A few days ago the Trump administration announced that it was imposing a 30% tariff on imported solar panels and components. Around 80% of the panels used in the US today are imported, so this affects many of the people looking to add solar (like we were starting to). But just how much impact does it have on the total cost of installing solar?
Components of a Solar Installation
The panels are just one part of the overall installation. In addition, there are the electrical components (inverter and monitoring system), wiring, mounting hardware, labor costs and, of course, the various permits and fees that are required. So, the 30% tariff applied to the panels doesn’t translate directly into a 30% increase in the cost to install solar.
Impact of the Tariff
The stated goal of the tariff is to try to level the playing field for US solar manufacturers. Sadly, the consensus seems to be that while it may make their panels more competitive on price, the most likely end result of increasing the price is less people installing solar. And, besides the environmental impact of that, the more immediate impact will be to slow growth in the solar installation business – one of the fastest growing segments of the US economy.
Price is also not the only deciding factor when looking at the panels. Efficiency, power output and warranty length also come into consideration, and the two commonly mentioned proponents of the tariff (Suniva and SunWorld) both have lower efficiency ratings than some of the imports, and shorter warranty periods.
The real winners here are likely the fossil fuel industry players. With less people converting to solar the demand for energy from natural gas and coal fired power stations stays strong (they accounted for over 60% of the electricity generation in 2016).
Estimated Residential Installation Impact
Since we have been looking at installing solar here, I have a selection of quotes. The range we are seeing is around $10K to $15K after tax credits, and they are installing between 14 and 16 panels on our roof. While the quotes did not break out the individual line items, a little research suggests about $5K of the cost is in the panels. All the quotes I have used imported panels, so they would all be subject to the increase. That would add about $1500 to the pre-tax credit price, but that would be subject to the tax credit discount, so it would add about $1000 to the net cost, or between 7% and 10%.
Interestingly, the panels they selected were already the more expensive even before the tariff is added (but they were more efficient, meaning less panels were necessary).
Commercial solar and solar installations for generation are likely to be hit harder by the tariff since they will have a greater number of panels. Large commercial buildings covering their entire roof in panels or the large scale solar generation facilities have many times more panels than the average residential installation.