Solar market report reflects growth, but trade dispute proves disruptive

Published on December 15, 2017 by Scott Sowers

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According to a report recently released by the Solar Energy Industries Association (SEIA) and GTM Research more than 2 gigawatts (GW) of solar capacity was added in the United States during the third quarter of 2017, but policy uncertainties cast a shadow over the sector.

It marks the eighth consecutive quarter where the industry added more than 2 GW of capacity, and yet some numbers this year are not as good as last year. Cumulative year-to-date figures show a 22 percent drop in installed capacity as compared to 2016, the latest Solar Market Insight (SMI) report said.

The blame for the drop-off is being pointed directly at complications resulting from a rarely used “Section 201” petition filed with the U.S. International Trade Commission (ITC) by two foreign-owned manufacturers, Suniva and Solar World, earlier this year. The companies are requesting a tariff be imposed on imported crystalline silicon photovoltaic modules.

Suniva is a Chinese-owned manufacturer based in Atlanta that filed for bankruptcy in April. Solar World is a German-owned firm with a subsidiary based in Oregon that has also been rocked by financial troubles.

The proposed tariff and sale of import licenses could generate as much as $89 million of revenue for the U.S. government in the first year. ITC Commissioner Meredith Broadbent recommended that the funds could be used to provide development assistance to domestic panel manufacturers.

According to SEIA, which strongly opposes the tariff, the downside would be added cost to the installation of solar systems that negatively impacts the industry as a whole.

Dan Whitten, SEIA’s vice president of communications, said, “The solar industry would not benefit at all from restrictive trade measures. The idea that it will help domestic manufacturing jobs is a myth, which is why dozens of American solar manufacturers have come out ardently opposed to the Section 201 petition,” he told Daily Energy Insider.

SEIA points to the numbers in the report as an indication of how sensitive the solar market is relative to any price increase or the possibility of one. “The solar industry competes with wind, natural gas, hydro – other forms of electricity in America – and the margins are very slim. Tariffs would raise solar prices to the point we would no longer be price competitive,” said Whitten.

The report states that more than half of the United States has now reached the long sought after “grid parity,” meaning that “the levelized cost of energy is below electricity bill savings in year one of system life,” and yet sales are off. Some regions of the country are considered “mature” regarding continued growth while other areas including Washington D.C., New Mexico, Virginia, and Idaho are experiencing record-breaking quarters for installations.

The debate and decision over who wins and loses in the tariff dust up ultimately will be decided at the highest level of policy makers with President Donald Trump expected to make a ruling in January.

“As this quarter’s SMI report shows, price increases dramatically impact deployment and demand. When prices go up, demand drops – it’s simple economics,” Whitten said. “We are hopeful the Administration will not unnecessarily handicap a growing, job-creating American economic engine, like the solar industry.”

Meanwhile, GTM Research’s base-case outlook forecasts that U.S. solar will fall year-over-year again in 2018 before rebounding in 2019, mainly due to issues related to utility photovoltaic (PV) procurement.

When examining utility-scale solar projects specifically, the report noted that those projects accounted for 51 percent of the third quarter’s installed capacity. Following a total of 1.0 GW of utility PV projects coming on-line in the third quarter, GTM Research expects 3.9 GW of additional capacity to come on-line during the fourth quarter.