US solar market shrugs off Trump’s module import tariffs
The Trump administration’s PV-import tariffs took a nibble out of the US solar market last year, but the impact was less severe than many predicted, and installations are primed for a rapid recovery in 2019 and the years ahead.
The US installed 10.6GW(dc) of new solar capacity in 2018, according to figures from market researcher Wood Mackenzie Power & Renewables and the Solar Energy Industries Association (SEIA) trade group. That’s a 2% decline from the year prior, as President Donald Trump’s imposition of tariffs on imported crystalline silicon cells and modules led to project delays.
But the impact of the tariffs appears to have been relatively muted on the market as a whole, and likely will be fleeting.
Solar remained the second largest source of new power-generating capacity in the US, behind gas-fired plants but ahead of wind – which installed 7.6GW of capacity last year, according to the American Wind Energy Association.
Wood Mackenzie expects the solar market to rebound sharply to around 12GW this year, then climb to a record 15.8GW in 2021. Even after a modest pullback in the mid-2020s as the market adjusts to the diminished investment tax credit, annual installations are expected to remain at 14GW or more.
The US ended 2018 with 62.4GW of installed solar capacity, compared to 96.5GW of wind.
“The total amount of solar installed in America is on track to more than double in the next five years, proving solar’s resiliency and its economic strength,” says Abigail Ross Hopper, chief executive of SEIA. “It’s clear this next decade is going to be one of significant growth.”
In spite of the tariffs, the price of solar components and projects continued to fall in the US last year, boosted by a global glut of PV cells and modules resulting from China’s decision to rein in its own installations through subsidy cuts.
The US solar market has a number of powerful long-term tailwinds, including a growing comfort with large-scale PV arrays by major utilities like Southern Company, rising demand from corporate customers like Facebook, and a geographic expansion of the residential market into potential-rich states like Texas.
Compared to the wind sector, where most projects tend to be large, the solar market is more diversified in terms of its project sizes and clients, with utility-scale arrays accounting for around two-thirds of the market, while residential and commercial customers account for the remainder.
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A year ago the Trump administration imposed a 30% tariff on imported cells and modules made from crystalline silicon, a technological distinction that left the door open for US-based manufacturer First Solar’s overseas factories.
The solar tariffs fell to 25% this year, and will drop to 20% and 15% in 2020-21, before expiring in February 2022, unless the president chooses to extend them. Much of the current US solar pipeline will be built using modules purchased at reduced tariff levels.
Although the US has not dramatically transformed into a PV manufacturing superpower, there have been a spate of significant announcements since the tariffs went into place – including new US factories backed by JinkoSolar and Hanwha Q Cells, and the acquisition of SolarWorld Americas’ Oregon plant by SunPower.