The Solar Window is Still Open – Karen Elias

A friend asked me this morning what effect the Trump administration’s newly-imposed tariff might have on homeowner costs for a solar system. She’s putting an addition on her house and is considering solar panels for her roof. When my own solar system was installed in 2014, such tariffs were not even a gleam in a future president’s eye, but I told her I’d do some research.

Here’s the background. The Trump administration recently announced a 30% tariff on foreign-made crystalline-silicon solar cells and panels. The tariff will last for four years and will decrease by 5% each year, ending with a 15% tariff by 2021. Aside from a Tesla plant in Buffalo, NY, and a solar manufacturer that does not use silicon in the production of its panels, it’s not clear who the beneficiaries of this tariff will be. The United States is in the business not so much of making solar cells and panels but of installing them, and the industry is predicting that 23,000 installation jobs could be lost because of the tariff, just this year. At a time when solar is the fastest growing source of new energy world-wide, and when there are already twice as many solar jobs as there are coal jobs in the U.S., the tariff could have a dampening effect on one of our country’s most promising industries.

The industry itself, however, seems optimistic. Solar installations were 30 percent higher in 2017 compared with 2015, and the industry anticipates that a further 10 gigawatts of capacity will added in 2018 and then grow steadily out to 2023, when about 15 gigawatts of capacity is forecast. Varun Sivaram, a fellow at the Council on Foreign Relations who studies the solar industry, said, “Solar is standing on its two feet . . . the industry is so strong that even with the tariffs, it’s going to keep growing.”

I decided to ask Solar Universe, the folks who put in our solar panels how things were going. Tony DelDonna, the owner/operator, said, “All I can tell you is that we are probably busier this year than we were in our first quarter for 2017 or 2016. The module availability right now is very good. We are installing anywhere from 295w to 310w modules, all very high efficiency rated. Most people are still seeing a 7 to 10-year return on investment, depending on shading and direction. With the 25-year warranty, the system is paid off way before the warranty wears out, so bonus bonus.”

For those considering investing in residential solar panels, however, it is expected that homeowners’ costs will rise. The tariff will apparently add 10 – 15 cents per watt to the final installed price of a home-based solar system. It’s important though to look at the bigger picture. While the costs of the panels may be going up (at least temporarily), the costs of installation and technology continue to drop.

According to a recent article in The Guardian, “The costs of installing solar panels on rooftops has fallen by more than 70% since 2010.”

Because manufacturing costs are going down, the cost of solar panels will continue to fall. The tariff will not prevent this from happening. By year 4 of the tariff, we can expect less than a 2% rise in installation costs.

Comparison-shopping on a site called EnergySage can save you money, potentially offsetting the effects of the tariff. EnergySage gives customers an opportunity to compare as many solar options as possible in order to avoid paying the inflated prices offered by the large installers in the solar industry. The bids that solar installers make on EnergySage are apparently lower than those they make to customers directly offline.

And what may be the best news of all, the 30 percent federal investment tax credit is still in place. The federal tax credit, also known as the investment tax credit (ITC), allows you to deduct 30 percent of the cost of installing a solar energy system from your federal taxes. The tax credit for residential solar remains at 30 percent through 2019, drops to 26 percent in 2020, and to 22 percent in 2021; in 2022 it expires. Thanks to the ITC, the average solar shopper saved over $5,000 on the cost of going solar in 2017.

For those who are interested in solar but are unwilling to make a large personal investment, stay tuned. Many communities are initiating “community solar” projects that allow groups of individuals in a community to share solar power generated by a large, central installation.

If you find yourself in a position to consider installing a residential solar array, this is still a good time. The window is still open. Contact a solar business in the area and have them do an assessment. Tony talks about what his assessments entail. “We do our best to simply educate people. We tell them whether they have good solar access. We ask them their current annual electricity usage. We give them an idea of how solar will affect them. Basically, we find return on investment to be 7-10 years, and all components have 25 year warranties.”

And here are Tony’s final words. “If you had the chance to buy gasoline at $1.00 a gallon, and buy enough for the next 30 years, would you do it? If you had the money you would. Same thing with solar. You are buying your electricity for the next 30+ years, and it will take you about 7-10 years to pay it off. But you’ll still have years’ worth of gallons to drive.”
Email Karen Elias at eliaskaren100@gmail.com if you have questions.