The recent White House ruling on the Section 201 Trade Case with regard to imported solar panels, while not optimal for the immediate term goal of delivering more solar power to the United States, was a relief from the last year of uncertainty. Developers and EPCs alike, look to consistency in component pricing in order to develop and bid projects into the United States Grid; if project delivery prices are uncertain, bidding a power purchase agreement at a fixed-rate is difficult. The first-year 30% tariff (succeeding year tariffs drop by 5% year to a minimum of 15%) has a projected effect of about $0.06-$0.10/watt on solar panels and an aggregate price increase, at the utility level, of around 3% to 8% depending on the size and type of the project.
While obviously a negative impact for project economics it seems that the most effected solar sectors will be the highly-competitive utility projects in non-regulated markets where any additional costs are lined up against cheap, incumbent energy sources. However, a number of states have established concrete Renewable Portfolio Standards and state-wide solar initiatives that may mitigate these higher prices including California, Illinois, Massachusetts, and New York among others. Interestingly, to a certain extent foreign module manufacturers have already priced in the effect of the 30% tariff which has resulted in module pricing that is identical to module prices three months ago. Our belief is that once market forces take hold on the current supply and demand of solar panels, pricing will continue to adjust downward mitigating the near-term effect of the tariffs on a large portion of planned solar projects.
JE Dunn continues to expand aggressively in the US Renewables market and wholeheartedly believes that US manufacturers and integrators will continue to adapt and innovate price and delivery improvements in the solar space. If you are interested in learning more about JE Dunn and our capabilities in solar, please contact us at Renewables@jedunn.com.