Tag: solar

What Happens If the U.S. Reinstates Solar Panel Tariffs?

Posted on by Mike Zimm

For the most part, this has been a good year for the solar industry. 

The Inflation Reduction Act of 2022 (IRA) supercharged the industry, creating billions of dollars in investments. It also led to announcements of more than two dozen solar manufacturing facilities and 10 utility-scale battery storage manufacturing plants across the United States. 

The IRA isn’t the only thing adding fuel to the solar industry’s fire. Growth can also be attributed to the Biden administration’s 24-month moratorium on solar panels coming from four Asian counties. The move allows Cambodia, Malaysia, Thailand, and Vietnam to sell low-cost solar panels to U.S. companies and gives stateside producers time to ramp up production. 

A Bumpy Road 

While everything seems fine on the surface, solar installers face rising uncertainty from Congress. A bipartisan effort to reinstate the tariffs has moved through the House and Senate but was vetoed by Biden in mid-May. 

According to lawmakers, overturning the moratorium would be a rebuke of the Chinese government, spurring domestic production and investment. The problem is that reinstating the tariffs would potentially derail solar installations and investments without guaranteeing U.S. manufacturers can fill the void. 

What does reinstating tariffs mean for the rapidly expanding solar industry? Based on earlier experience, there are several things we can expect. 

Market Uncertainty 

When something changes in the market, everyone has to adjust. 

From a supply chain standpoint, reducing the flow of low-cost solar panels from Asia can delay projects. It also forces manufacturers to source materials elsewhere or jumpstart domestic production to keep shipping panels. 

Meanwhile, distributors must scramble to get the products they need for installers, who, in turn, struggle with having the right amount of labor available. The labor aspect is especially important. According to Abigail Ross Hopper with the Solar Energy Industries Association (SEIA), Congress’ move to overturn the moratorium could affect up to 30,000 jobs. 

Since the tariff decision was made last year, there has been a drastic increase in solar projects across the country. During COVID, supply chain issues created delays for many projects. With a wave of new panels, those installations have picked up again. It’s also encouraged other companies to make announcements for upcoming solar projects. 

The problem is reinstating the tariff. In a burgeoning industry like solar, market uncertainty can halt new investments. When companies can’t plan or forecast, they struggle to find the budget to complete projects. Then, they get delayed or shelved until market conditions improve. 

Strained Geopolitical Relationships 

One of the main reasons the solar panel tariff was introduced was due to an ongoing trade war with China. 

On several occasions, the U.S. has accused China of “dumping” materials into the American market, creating conditions that make it hard for domestic producers to compete. Dumping, as the name implies, occurs when a country sells raw materials, products, or other goods in another market at a low price, sometimes less than the cost to produce it. 

When dumping occurs, domestic producers are forced to sell their products at a higher price and potentially lose market share or lower prices to compete. In either case, it can hurt competition in the buying country’s market and disrupt the economy. 

U.S. officials believe China is going through Malaysia, Thailand, Cambodia, and Vietnam to skirt anti-dumping regulations and get solar panels into the U.S. market. Reinstating the solar panel tariff may not directly impact China, but could cause a rippling effect, further hurting the relationship between the two superpowers. 

There is one positive aspect to this situation, though. With tariffs on solar panel imports, domestic producers will have room to ramp up production to meet clean energy demand. 

Higher Short-Term Pricing 

When there’s less product to go around, prices naturally rise. 

Shortly after President Biden suspended solar panel tariffs, companies jumped at the opportunity to buy low-cost panels from overseas. Prices dropped because there was enough supply to meet growing demand in the U.S. Unfortunately, that would change if tariffs were reinstated. 

Think of it this way: eggs are typically cheap and don’t often fluctuate in price because demand is generally constant, as is supply. But earlier this year, prices skyrocketed after avian flu reduced the number of eggs produced while demand was unchanged. As egg producers fought to catch up, the cost of eggs exploded by double digits, with people sometimes paying $5 or more per dozen. Today, prices are slightly higher than last year, but we’re nearly back to equilibrium. 

So, let’s use the same supply and demand lens on the solar panel situation. What would happen if the steady supply of low-cost panels became severely restricted? In the short term, prices would spike as supplies dwindled and demand stayed high. Prices will jump if domestic producers and manufacturers in other countries don’t fill the immediate void. 

Once manufacturers in the U.S. increase their output, costs will come down until reaching an equilibrium price. 

More Domestic Investment 

Although having an influx of solar panels is great for the burgeoning solar industry, Congress has a good reason for reinstating the tariffs; legislators want to see domestic producers in control. 

For all intents and purposes, the White House has promoted green energy economic development across the board, not just solar. The Inflation Reduction Act (IRA) has been a boon for solar and other renewables, resulting in $150 billion in capital investments across many clean energy projects. 

It’s about more than simply making more panels and parts, though. Every investment in renewable development in the U.S. is an opportunity to create thousands of high-paying jobs in an expanding industry. Without a steady stream of utility-scale solar products, companies can’t predict labor needs. 

More production also gives the U.S. a chance to meet its high-level sustainability goals. According to the White House, the U.S. wants to reach 80% renewable energy generation by 2030 and 100% carbon-free electricity by 2035. They’re lofty goals, especially when nearly 80% of our energy was generated by fossil fuels in 2021. 

With more investment in renewable energy, there is a chance to turn the tide. According to the EIA (Energy Information Administration), total solar generation share could double from 3% in 2022 to 6% by 2024, thanks to lower production and installation costs combined with tax credits and other incentives. 

Where Do We Go from Here? 

No matter what happens with the tariffs, it’s important to remember the moratorium was only temporary. 

The stay was meant to give solar installers, companies, and utilities time to complete projects, increase production, and build a thriving U.S. solar market. Two years may not cover a manufacturer’s ramp-up timeline, but it gives installers time to work on projects while they get up to speed. 

It’s also worth noting that although tariff relief supports low-cost solar panels, the IRA has been doing the heavy lifting to create investment and manufacturing opportunities for companies. 

Repealing tariff relief on solar panels now may be a minor setback, but it shouldn’t cloud our view of what has been done so far. American manufacturing is growing, with companies like Sun-Pull producing critical infrastructure like bundled PV wire. Other companies are coming online soon, joining manufacturers who have found footing in the space, making panels and Balance of System (BOS) items. 

Renewable energy, including solar, is the future, but how we approach the coming years depends on our commitment to green energy and divesting from fossil fuels.  

Anything is possible, but we need to move quickly.

Production, Labor, and Land: The Push for Solar Energy

Posted on by Mike Zimm

You’ve probably seen renewable energy, including solar, receiving large-scale investments lately. 

It’s no surprise the solar industry is growing, especially given the world’s push to curb climate change. The U.S. solar market currently totals $35 billion and generates about 5% of our country’s electricity – nearly 11 times more than a decade ago. The trend is expected to continue, thanks to recent actions from the Biden administration, including the recently passed Inflation Reduction Act (IRA). 

The government’s actions are spurring excitement in the industry. Solar manufacturers are announcing large-scale production investments, including Qcells, Enel, Maxeon, and CubicPV. These projects are expected to increase domestic solar production more than five times, expanding from 7GW to more than 42GW. 

Though the IRA encourages companies to invest in renewable energy, the changing geopolitical climate plays a vital role. In 2022, a 24-month tariff moratorium was announced for solar panels coming into the U.S. from four Asian countries, including Cambodia, Malaysia, Thailand and Vietnam. The stay allows U.S. companies to import low-cost solar panels from Asia while giving domestic manufacturers time to increase production. 

The utility-scale solar growth has been nice, but there are still barriers to success, including: 

  • Reliance on imports 
  • Permitting and regulatory red tape 
  • Ongoing labor issues 
  • Public skepticism of solar power 

Combatting these issues may supercharge the clean energy industry and allow for more utility-scale solar power domestically. 

Fewer Imports, Better Results 

China is a key player in the solar energy industry. Not only does it produce a large number of low-cost solar panels, but it’s also a leader in energy storage. 

Although China’s solar panels are inexpensive, they come at a cost. There are questions about the country’s skirting of duties applied to them, and their low cost has made it difficult for domestic manufacturers to compete. 

COVID also showed us that supply chains can be easily disrupted, making getting supplies quickly or reliably harder. 

Recent developments like the IRA may reduce U.S. reliance on other countries. Contrary to what that sounds like, it doesn’t mean the U.S. is cutting China or any other country out. We’re simply narrowing the supply chain and bringing more production stateside. 

Since the IRA became law, innovative companies have jumped in to support solar expansion, committing to producing everything from modules and inverters to batteries, copper foil, and photovoltaic (PV) wire. Even structural products like racking and trackers are showing signs of increased production as manufacturers take advantage of the changing business climate. 

Unfortunately, we can’t flip a switch and immediately start production. It can take months, even years, for production facilities to come online. However, the hope is that with enough lead time to get production moving, the U.S. can become competitive in the solar space. 

Streamlining the Permitting Process 

Let’s be honest; the government is a lot of things, but fast isn’t usually one of them. Despite the Biden administration helping installers get low-cost panels and freeing up billions of dollars to promote renewables, there’s more to do. 

The permitting process is different depending on where the installers are. Even the Environmental Protection Agency (EPA) has called the permitting process a “patchwork” of regulations varying from state to state. 

To make the process smoother, the EPA introduced a toolkit to help developers, utilities, and communities navigate regulations, secure financing, and troubleshoot issues. But organizations like the SEIA are calling for more permit reform. In their eyes, reducing red tape adds jet fuel to a burgeoning industry, opening the door for more jobs, revenue, and opportunity. 

Although there have been attempts to streamline the building process for companies to set up distributed energy systems, none have succeeded. For example, the bipartisan American Energy Opportunity Act of 2019 bill called on the Department of Energy (DOE) to designate a board to help qualify communities with solar systems and certify installers in the space. It died without a vote or any other action. 

Establishing Better Career Promotion and Labor Relations 

As with any growing industry, thousands of skilled and unskilled jobs are available. The problem is finding enough people to meet increasing needs. 

Unskilled labor is in high demand, but so is the need for electrical, process, and chemical engineers, scientists, architects, physicists, planners, and more. The jobs are certainly available, more so with the increased focus. 

More than 250,000 people work in the solar industry, with job growth in 47 of 50 U.S. states. Among them, California, Texas, New York, and Florida are at the forefront of hiring and employment. Even states traditionally tied to fossil fuels are beginning to lean into solar. 

The labor shortage doesn’t have to cripple solar. If private companies, utilities, colleges, and governments collaborate, it simplifies recruiting efforts and builds industry interest early on. Training programs, apprenticeships, and veterans programs are only a few ways to introduce new workers to renewable energy occupations. 

Creating Positive Perceptions 

For some people, solar is the future of electrical energy and a way to rely less on fossil fuels. Others see PV panels as another way to muck up a hillside view. 

Solar has plenty going for it, but it also has its fair share of detractors. Often helmed by rural mobilization efforts, arguments range from deforestation fears and aesthetic issues for homeowners to agricultural concerns. The truth is that solar installations aren’t nearly the nuisance people think they are. 

Think about the last time you looked at a swamp and thought, “Wow, what a great place to build!” Solar sites aren’t typically found where other development is attractive or possible.  

Swamps, steep hillsides, and farmland are great locations for utility-scale solar installations because they don’t interfere much with our daily lives. For example, one Sun-Pull solar installation is tucked in behind a correctional facility. Another is in what used to be an unused swamp area off a busy road. 

In the case of farmland, agrivoltaics is literally changing the solar landscape. Recent studies have shown that combining solar panels with grazing areas or cropland can benefit both the land and the panels. Unlike other solar installations, which only serve one application, agrivoltaics let property owners use the land while leasing it out. 

What’s important to remember is that education breeds awareness, especially in communities where solar is a practical solution. Better access to tools and information can alleviate concerns and encourage residents to learn more about community and utility-scale solar. 

Solar Goes Mainstream 

This is an exciting time to be in the solar industry, but there’s still more to do. 

The industry needs continued investment from private and public sources. An influx of money will spur production, job growth, and energy reliability as the world turns more toward renewables. 

Solar manufacturing and installation jobs pay well, have job security, and can help revolutionize the electrical utility industry. More workers also push innovation, better designs, and increased interest in revamping the electrical grid. 

Solar power is the future of energy. As installed capacities increase and technology improves, getting much of our energy from the sun, wind, and water will become commonplace. But it’s not all about getting away from fossil fuels; this is a move toward unlimited sustainable, clean energy. 

The renewable revolution is here. With a sustained effort, the U.S. is more than capable of reaching its lofty energy production goals.

What Are the Soft Costs of Utility-Scale Solar? 

Posted on by Mike Zimm

If you’ve followed the solar energy trend with any interest over the past 10 years, you’ve likely seen a few massive changes in utility-scale solar operations. 

As solar panel technology improves, one question remains: is solar energy becoming cost-effective enough to displace fossil fuels? The answer to that question is a resounding yes, but we can do more to improve costs and expand the solar industry’s reach in the United States. 

While hard costs tied to utility-scale solar power have dropped considerably since 2012, soft costs haven’t seen the same changes. As the price of panels, PV wire, and the overall solar BoS decrease, the money spent on permitting, inspections, and operations become a larger piece of the pie. 

Luckily, many experts believe soft costs can fall with some additional investments, training, and standardization. 

Breaking Down How Utility-Scale Solar Costs Shake Out 

Whenever a solar project gets underway, there are two expense types that the utility needs to keep in mind; hard costs and soft costs. 

Solar Hard Costs 

Hard costs are budgeted into the account, and their prices tend to be fixed. Items that fall into this category are the parts and pieces needed to actually get the solar array up and running, including: 

Though it’s safe to say these costs can be counted on to stay in a determined range, higher quality products may come with short-term and long-term savings that could affect soft costs down the line. For example, Sun-Pull’s bundled PV wire can drastically reduce installation time and labor expenses, cutting overall project costs. Over the past decade or so, hard costs have fallen by about 60%. 

However, supply chain issues caused by the pandemic and our subsequent recovery have pushed prices slightly since 2020. 

Solar Soft Costs 

These cover everything else that isn’t a physical part of the solar installation. In the case of a solar installation, a breakdown of soft costs includes: 

  • installation labor 
  • permits and taxes (including sales tax) 
  • sales promotions and new customer acquisition 
  • administrative, marketing, and other overhead expenses 
  • operations 
  • supply chain expenses 

Unlike hard costs, which are somewhat predictable, soft costs are tied to several factors. These could include permitting and inspection fees, hiring and training new workers, money spent on community programs and educational materials, marketing programs to acquire and maintain customers, software, and more. 

Though soft costs have fallen, they have not had nearly the same drop as hard costs. Product prices tend to react more favorably in the face of more available options, better technology, and fewer restrictions. 

Cutting Down on Soft Expenses 

In 2017, the National Renewable Energy Laboratory (NREL) suggested soft costs made up more than 40% of a utility-scale system’s costs. Unfortunately, though overall prices have kept falling, soft costs are still about 36% of total utility solar expenses in 2021. 

If prices are high here, they must be high everywhere, right? Not so much. Utility-scale PV soft costs in the U.S. are still higher than those of other countries with developed solar markets, partially due to a lack of combined efforts. 

There is hope, however. The Department of Energy (DoE) says they can be mitigated with a few changes to get everyone on the same page. This includes standardizing codes and providing more educational opportunities for permit issuers, real estate professionals, and others in nearby industries. It also includes creating more effective integration strategies that make it easier to connect solar arrays to the overall electrical grid. 

Part of the current issue is that plenty of money has been spent to create technology that reduces hard costs but isn’t always applied to reducing soft costs. As with any solution, getting from where we are now to where we’d like to be will involve a few investments. 

Utility-Scale Solar PV Systems Can Benefit from Lower Costs 

The solar industry isn’t alone in its fight to make utility-scale solar more affordable. It will take a concerted effort from the government, private companies, and social organizations to complete. 

It requires the government to reduce the red tape associated with permitting and inspections. Companies need to look for organizational savings wherever possible, including software platforms that streamline operations and simplify processes where possible. Even variable expenses like marketing, attracting new customers, staffing, maintenance, and insurance offer opportunities to reduce overhead. 

The goal should be to make utility-scale solar energy and other renewables accessible to more people. To accomplish it, we must do our part to keep installation costs down and encourage investment.

What Do Tariff Suspensions Mean for U.S. Solar Energy?

Posted on by Mike Zimm

Business is looking a little sunnier for U.S. companies, thanks to several encouraging announcements from the White House. 

In June, President Joe Biden announced a 2-year exemption for solar imports, lifting restrictions on solar products coming in from four Asian countries; Cambodia, Malaysia, Thailand, and Vietnam. The announcement follows in the footsteps of an investigation launched in March regarding anti-dumping regulations imposed by the U.S. on China several years ago. Although the tariff exemption is big news, it does not apply to China or Taiwan, which both still have their tariffs in place. 

Asia is a massive player in the solar panel industry. In fact, upward of 80% of the solar panel imports come from Asia, meaning that America’s solar goals are somewhat contingent on having a relationship with our overseas trading partners. Pausing tariffs on incoming solar panels helps utilities and other companies that had paused their plans to restart the process. 

Besides the exemptions, the Biden administration also invoked the Defense Production Act (DPA). This opens the door for additional government investment in clean energy projects, including solar. According to the Department of Energy (DoE), this money is for companies to expand clean energy manufacturing, build new facilities, and help consumers access greener products. 

The hope is that with more investments, U.S.-based companies can boost domestic solar panel production so the country can rely less on imports. As the DPA effort ramps up, the 2-year tariff will serve as a temporary solution to give domestic manufacturers a chance to make enough supplies to catch up to what is imported. 

Who Stands to Win with Tariff Exemptions?  

As with any governmental announcement, there will be winners and losers. In this case, several clear winners emerge in the near- and long-term.  

Domestic Companies with Solar Projects  

Tariffs have a contentious and complicated history in the United States, often acting as a defensive mechanism used by countries to protect domestic manufacturing. Unfortunately, what typically happens is that consumers get saddled with higher prices associated with the tariffs, and production doesn’t always keep up. 

With solar tariffs in place, products like solar panels become more expensive, making it harder for companies to fund previously planned projects. As a result, some planned projects were either delayed or outright canceled.  

According to the Solar Energy Industries Association (SEIA), the organization cut its solar installation forecast by half in 2022, mainly due to supply chain issues and uncertainty related to the government’s investigation into possible Chinese anti-dumping tactics.  

By cutting at least a little of the bureaucratic red tape, the U.S. is giving domestic companies a chance to complete their solar projects with fewer costs and more certainty. Although the eased restrictions aren’t going to bring back previously canceled projects, there is a chance that delayed projects could get back on track.  

The move can’t come soon enough, either. SEIA recently reported about half of all energy added to the grid in the first quarter of 2022 was solar, so there is an appetite for renewable technology. 

Domestic Solar Manufacturers  

Although the tariff exemptions are meant to ease import costs for solar panels, the activation of the DPA is designed to spur solar manufacturing stateside. 

The White House announced in June with additional government support, domestic solar manufacturing was on pace to triple in 2024, going from a current manufacturing capacity of 7.5 gigawatts to 22.5 gigawatts by the end of 2024. This would be enough production capacity to help more than 3 million homes convert to solar energy production annually. 

June’s DPA announcement bolsters the production of several solar components, including photovoltaic (PV) modules. The resulting products will give companies domestic options that don’t need to be imported or subject to tariffs. The announcement and expected production increase is also fantastic news for companies that produce other solar components used in solar arrays, including Sun-Pull. Our wire is used to string solar panels together, letting generated electricity flow back to the combiner box. 

Perhaps the best part of the tariff exemptions and DPA announcement is that thousands of jobs associated with the solar industry won’t be eliminated. There’s even optimism that solar jobs will increase due to more projects. 

Although this is fantastic news for stateside manufacturers, there’s some reason for concern. It’s worth knowing that earlier tariffs imposed to bolster domestic manufacturing have not always resulted in increased production. 

The Environment  

It’s no secret the United States has climate goals it wants to reach in the coming years, including a series of renewable energy benchmarks in 2035. 

The first quarter of 2022 was not particularly great for utility solar energy as only 2.2 GWdc was installed. According to SEIA, it was the weakest quarter of growth in two years and was a far cry from what was considered a strong finish during the final quarter of 2021. 

Adding to the problem is the March investigation into China possibly skirting anti-dumping regulations by sending materials to other Asian countries. A month before, Auxin Solar, a small manufacturer, asked the government to investigate the situation, leading to even more uncertainty. The political climate made moving forward with some projects risky, leading to 17.6 GWdc worth of solar projects becoming delayed by a year and another 450MW canceled. 

Fewer tariffs, on the other hand, mean domestic companies can once again import low-cost solar panels to complete their projects. It also means current projects can proceed as scheduled with fewer delays, and new projects can get off the ground to bring more solar energy online. 

More solar energy is great news for the environment because it lessens our dependency on fossil fuels and other carbon dioxide-emitting power sources. Of course, ramping up the solar industry isn’t like turning on a faucet. It will take months, if not years, to get back up to speed. However, the tariff exemption may go a long way toward getting us started until domestic manufacturers can catch up and bring their own products to market. 

What Do We Expect?  

It’s tough to look at the tea leaves and find a definitive answer to what we think might happen. Still, the tariff exemptions are a good sign for Sun-Pull and the entire solar industry. 

Removing tariffs for a few countries doesn’t fix all the issues we’re currently facing. It won’t be easy for domestic manufacturers to compete with low-cost imported options overseas, but it can be done. The announcements do give manufacturers a much-needed fighting chance, allowing them to meet increased solar needs from a growing number of Americans. 

Companies like Sun-Pull Wire are poised to make the most of solar’s growth, with bundled wire systems that will carry the future of energy to millions of Americans across the country. We’re looking forward to seeing brighter, cleaner, and more sustainable energy take the next step.