Commerce is expected to announce a decision next month on the issue of tariffs for Chinese-made silicon modules and cells. At the end of January, the Brattle Group released a study, funded by the Coalition for Affordable Solar Energy (CASE, which opposes tariffs), positing that a 100 percent tariff on Chinese modules would cost as many as a net 60,000 jobs in the United States over three years and net economic losses amounting to between $698 million and $2.6 billion.

On the other side, the Coalition for American Solar Manufacturing (CASM, which asked for the tariffs) pointed to a spike in Chinese imports at the close of 2011, asserting that this was evidence of anticompetitive dumping in advance of tariff impositions.

The assumptions behind the Brattle Group report include a lot of second- and third-hand effects in other industries. And the import spike had a more proximate cause: the impending year-end expiration of Section 1603 Treasury grants.

In fact, if we accept the Brattle Group calculation that a 100 percent tariff would raise module prices as much as 30 percent, we can calculate what that would do to installed-system pricing. A nationwide survey of installers conducted by IDC and SOLAR TODAY in December determined that the median cost of installed systems was $5.27 per watt (before incentives) in Q3 2011, with modules comprising about 24 percent of the cost. If module prices were to rise 30 percent, modules would make up 29 percent of the cost and system cost might rise 7 percent, or 38 cents per watt. It doesn’t sound like much unless you consider that it can erase the thin margin on which the typical installer operates today. Jigar Shah of CASM notes that large developers work with a margin close to 10 cents a watt. He cites estimates that tariffs would knock U.S. photovoltaic installations back by 1 gigawatt this year, from 3.5 to 2.5 GW. That’s not the end of growth, but it’s a significant flattening of the curve.

Each side in this squabble has a legitimate case. No one wants to see the establishment of a Chinese monopoly on silicon manufacturing, but no one wants to dampen the rate of installations.

Photo courtesy of TIANWEI

Share on FacebookShare on LinkedInTweet about this on TwitterDigg thisEmail this to someone

Leave a Reply

Your email address will not be published. Required fields are marked *