This is your SolarWakeup for January 23rd, 2018
Tariff Breakdown Conference Call. Join me tomorrow for a conference call at 3 PM EST to discuss the tariffs put in place. I will have a few experts on to discuss their take in addition to mine. RSVP Here.
The Decision. By now you have seen the news, Trump put a 30% tariff in place in response to the ridiculous 201 petition. It declines 5% per year and the first 2.5GW of imported cells are exempt. There does not appear to be an exemption for anything, module size or country of origin. Everyone is denouncing the decision rather harshly, especially given the overarching advocacy against the tariffs. This is the third trade case that solar has lost in the past few years, a record that is not to be emulated.
The Bad. Module prices are going up and it’s going to hurt. Markets, especially large scale ground mount, in places that use PURPA or hedges are going to suffer. 10 cents is more than the margin in most cases which means that the price pressure is going to get intense. The fact that solar lost again is also a sign that we must think about doing things differently. I ask again, what would it take for a US cell phone maker to file a 201 against Apple and actually have it hear. It would never happen. Solar must review the plan of action it undertook and understand what went wrong and what has to change going forward.
The Good. It’s not nearly as bad as it could have been. On the other hand, once pricing settles back into place, you may be surprised to see pricing below Q1 2017. In fact, I believe that most people will buy panels below where they bought most of the 2017 modules at. Also, the uncertainty is over. No more discussions about import risk and who takes the risk of retroactive tariffs. You can go about your business with a clear set of guidelines. You have also seen how bad it can get if you don’t get involved. Use this opportunity to look at your own actions and what you could have done differently.
Settlement. Lighthizer’s comment is right in the tariff press release. The USTR will look to engage interested parties to try and create a global settlement. My take, the 201 tariffs do little to help SolarWorld and Suniva with cash and the global settlement is the best way. I would look to remove the all the US tariffs and the Chinese tariffs on US silicon while creating an import license to drive cash to US manufacturers. This would lower the overall cost of solar in America and grow the market while actually helping grow US-based manufacturing.
Longer View. If you want even more of my opinion on the matter including what I think needs to happen next, check it out here.
Talks Continue. Join me in New York next Wednesday to talk about the 201 process with an industry insider who was in the room. Hint: It’s not Alexander Hamilton. Register here.
Have a great day!
SolarWakeup View: Trump Announces Section 201 Determinations for Cells and Modules
By Yann Brandt What: Trump Announces Section 201 Determinations for Cells and Modules Summary: Shortly after the Government shutdown ended, Trump announced 30% tariffs on cells and modules with the first 2.5GW of imported cells being tariff free. This ends the 201 proceedings after over 6 months of battling within the solar industry. The tariff has a 4 year life with a 5% reduction each year ending with 15% in year 4. SolarWakeup View: Now that the tariff is set, the solar industry has a few things ahead for itself. First, it can start transacting again. For the past 6 months, suppliers and … Read More
This is your SolarWakeup for January 22nd, 2018
What A Week. It is widely expected and planned that Trump will announce a tariff in response to the 201 petition filed by the terrible companies, SolarWorld and Suniva. Led by terrible management, executives are hoping to reframe themselves by blaming others. If you haven’t stopped buying those products, you should ask yourself why. More than anything the damage is done already, the market has been at a standstill for over 6 months while the case went through the process. I personally believe that this was done with intention. Suniva met with trade representatives prior to filing and my conversations with agency personnel also indicated that a move against China was desired by the administration.
What To Expect. SEIA and solar executives met with Wilbur Ross a few weeks back. Now that it seems that Ross is on the outs with Trump with Lighthizer taking command of trade negotiations that meeting could be a negative if Ross went to the Oval with a pro-solar view. As Amy Harder told the crowd at SolarWakeup Live! DC, Lighthizer is much more of a China hawk than most in the group of advisors. Even with the conservative pushback on the solar tariffs you should brace yourself for tariffs and quotas, the question is how much of each. Some have said that tariffs could come in high but not high enough to matter to SolarWorld and lacking the cash for Suniva to be happy. Quotas could be put in place but nobody is excited about the prospects of having totally the total imports from China.
A Global Settlement? I can only hope. This has been 7 years in the making and everybody is losing right now except those opposed to solar. The idea would be to stop the tariffs in the US on foreign modules, stop the tariffs in China on silicon and add some cash import fees on materials that would result in aiding local manufacturing. Downstream solar keeps getting crushed by these bogus trade cases as development entities can’t handle the starts and stops of the market.
SolarWakeup View. First, solar needs to take some lessons from the Patriots. Win at any cost. Stay tuned for more info once the tariff is announced. We will hold a conference call shortly after the announcement with a few experts to give you their take. Make sure you join us in New York to get more info about the tariffs and how it will impact your business going forward. Only about 20 tickets left at this point so get them while they are still available.
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This is your SolarWakeup for January 19th, 2018
Solar Reality Show. “You know, they dump ‘em - government-subsidized, lots of things happening - they dump the panels, then everybody goes out of business,” Trump said (to Reuters in the Oval Office) just before teasing that the announcement on tariffs is forthcoming. Advocates appear to be indicating another level if the tariffs come back bad for solar. They are saying that tariffs could be the baseline towards a global settlement on modules and silicon but analysts are not optimistic that this could happen. Either way, we will be going through this in great detail at SolarWakeup Live in New York in a few weeks. For one day only, you get 50% off by using code LIVE50 thanks to the bigger theater space we moved into.
SolarWakeup On The Road. Over the next few months you will have plenty of places to meet me and talk solar. I will be hosting a keynote interview at Midwest Solar Expo in May and COSEIA’s Solar Power Mountain West in March. In February I will be in DC for a few days for a DOE event and speaking at a storage event in San Francisco. Pretty much if there is a microphone that needs to be spoken into, count on me to try and stand behind it. Come say hello at all of these events and look out for the next SolarWakeup Live after New York.
Storage Versus Gas. Gas is getting cheaper and it is much more flexible than peaker plants. It dispatches faster and for shorter periods of time as needed. That being said, stand alone storage economics will be hurt by the volatility of the charging price unless colocated with generation plants, preferably solar plants. If colocated with solar than you must be thinking about dc-coupled because redoing your interconnection and using additional bidirectional inverters will change the way you finance your solar plant. I’d like someone to challenge me on this thinking because I haven’t heard an argument for ac-coupled on colocated plants.
Social Cost Of Business. Blackrock’s CEO, Larry Fink, knows business and he knows businesses that make money. He is also out with a new letter saying that businesses owe society a bit of a social contract and the requirement to think about the longer term. For many of us in solar, we realize our work is hard and oftentimes without thanks. We work on projects with thin margins and a tough road ahead but we know our mission is worth it. Similar to Fink’s social impact I want to ask the following question to solar companies. If you were asked to give $10,000 a year to solar advocates like Vote Solar or your State Chapter, would it kill your business? If yes, do you think your business has issues other than market/regulatory? If no, can your business be killed by market/regulatory changes?
Power Market Mayhem. January has been a crazy month for power markets. ERCOT went to over $2,000/MWh and gas prices in New York went to over $175/mmBtu. Both crazy.
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Have a great day!