The World's #1 Renewable Energy Network for News, Information, and Companies.

Report: Tariffs' Impact on Solar Project Costs Will Be Small

A new set of tariffs on Chinese silicon solar cells could hike the wholesale prices of solar panels shipped to the United States by 10-12 percent, but the tariff will only add a small amount to the price a developer will pay for building a solar project, according to market research firm IHS on Tuesday.

The 10-12 percent increase will come from the use of Taiwanese solar cells, which appear to have become the sought-after commodity since the U.S. Department of Commerce announced on May 17 a set of preliminary tariffs on silicon solar cells made in China. With a 10 percent jump in solar panel pricing, the cost of installing a ground-mounted system to a developer will not go up nearly as much, however, because the system cost includes other factors, such as labor, permitting, marketing and sales and even customer acquisition. Some critics of the tariffs have warned about a big jump in project costs for developers, installers and consumers. 

IHS estimated that a developer could end up selling a ground-mounted system at higher prices to investors, from $2.56 per watt to $2.65 per watt, or about 3.5 percent, if the solar panel price goes up by 10 percent, said Mike Sheppard, an analyst at IHS, in an email. That means the return on investment could fall by 1.5-2.5 percent, he added. Over the past week, Chinese and Taiwanese solar companies have told me that they don’t expect the tariffs to add significant costs to solar projects or lead to a hike in solar electricity prices.

 “This reduced (return on investment) means some investors may think twice when valuing other vehicles to put their money,” Sheppard said in a statement. “However, most investors will not be deterred.”

The commerce department is imposing tariffs of around 31 percent on solar cells made by 61 manufacturers, including those among the top 10 solar cell and panel makers worldwide: Suntech Power, Trina Solar, Yingli Green Energy, Canadian Solar, JinkoSolar and Hanwha SolarOne. The rest of the Chinese companies that also ship to the U.S. face about 250 percent tariffs.

“We think the tariff itself is unfortunate and unwarranted and unnecessary,” said Michael Potter, chief financial officer at Canadian Solar, during an interview last Friday. Canadian Solar is considered a Chinese manufacturer because the bulk of its operations are in China.

But the companies that filed the complaint against the Chinese manufacturers said the commerce department’s decision verified what they contended all along: Chinese companies are selling products at below-market prices to unfairly force out competitors.

The tariffs apply to only solar cells, so Chinese manufacturers could still use their solar panel assembly plants, which remain a cheaper option than using solar panel factories elsewhere to meet the demand of the U.S. market, Potter said.

Canadian Solar has bought solar cells from Taiwanese companies, and it expects the relationship it has already established with these cell suppliers to enable it to avoid the tariffs quickly. Potter declined to name the Taiwanese cell suppliers. He also said the company doesn’t expect to raise its solar panel prices even though outsourcing cells tends to push up the company’s production cost because the company has used enough Taiwanese solar cells in the past to build those increases into its pricing models.  

Potter declined to disclose how much more expensive it will be when Canadian Solar has to rely on cells made by someone else. Trina Solar executives told analysts during a conference call to discuss its earnings last week that the use of Taiwanese solar cells will mean a production cost increase of around $0.03 and $0.05 per watt, according to a research note by the Deutsche Bank. For some companies, the production cost increases would be around $0.05 to $0.07 per watt. 

The average selling price for solar panels shipped to the United States was around $1 per watt when I caught up with Chinese solar companies at PV America West in March this year. The average price for panels going to Europe was less, around $0.75 to $0.85 per watt.

Major Chinese manufacturers have been posting losses in the past year because a glut of solar panels in the world market – and incentive policy changes in key markets such as Germany – have caused solar panel prices to plummet. So while they aren’t expecting to see a big hike in production costs, they may take longer to start to make profits again.

Big Taiwanese solar cell makers include Motech, Gintech and Neo Solar. Motech, though primarily a cell maker with 1.5 gigawatts of annual production capacity, also has 200 megawatts of solar panel assembly capacity spread out in factories in China, Japan and the United States. It bought a U.S. solar panel factory (40 megawatts) in Delaware from General Electric and started its own production there in 2010, said Derick Botha, vice president of sales and marketing for Motech’s American operation, during an interview last week.

Botha noted that the price for solar panels now accounts for about a third of what a developer pays to install a megawatt-scale project – and less than that if the developer includes permitting and marketing costs. So the final impact of the tariffs on solar electricity will likely be minimal.

“I honestly don’t think there will be a significant impact on the consumers,” Botha said. 

RELATED ARTICLES

Canadian Climate Goals

Canada Announces Weak Climate Target

Danielle Droitsch, NRDC Last week, Canada has announced its contribution to the global effort to reduce greenhouse gases by announcing its post-2020 target. The target announced today is off-track to the 80 percent cut by 2050 they committed to in...
Renewable Energy Stocks

What Drives Alternative Energy Stocks?

Harris Roen, The Roen Financial Report Alternative energy became a serious market player after the turn of the millennium. Since that time, solar, wind, smart grid and other alternative energy stocks have experienced both strong up and down trends. The forces at...
Rooftop Solar Panels

Hypocrisy? While Buffett Champions Renewables, His Company Fights Rooftop Solar

Mark Chediak, Noah Buhayar and Margaret Newkirk, Bloomberg Warren Buffett highlights how his Berkshire Hathaway Inc. utilities make massive investments in renewable energy. Meanwhile, in Nevada, the company is fighting a plan that would encourage more residents to use green power.
Japan Microgrid

Born from Disaster: Japan Establishes First Microgrid Community

Junko Movellan, Correspondent Although Japan's Fukushima prefecture is most commonly associated with the 2011 disaster due to the nuclear power melt-down, Miyazaki prefecture, located north of Fukushima, suffered from the largest death toll, close to 10...
Ucilia Wang is a California-based freelance journalist who writes about renewable energy. She previously was the associate editor at Greentech Media and a staff writer covering the semiconductor industry at Red Herring. In addition to Renewable En...

CURRENT MAGAZINE ISSUE

03/01/2015
Volume 18, Issue 3
file

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

EU PVSEC 2015 (European PV Solar Energy Conference and Exhibition)

The EU PVSEC is the largest international Conference for Photovoltaic re...

Energy Security: Opportunity Power with the Sunny Boy Secure Power ...

Wouldn’t it be great to have a grid-tied inverter that could still...

SMA More Power, More Profit Tour - Duluth

SMA’s More Power, More Profit Tour is aimed to provide highly-valu...

COMPANY BLOGS

EU PVSEC 2014 extends its Scope

Added focus on application and policy topicsAbstracts for conference con...

EU PVSEC 2014: Call for Papers Receives Great Response

More than 1,500 contributions apply for presentation in AmsterdamScienti...

Solar Impulse Flying From China to Hawaii

The team behind Solar Impulse, the solar-powered airplane, is prepa...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS