The future looks promising for Cypress Creek Renewables, one of the largest solar companies in the U.S. It was recently awarded six solar projects by New York State’s Renewable Energy Projects, which allocated $1.4 billion to 26 clean energy projects. Four of them are in the Mohawk Valley, one in Central New York and one in Mid-Hudson.
What about the 30 percent tariff on imported solar panels President Trump instituted in January? Cypress Creek had the financial flexibility to buy inventory in advance of the tariff and hasn’t laid off any workers because of it, said Jeff McKay, a spokesman for the company.
Although the tariff inevitably raised solar projects’ cost, residential solar installations are expected to rebound after a downturn in 2017 because the panels on which the tariff is applied account for only about 15 percent of the total cost. However, larger-scale projects are more sensitive to the panels’ price rise, so the tariff will blunt the robust growth in commercial and utility solar. 2018 was projected to create 23,000jobs than if there were no tariff, according to the Solar Energy Industry Association (SEIA).
“It’s more about the potential jobs that would have been created,” said Austin Perea, lead author of the 2017 U.S. Solar Market Insight. “Those opportunities are going to be missed out because of reduction to future demand.” Collin Smith, coauthor of the report, added that the squeeze on profit margin “might not translate into any headline announcement of workers’ laid off.”
The tariff’s limited impact is good news for workers. John Beard, 54, of Frankston, Texas, has been working in solar industry since 2009. Two months ago, he was promoted from installer to solar project lead in charge of both project design and installation. His wage is $30 an hour, twice what he earned when he first started working as a solar installer in 2009.
The number of solar jobs increased by 75 percent in the last five years, to more than 250,000, nine times as fast as than the national jobs growth rate in the same time period. The median wage for mid-level solar installer is $21 an hour, more than in similar industries, according to Solar Jobs Census. The relatively new and fast-growing solar sector hires from a limited talent pool in a tight national labor market, often drawing workers from construction and other industries.
“The industry growing so much that it actually needs more people, and as my skills get more solid, I can be more productive,” said Beard, whose raise meant he could afford a vacation in Melbourne, Australia, with his wife last summer.
The 30 percent tariff on imported solar modules and cells is a result of the petition from Suniva and SolarWorld, two American solar manufacturing companies. They invoked the “global safeguard” law, a provision of the trade laws that allows for temporary relief when surging imports are causing “serious injury” to a U.S. industry. The tariff starts at 30 percent in the first year, declines to 25 percent in the second and, 20 percent in the third, and ends at 15 percent in the fourth. The first 2.5 gigawatts of imported solar cells are exempt from the tariff each year.
However, the tariff won’t have much effect on solar manufacturing employment. Manufacturing jobs account for only 14.7 percent of total solar jobs. Installation, sales and distribution jobs lost because of the tariff will outnumber the few manufacturing jobs it might save.
“That’s like killing 1,000 enemies at the price of 800 casualties,” said Jiru Shen, political economist at the Chinese Academy of Social Sciences, invoking an old Chinese saying. China now dominates the global solar supply chain; its share of global solar cell production surged from 7 percent in 2005 to 60 percent in 2017.
https://fred.stlouisfed.org/graph/fredgraph.png?g=jh2m
From 2012 to 2016, American solar panel imports grew by about 500 percent, and prices for solar cells and modules fell by 60 percent, to a point where most U.S. producers ceased domestic production. By 2017, only two American solar factories remained viable, according to the U.S. International Trade Commission.
“We don’t have a real infrastructure in this country for solar manufacturing,” said Dan Whitten, an SEIA spokesman. “It’s hard to build it from ground up.”.
Even more important than the tariffs is the federal tax credit that has helped solar installation grow by over 1,600 percent a year since it was implemented in 2006, according to the SEIA. It was to expire in 2016, but SEIA has successfully advocated extending it to 2021.
The tax credit for both residential and commercial scale is 30 percent, applying to projects that commence construction through 2019. The tax credit then drops to 26 percent in 2020 and 22 percent in 2021. After 2021, the residential credit will drop to zero, while the commercial and utility credit will permanently drop to 10 percent.
“The tax credit steps down 4 percent a time, which is a nice gradual change that’s much easier for the industry to manage,” said Mike Balma, development director at Sunwork, a nonprofit solar installation company in San Francisco. “But if it were to go away, oh, my gosh, it’s going to be painful,”
Beard observed from his almost a decade of experience working in solar how his customers had changed. In the beginning, they were motivated by their concerns for the environment. Now they are primarily looking to save money on energy bills.
The tariff doesn’t cast any clouds on Beard’s affection toward his new job as project lead, which combines installation and project design. Now he spends every Wednesday learning project design and practicing with related software. He even sees himself and his wife settling in San Francisco someday.
“I like it a lot!” he said. “I always like the design part of it, but mostly worked in just the installation part. Now I enjoy being able to do both.”