(Reuters) – Huawei Technology Co’s coming U.S. launch of a solar-panel control device is expected to collide with new Trump administration tariffs on Chinese electronics, undermining a product that analysts had seen as challenging rivals on pricing.

The Chinese company, best known for its smart phones and telecommunications equipment, has developed a new generation of low-cost solar inverters, which convert, manage and monitor energy produced by solar panels for home use.

Huawei has said it was aiming to roll out the product, called FusionHome, in the United States before the end of the summer, a year after its original target. Analysts and distributors had expected it to knock $100-$200 off current market prices of similar devices costing between $1,000 and $1,500 per household.

But a coming 25 percent tariff on Chinese electronics that would overturn much of Huawei’s expected price advantage may have stalled talks with U.S. installers and distributors, said analysts and research firms.

Huawei will either have to reduce its margins or raise prices, they said, potentially benefiting rival producers including SolarEdge and Enphase Energy, which are ramping up manufacturing outside China.

Huawei declined to comment on tariffs and did not respond to detailed questions from Reuters on the current status of FusionHome.

Company spokesman Joe Kelly said in July that the company was planning to introduce the new product to its partners in the United States this summer and that the timing of the roll-out would depend on those distributors.

The 25 percent tariff, if implemented, will take effect Aug. 23, and analysts covering the sector say it will affect the new Huawei product.

“It certainly would eat into profits and is just a question on how aggressive Huawei wants to be,” said Cowen & Co analyst Jeffrey Osborne.

Huawei’s foray into the high-margin residential market comes after panel installations fell in 2017 for the first time in seven years. GTM Research recently cut its forecast for 2018 residential solar market installations by 8 percent to 2.2 gigawatts.

Of four major solar panel makers Reuters talked to, only Utah-based Vivint Solar confirmed it was considering adding Huawei’s inverter to its lineup.

SunPower Corp and Tesla’s SolarCity did not respond to Reuters’ requests for comment. A SunRun spokeswoman said the company welcomed new innovations that made solar energy cheaper and more accessible.

“A 25 percent tariff could eat up the margins of cost-competitive Chinese manufacturers and potentially change the player landscape of the U.S. solar inverter market,” said another analyst, Iben Frimann-Dahl from Rystad Energy.

S&P Global Market Intelligence ($):

A contraction in China’s solar market is blunting the Trump administration’s efforts to use tariffs to raise domestic equipment prices in hopes of spurring more U.S. manufacturing.

Four months after President Donald Trump imposed duties on most imported solar cells and panels, Beijing in May moved to limit the pace of growth in the world’s biggest solar market in order to reduce subsidy costs and encourage industry consolidation. The lost demand has sent equipment prices tumbling.

“In terms of equipment costs, we definitely are seeing spot prices … declining,” Edward Fenster, executive chairman of San Francisco-based rooftop solar developer Sunrun Inc., said on an Aug. 9 earnings call. “Panel prices on a spot basis are probably approximately back where they were a year ago prior to the run-up in price ahead of the Section 201 tariff,” he added, referring to the section of the Trade Act of 1974 that the administration is using to target foreign-made cells and panels.

Dana Russel, CFO and executive vice president of Vivint Solar Inc. in Utah, said on an earnings call Aug. 7 that he has also seen module prices declining after a “slight increase” several months ago due to the U.S. tariffs.

“The net result is that capital costs for solar projects in the U.S. have actually declined in recent months,” TerraForm Power Inc. CEO John Marcus Stinebaugh said on an Aug. 14 earnings call. TerraForm Power, based in New York City and majority-owned by Brookfield Asset Management Inc., had nearly 3,600 MW of renewable energy assets under management as of June 30.

Edurne Zoco, head of solar research at IHS Markit, in June predicted that price reductions resulting from China’s new solar policies could undercut the economic rationale for manufacturing in America. While a number of foreign companies have announced plans to open plants in the U.S., Goldman Sachs analysts said “cyclical pricing pressures” and uncertainty about the timing of the tariff regime increase the risk of such an undertaking.

More ($): Despite tariffs, solar panels getting cheaper in US

Ocean City plans to break ground Thursday on a solar farm that will generate enough power to run the resort town’s convention center and municipal buildings.

In a statement, Mayor Rick Meehan called it “a true example of the Town of Ocean City’s commitment to renewable energy and a sustainable future for our resort community.”

The project comes as town leaders fight an offshore wind farm they say could disrupt beach views and send tourists elsewhere. The City Council decided in May even free electricity wouldn’t justify the project, rejecting such an offer from developer U.S. Wind in a closed-door session in May.

U.S. Wind is planning to build 32 wind turbines a minimum of 17 nautical miles from shore. The company’s renderings show them appearing as specks on the horizon on a clear day.

But Ocean City leaders say they fear the project will be more imposing than that. They also worry it could grow — Maryland regulators approved U.S. Wind for as many as 64 turbines as close as 14 miles from shore.

The solar farm will only be 10 miles from beaches — but in the opposite direction. Constellation Energy Group plans to build 30,000 photovoltaic panels on 113 acres near Berlin, at the intersection of U.S. Route 50 and State Route 90, the Ocean City Expressway.

Constellation said the Gateway Solar project helps satisfy a requirement that its parent company, Chicago-based Exelon Corp., build at least 10 megawatts of solar energy on the Delmarva peninsula. That was a condition Maryland regulators placed on Exelon in approving its 2016 purchase of Pepco Holdings, the parent company of utility Delmarva Power and Light.

Ocean City officials said the project accounts for 20 percent of the town’s energy use. Through a deal with Constellation offering the energy below , the project will save Ocean City taxpayers $120,000 per year, town officials said.

sdance@baltsun.com

twitter.com/ssdance

EnSync Energy recently announced the sale of a project under a 20-year power purchase agreement with the California Department of Forestry and Fire Protection to Standard Solar, a company which specializes in the development and financing of solar power systems. Under the agreement, EnSync Energy is constructing a 600-kilowatt solar installation at the CAL FIRE training facility in Ione, California.

Scott Wiater, president and CEO of Standard Solar, answered some questions for Solar Love.

1. How did the arrangement with CAL FIRE come about?

Standard Solar works with an extensive network of developers and installers throughout the entire country. The Cal Fire project was brought to us from one of our channel partners.

2. When will the solar power system be completed and become operational?

The system is expected to be fully constructed and operational by the end of the year.

3. How do you help finance solar power projects?

Standard Solar is able to support with financing in a wide variety of ways depending on the stage of the solar project development. For example, on early stage project developments, we can work with partners to craft the ideal financing proposal for the host-customer and fund every step of the way through to construction and operation. We also come across late-stage projects that are fully contracted with host-customers and in many cases under construction. In these situations, Standard Solar can provide financing to acquire the solar project facility and serve as the long-term owner/operator of the system. Because Standard Solar is utilizing in-house funds, it provides us the flexibility to focus on providing value throughout the full range of the solar project development cycle.

4. Are you working on other solar power development projects in CA?

Yes, given that California continues to be the leading solar market in the US, our focus on increasing our operational footprint in the California market remains a top company priority. We have more than 100 MWs of projects under evaluation, in active development, or under construction in the California market.

5. What is the company roadmap for the next 3–5 years?

Our goal over the next 3-5 years will be continuing to identify and execute on renewable projects that will allow our parent company to diversify their generating asset mix that deliver a healthy return on investment. We have dedicated capital resources that exceed $600 million which can be increased should the demand for financing exceed this amount.

6. Why is providing a range of financing for solar power projects important, and is it even more so right now due to the economic and policy conditions?

Solar projects are a lot like fingerprints — each one is unique. To be a strong player in the solar industry, you have to be able to reach your clients where they are, whether that’s through a loan, a lease, a power-purchase agreement (PPA) or some other creative financing deal. Being a one-size-fits-all financing institution isn’t going to lead to success. And with today’s tumultuous economic and policy conditions, flexibility is paramount if you want to make sure you get projects done and get them done in ways that are financially advantageous to everyone involved.

7. What are some other new projects you are working on right now you are excited about?

Right now, we are most excited about our expansion into new states and emerging markets (we are now contracted, constructing, or operational in over a dozen states). Our competitive financing coupled with our channel partnership approach allows us to remove regional market barriers and widen our pool of renewable asset opportunities.

Image Credit: energy.utah.gov

Don’t forget to follow Solar Love on Facebook, Twitter, Google+, and/or RSS!! Do it for the sun.