House with residential solar system for article about the cost of tariffs

Solar Panel Tariffs – What’s the Bottom Line for a Residential Project?

Before starting, this is not an article defending or attacking the newly imposed US tariffs on solar panels manufactured abroad. It is simply to put the panel tariffs into relation to an entire project.

Incidentally, the Trump tariff has precedent. In 2012, the US imposed punitive tariffs after a Solar-World complaint of “dumping,” or selling under cost, usually in an attempt to drive other companies out of the business. Afterward, the European Union followed in 2013 and imposed similar tariffs. It was estimated by the US Department of Commerce that the solar panels were being sold in the US for 31% less than the cost to manufacture.

At the time, tariffs were supported by U.S. and European solar manufacturers. Yet they were opposed by installers, who saw the “cheap” solar panels are helping sales.

In 2015, anti-dumping solar panel tariffs were kept in place.

As of 2017, almost all solar panels used in the USA are now imported. Even with the tariffs, the prices continued to plummet. The ITC (International Trade Commission) studied and found: “increased solar cell and module imports are a substantial cause of serious injury to the domestic industry. Although the Commissioners could not agree on a single remedy to recommend, most of them favored an increase in duties with a carve-out for a specified quantity of imported cells.”

Based on the above, 30% across the board tariffs are being imposed. They are for 4 years and decline each year, reaching 15% by year 4. Note, though, that according to the Commerce Department, the first 2.5 gigawatt of imported cells are excluded from the additional tariff.

A 30% tariff sounds scary! And if you listen to the news, doom and gloom are predicted. But what effect will a 30% tariff have on a solar project? The 30% only applies to the solar panels.

Typical solar installs are for “grid-tied” solar. This is where the panel “DC” power is converted to AC power with an inverter. This power is then connected to a house’s electrical power system where it is directly used, or exported to the grid.

In Houston, for example, typical pricing for 5kW of grid-tied solar, roof mounted, is around $15,000. The systems include: solar panels, roof mounted racking equipment, electrical combiners, disconnects, solar cables, grid-tied inverter, electrical disconnects, breakers, sales commission, storefront costs, vehicles and a whole lot of labor. Not to mention, some profit for the solar company! The PV panels make up about 40-50% of the cost of the equipment of the installation, but only 20% of the overall project.

Assuming the solar panels are Chinese, adding a 30% tariff will add about 6.7% to a job. On a $15,000 project, this could be about $1,000.

In other cities, the other costs are much higher. A friend from San Diego had 7kW installed on his home. It cost $27,000. The cost of imported solar panels should be similar in Houston and San Diego, so the delta from the tariffs will still be $1,000. In San Diego, the tariff will represent about 3.7% of the project.

While any price increase could hurt a business, these increases on a project basis are relatively minimal. And prices of solar panels continued to drop from 2012-2016 even with the solar tariffs imposed. And this article in Cleantechnica shows that prices are continuing to drop!

As a rule, we should strive for a “level playing field.” That said, even with these “safeguard” tariffs, their effect should be viewed in relation to the effect on a solar install, not as a single part.

Mi-Grid generally does not sell solar panels. Those are sold by the solar installer as part of the installation. But the Mi-Grid energy management system is made in the USA from parts made in the USA!

Seeking an estimate on a custom solar hybrid Mi-Grid energy management system?  Get in touch here to request an estimate.