Talk about money: Tariffs on solar would raise costs of renewable energy

China is accused of dumping solar panels in the U.S. at ultra-low prices, pushing Solyndra of Fremont into bankruptcy and causing other U.S. manufacturers to seek help from Washington.
The International Trade Commission is investigating, and if it finds China guilty of “predatory pricing,” it may add tariffs to the prices of Chinese-made solar panels, raising the cost to Americans who want to equip their homes with solar energy systems.
Washington wants to cultivate a budding industry and protect American jobs. And the Obama administration is still smarting after giving Solyndra loan guarantees that went sour and cost taxpayers $535 billion. But tariffs would do Americans more harm than good.
“Placing tariffs on foreign-made solar equipment is only going to increase the cost of generating solar electricity and reduce market demand for solar,” said Jeff Parr, owner of Solar Technologies in Santa Cruz, which has installed more than 1,000 solar power systems in the past 14 years. “And that would eliminate a lot of solar jobs.”
There are 100,000 jobs in the U.S. in installing, financing, shipping, monitoring and selling solar panels, Parr said, but manufacturing the panels is becoming “an offshore activity.”
The high costs of labor, health care and environmental regulations make it nearly impossible for U.S. companies to compete with manufacturers in China, where wages are low and regulations nonexistent.
Solyndra’s future looked bright in early 2008, because a strong global economy had driven up the price of silicon, the main ingredient in most solar panels. Solyndra’s technology didn’t use silicon, giving it a competitive advantage.
But silicon prices plunged by more than 80 percent over the next 15 months, according to Bloomberg News, and that left Solyndra unable to compete with Chinese-made silicon panels.
Other solar panel makers are hurting, too. Arizona-based First Solar last month lowered its profit forecast and cut 60 jobs in Santa Clara. First Solar and other U.S. manufacturers are lobbying hard in Washington for tariffs on Chinese panels.
But low-cost panels are making solar systems more affordable for Americans. Parr said his customers are able to buy solar systems and recover their upfront costs with savings on their Pacific Gas and Electric Co. bills in six to seven years. Or they can lease a solar system with no upfront investment and cut their electric bills by 25 percent.
The savings would increase over time, Parr said, because PG&E raises its rates an average of 6.7 percent a year, while the costs of a solar system are fixed.
Yes, cheap solar panels from China take away jobs as U.S. manufacturers become less competitive. But jobs are being created at companies like Solar Technologies as solar power systems become more affordable.
As more Americans install solar systems, we can reduce our dependence on dirtier forms of energy, like oil and gas, much of which we buy from unfriendly countries. Our air will be cleaner and our energy costs lower. If cheap solar panels from China help make that happen, then so be it.
– Mark Rosenberg is an investment consultant for Financial West Group in Scotts Valley, a member of FINRA and SIPC. He can be reached at 439-9910 or [email protected].