In May 2012, the U.S. Commerce Department approved a new tariff on solar panels manufactured in China.
SolarWorld Industries America Inc. launched the complaint that resulted in the announcement of tariffs on Chinese companies for accepting government subsidies and dumping products at unfairly low prices. According to the LA Times:
More than 60 Chinese firms, includingSuntech Power Holdings Co., the world’s largest solar panel maker, and Trina Solar Ltd., face a 31% duty on their exports to the U.S., retroactive to shipments made in February. All other Chinese exporters of solar cells will be hit with a tariff of 250%.
JA Solar Holdings Co., the world’s biggest solar cell manufacturer, is a Chinese company that will be hit hard by the new tariffs. It is now searching Western states for potential plant locations, with Oregon emerging as a lead contender.
Imposition of the new tariffs are intended to slow or stop the “dumping” of solar cells and panels by Chinese manufacturers into the U.S. market. From 2009-2011, U.S. imports of Chinese solar cells were up from $640 million to about $3.1 billion, comprising about half of the U.S. market for solar panels. As a result of the flood of solar panels from China into the market, U.S. manufacturers took a hard hit. At least four companies filed for bankruptcy in the past year.
Following the tariff announcement, investors and market experts began speculating about the impact on solar panel prices, demand, reduction in solar panel jobs, and the potential that some companies might move manufacturing from China to America to avoid the hefty tariffs. In addition, the new tariff on solar panels manufactured in China may spark a trade war between the countries. China is now challenging import duties on solar panels it alleges are unfairly priced.
While the long term effects of the solar panel tariff are yet to be seen, some experts are cautioning that the impact on prices of solar panels for consumers will be minimal. Mike Sheppard, a photovoltaics analyst at IHS, predicts a 75% drop in solar panels imported from China, which may boost prices for consumers by 12%, resulting in a lower average return on investment for a solar panel system by up to 2.5%.
Time will only tell how much the tariff on solar panels from China will affect property owners considering solar, and the cost of solar panels in the future. For now, the Department of Commerce’s initial ruling must be affirmed by U.S. Trade Officials in the fall.
Will there be a spike in demand for solar panels at their current, very low prices?