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Question

In the wake of the Biden Administration actions on solar power this week, what do you see the long-term impact being?

Matt Chester's picture
Energy Analyst Chester Energy and Policy

Official Energy Central Community Manager of Generation and Energy Management Networks. Matt is an energy analyst in Orlando FL (by way of Washington DC) working as an independent energy...

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The solar sector had been in a bit of an uproar since March when the anti-circumvention tariff petition was filed and the Commerce Department started to investigate, as solar panel imports immediately got scarcer and more expensive and shovel-ready solar projects became delayed or even canceled. 

After several months of discussion, Biden this week announced a two-prong stopgap resolution:

1- Tariffs on panel imports from the Southeast Asian countries in question would be halted for 2 years

2- The Defense Production Act would be engaged to look to spur domestic manufacture of solar panels

 

I've seen mixed feelings on these announcements, so I'm curious what the Energy Central community thinks. Is this just window dressing to temporarily appease the clean energy advocates? Will it bring solar installations back to where they were at the beginning of the year? And long-term, will this be enough to allow U.S. solar manufacturing to finally catch up with global competitors? Sound off with an answer below. 

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Matt: Thanks for this good question. A couple of comments first to frame my answer. 

First, there needs to be a global commitment now to embrace renewable energy of any kind.  Not by 2030, or god forbid beyond that, it needs to be immediate. Climate change is happening much faster than any of us imagined, and without a comprehensive switch away from fossil fuels, the Earth will not be a fit place for humans in just a few years. 

Second, the United States middle class has largely disappeared. By off shoring, our manufacturing capability, we have triggered consequences that are hurting us every day.  A radical growth in renewable energy industries gives us a quick pathway to create millions of great middle-class jobs, that will have countless benefits for our society. 

Third, tariffs are a really foolish way to deal with competition.  In the end, the consumer keeps buying and is the one that pays the extra cost created by the tariffs. Instead, we should have a serious subsidy and expand our renewable energy tax credits to incentivize the US renewable energy manufacturing sector.

To address the question, the price of a solar panel is about 1/3 of the cost of the installed price.  Making the panel more expensive does not change the economics of a solar project that much.  We are still seeing a great price per kWh of roughly 3 cents per kWh from utility scale solar projects.  It is this number that is driving the electric utility companies crazy.  Their pricing is no longer competitive, tariff or no tariff. Not to mention the environmental consequence of their offering. 

We badly need to expand the renewable energy industry in the United States. We need to be able to produce everything needed for a successful renewable energy project.  We need the utility companies to make the radical shift and buy renewable energy for redistribution. 

Tariffs ultimately are relatively inconsequential when there are other better alternatives to get us to where we need to be. 

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