Trump Proclaims. Yesterday, in a public signing in the Oval Office Trump signed the 201 tariffs in a proclamation. I can’t do the comments justice, you have to watch the video for yourself to listen to see how out of sync the comments are with reality. You have to wonder where the disconnect is when the solar industry met with the person standing behind the President but the comments remain so factually incorrect. While I expect the blame to be put on the Trump factor, I am concerned that the advocacy appears to have failed at every level, the USITC, the USTR and then the President. As a reminder, this is the third trade case that solar has lost. Outside of the ITC extension, we can’t say that DC has been kind to solar.
Don’t Buy The BS. Solar will survive is not an answer for this tariff. Yes, the market will move forward because there is no other option. BUT. This isn’t a non-factor. Solar was not advocating for this result privately. Manufacturing will still not thrive in the US. I’ve read all the spin that has come across my desk and it’s largely all BS. Most of all, this is not a good thing for solar. We’ve all been struggling to find profits within the right balance of volume. Taking 10 cents off the top means less money to pay for the operations of your solar company.
Tariff Impact Data. Greentech Media is out with the data on the impact from the tariff which is enacted on February 7th. In the next month, you will also see a process for exemptions for products that consider themselves eligible. GTM Research will be on our conference call today at 3pm.
For Sale. PREPA, the Puerto Rico public utility, is going to be privatized. Consider NextEra an interesting candidate to make that move given the need for some aid from Congress to make it work. You can also see some European players make a move to engage the process.
My View On What’s Next. Some things need to change in solar. Going 0 for 3 on trade cases means that the entire approach is broken. My thoughts on the matter. Make sure to register for SolarWakeup Live! New York to continue this discussion
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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.
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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 EPCs squared off on who takes tariff risk, most of the time neither choosing to take that on and the project was delayed. Second, the industry should be upset at the result. This is a 30% increase on the cost of solar panels for no reason, not even Suniva and SolarWorld can call this a victory meaning everyone is a loser.
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 EPCs squared off on who takes tariff risk, most of the time neither choosing to take that on and the project was delayed. Second, the industry should be upset at the result. This is a 30% increase on the cost of solar panels for no reason, not even Suniva and SolarWorld can call this a victory meaning everyone is a loser.
Look to markets like Texas, South Carolina and remaining PURPA territories for most of the impact. 3 cents per kWh looks a lot worse with an extra $0.10/watt in fees. The squeeze on installers, labor and balance of plant components will be harsh as developers look to make deals pencil.
The positive of this announcement is that it is over and it could have been much worse. Quite frankly I was bracing for that scenario. I have largely been quiet about how the process was run in order to let those in the room give space to advocate and many solar folks did the same which is probably the most successful takeaway in this case. This is however, the third major trade loss for solar. The ups and downs and solar's inability to squash these cases requires that we become retrospective about what kind of industry we want to work in.
Going forward, you will see public outrage, private sighs of relief, optimistic reviews to boards of directors all culminating in a personal requirement to look in the mirror. SEIA is underfunded. So are the other solar advocacy groups. Solar installers say that margins don't justify investment and they prefer to keep them local and solar supporters are asking how they can help. When there is a rally they are thinly attended, calls to action barely responded to.
Today is a good day to talk about a reset, a reset that I have pushed back against, but a reset that is required nonetheless. If you have felt un- or underrepresented, you are not wrong. The discussion on fixing that needs to start with the people of solar and it needs to start today.
Related: USTR 201 Determination Release
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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