The recent U.S. administration’s 30 percent tariff on imported solar cells and modules has not been well received by the solar industry. Effective Jan. 1, the first 2.5 GW of imported cells each year are excluded from the tariff, while all additional imports are subject to a 30 percent tariff in 2018—the rate declines to 25 percent in 2019, 20 percent in 2020 and 15 percent in 2021. Currently, about 80 percent of PV systems use imported cells. The solar industry is up in arms, claiming the tariff will cost 23,000 solar jobs and result in lower solar adoption. But what does a 30 percent tariff on panels really mean in terms of overall costs?

The answer to that question depends on whether you are interested in large utility scale solar or small residential solar. Utility scale solar will likely be hardest hit, the reason being that panel costs represent as much as 34 percent of the total costs for utility scale solar compared to only 13 percent for residential solar, according to NREL’s (Nation Renewable Energy Laboratory) latest Solar Photovoltaic System Cost Benchmark study (see graph). This means that the total cost of a residential system would only increase by approximately 4 percent, compared to a 10 percent increase for utility solar.

What impact the tariff will have on solar adoption in your service territory will likely depend on whether your area is dominated by large scale solar projects or smaller residential solar. It will be interesting to see how this impact shakes out over the next few years.

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Michael Russo
Forecast Analyst - Itron
Michael Russo is an energy analyst with Itron’s Forecasting Division. Russo is responsible for statistical modeling, data analysis, implementing forecasting software systems and providing client support. Russo has worked with clients to develop forecast models for both short-term and long-term sales, energy and demand forecasts for the electric utility industry as well as the natural gas industry. Russo received his B.A. in Economics from the University of Massachusetts and is currently pursuing a Master’s Degree in International Economics at Suffolk University.