US PV Import Tariffs To Cut New Capacity by 11%

GTM Research Expects President Trump’s Import Tariffs To Reduce US PV Installation Activity By 7.6 GW Through 2022
02:46 PM (Beijing Time) - 29. January 2018
n_mar_Americas_USA_US PV Import Tariffs_ab 2018-01-24

Among the three major segments that make up PV deployment in the US, utility-scale installations will take a hit of 65% in the 7.6 GW reduction predicted by GTM Research. (Source: GTM Research)

Key Takeaways

  • US solar PV installations will slow down by around 11% over next 5 years, according to GTM Research
  • GTM expects a cumulative 7.6 GW decrease over the previously estimated 68.9 GW capacity installation between 2018 and 2022
  • Utility-scale PV will take biggest hit
  • Southern US states, such as Texas, Florida, Georgia and South Carolina, are likely to bear most of the tariff impact

With the 30% tariff on imported solar cells and modules issued by US President Donald Trump, the US will witness a net reduction in installations of around 11% over the next 5 years. In its latest commentary, GTM Research believes the US will see its cumulative solar installations dropping to 61.3 GW, a decrease of 7.6 GW compared to the original projection of 68.9 GW between 2018 to 2022.   

Utility-scale PV capacity, the key driver for the US solar market, will be the worst hit segment. The loss of newly installed capacity from large installations will be approximately 65% of the 7.6 GW of expected reduction.

The tariffs would lead to an average $0.10/W increase of module prices in the first year and will gradually come down to a $0.04/W premium by the fourth year. Trump’s order imposes tariffs for four years, starting at 30% in year one and reducing 5% every year over the remaining period (see Trump Slaps 30% Tariff On Imported Cells & Modules).

GTM Research’s $0.10 per watt assessment is less than the $0.40 per watt requested by Section 201 Trade Case petitioners Suniva and SolarWorld. If the latter had been approved, it would have led to a decrease of up to 48% of newly installed capacity over the next five years, stated GTM back in October 2017 (see 36 GW Less Due To US Tariff Possible).

The tariffs on market dynamics will have a larger impact in 2019, since many of this year’s projects are already under construction. The modules already in inventory will help lessen the effect in 2018.

According to GTM Research, new and emerging state markets are disproportionately affected. Southern states, such as Texas, Florida, Georgia and South Carolina, are likely to bear most impact of the tariffs.

Trump’s decision on solar tariffs matches closely to recommendations from the US International Trade Commission,” said MJ Shiao, head of Americas at GTM Research. “The overall effect is a meaningful but not destructive reduction to expected solar installations in concert with modest improvements to a still challenging environment for domestic solar cell and module manufacturing.”

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