Depending on solar import tariff level, GTM Research estimates that the net impact on solar demand in the US of its base forecast could range from just 9% under a 10-cents-per-watt tariff to 48% under a 40-cents-per-watt tariff. This means rather than installing around 70 GW in the US between 2018 and 2022, only around 36 GW would be added in the 40c/scenario. (photo credit: GTM Research)
- A new report from GTM Research expects US solar market demand to shrink by up to 48% if a 40c/W import tariff for solar modules will be introduced compared to a base case of around 70 GW new solar between 2018-2022
- Utility Scale Solar is likely to be the worst affected in such circumstances
- Residential PV segment will see largest state markets taking a big blow
- Impending decision has already had its impact in the form of increase in the cost to install solar in the US
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The impending US International Trade Commission’s (ITC) decision on the recommendations under Section 201 trade case filed by Suniva and SolarWorld are already negatively affecting the American solar market. The latest analysis from GTM Research states that – even though the final results are not in – the case has led “the cost to install solar has increased for the first time in ages” (see graph below)
In case the tariffs are imposed, which every expert expects after the US ITC voted unanimously that serious injury occurred due to imports on Sep. 22, utility scale solar will be the worst affected, according to GTM Research. This segment is the most sensitive to price increases, while the residential sector would be the most resilient.
Minimal disruption can be expected in the utility scale solar market if a 10-cents-per-watt cell tariff increase takes place, but it could be very large in case it reaches 40c/W. “The utility-scale market would be most sensitive because two-thirds of the project pipeline is driven by solar’s razor-thin economic competitiveness with other generation sources,” said GTM. While a 10c/W tariff would lead to a 10% smaller demand for utlity scale solar, a 40c/W tariff would shrink the market by 57% (see graph below).
GTM believes that the biggest volume impacts would be felt in the largest state markets in the residential segment. Those state markets that are taking baby steps to becoming a vibrant residential solar sector space, could ‘disappear almost entirely’.
“We estimate that the net impact to our base forecast could range from just 9% under a 10-cents-per-watt tariff to 48% under a 40-cents-per-watt tariff,” said the authors of the report. This means rather than installing around 70 GW in the US between 2018 and 2022, only around 36 GW would be added in the 40c/scenario.
If import tariffs are imposed, GTM Research estimates that nearly 5 GW will be not subject to tariffs – either because they are not subject to the petition (thin film) or cells and modules are manufactured in the US, Korea, Singapore Canada or Australia, which are all exempt. Moreover, over 2 GW of modules have been already procured from US developers in preparation of the adverse conditions of the anticipated upcoming tariff.
The ITC will vote on remedy recommendations on October 31, 2017 which then will be submitted to the White House on November 13, 2017. US President Donald Trump will then take the final call on the recommendations by January 12, 2018.