Consumed by local solar events, it is easy to forget how global industry trends can also affect us. The US tariffs on the solar industry, for example, are a powerful reminder of the global economy and how closely tied we really are. With so much going on in the world of solar, we decided to explore a bit outside of our local industry, to understand what impacts the rest of the world might make.
Two major events have occurred in the United States this year which have seen a ripple effect in the solar industry worldwide. No. 1 was California’s mandate to install solar on all new homes. No. 2 was the Tariffs imposed by the federal government.
Sunny California Goes Green
California committed fully to going green this year by mandating all new homes be built with solar panels starting 2020. While some argue that this command and control technique is not the best way to reduce carbon emissions (for any number of reasons), others think this will encourage the future development of the state commit to sustainability in architecture. Regardless of what side you are on, it means that homes will continue being built, and will require solar panels. Some homebuilders may consider pre-building and permitting homes to avoid meeting these new regulations, but homes will still be built beyond 2020. This will lead to an increase in solar module demand, and may increase the price of solar modules.
The US solar industry has seen not one, but two sets of Tariffs to solar. The first was a 30% tariff on all solar cell and modules implemented in January 2018. Most recently, an additional 25% tariff has been imposed on imported products from China, including solar cells and modules. While it may be too soon to understand the full implications of these, two subsequent events have occurred. Following the initial imposition of 30% tariffs, $2.5 billion was lost in cancelled projects, not to mention the loss of jobs across the country. The second event that occurred was the increase in US based manufacturing plants. Some of these manufacturers are US based companies taking advantage of a higher barrier of entry to foreign firms; others are foreign firms seeking to circumvent the tariffs imposed.
Despite the increase in domestic manufacturing, the cost of foreign goods with high tariffs or the cost of domestically produced materials may have some influence on the price of solar in the US.
China continues to build solar cells and modules, in both China and the US. Recent Chinese government decisions to cut funding for solar could actually boost global panel production. Solar panels built in China are expected to see a significant fall in prices due to high manufacturing for current demand, but will likely not let up once domestic demand falls.
As India proposes to implement a 25% safeguard duty on solar panels from China, local solar companies are stockpiling solar panels from China. This stockpiling also contributes to an increased current demand for the Chinese solar panels.
So what does this all mean for us here in Canada? The US Tariff has already created reduced international solar cell and module demand, but has also increased local producers. China is currently encountering a high demand for solar cells and modules and has ramped up domestic and international production to keep up with the demand. These measures all create an increase in production and supply of solar panels. Furthermore, while the US pays more for imports and domestic products, Canadian solar installers can look forward to reduced prices due to the supply of modules and lack of tariffs.
Have other thoughts on global solar? Drop us a line!
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