U.S. solar prices continue falling despite tariffs

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