Investment, Innovation, Job Creation—Why Solar’s U.S. Growth Drivers Will Suffer if Tariff Moratorium Isn’t Restored
Solar power is having a moment. While rooftop solar technologies have been around for decades, consumer demand, urgent climate change concerns, and competitive price points have coalesced, creating historical interest in solar power, including 700,000 homeowners installing solar panels in 2022 alone.
The industry is expected to grow by up to 30% this year, and the Institute for Energy Economics and Financial Analysis has classified solar as the fastest-growing energy sub-segment in 2023.
That’s why last month’s vote in the U.S. House of Representatives’ to repeal President Biden’s suspension of tariffs on solar panels made by Chinese companies sold from Cambodia, Malaysia, Thailand, and Vietnam is so disappointing.
The 221-202 vote is a misguided effort to combat unfair competition from China and preserve U.S. jobs. The goals are laudable, but the actual outcomes are unhelpful and counterproductive. A thriving solar industry is critical to our future, and preserving that future depends on designing and implementing policies that encourage investment, innovation, and implementation.
Here are three reasons why the industry should mobilize to consider what is at stake and communicate the urgency of why lawmakers must reconsider this decision now.
The Industry’s U.S. Investment is Punished — Restoring tariffs on Southeast Asia-sourced solar panels will have real financial repercussions at home. Some $4.2 billion in domestic investment could be eliminated or delayed, hindering renewable energy adoption when it’s most urgent and in demand.
Meanwhile, if the tariff moratorium is eliminated, U.S. solar developers could be exposed to $1 billion in retroactive tariffs, an enormous amount of money that undermines solar’s growth and expansion now and in the future.
In this way, tariffs don’t just impact Chinese manufacturing, they imperil U.S. investors as well.
In-Demand Products Are Restricted — The U.S. has a long, vibrant manufacturing history, and state-side production will eventually meet surging demand for solar products. While the country ramps up its production capacity, Chinese solar products are filling a critical supply gap.
The tariff pause ensured solar power investors had reliable access to solar products so their projects could move forward on time and on budget.
The House’s vote puts this reliable supply chain in jeopardy.
Commenting on the impact of the vote, Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, explains, “The tariff pause provided business certainty that kept solar projects moving forward while providing a bridge for domestic manufacturing to grow. This deeply flawed use of the Congressional Review Act (CRA) rips the rug out from underneath American businesses and will cause thousands of workers to lose their livelihoods.”
When the House of Representatives announced its investigation in 2022, the AP reported that 80% of solar projects were at risk, a stunning sum that could face similar vulnerability now.
Long-term demand for solar panels made in the U.S. is contingent on existing solar products demonstrating their potential impact and ROI. However, repealing the suspension on tariffs will dampen demand, as product availability delays or cancels existing solar projects.
American manufacturers have already invested billions of dollars in developing new factories or retrofitting existing facilities. Supporting their investments tomorrow means ensuring that solar projects have adequate supply today.
As Sen. Catherine Cortez Mastro of Nevada argued on the Senate floor, “If we implement these tariffs, three-quarters of our solar deployment would stop. That would cede our leadership to the Chinese government, it would hurt our domestic manufacturing, and our working families would pay the price. We can’t let that happen.”
Job Creation Is Stifled — The solar power industry brings thousands of well-paying jobs to communities nationwide, outpacing many sectors in its job creation prowess. According to the Bureau of Labor Statistics, “Employment of solar photovoltaic installers is projected to grow 27% from 2021 to 2031, much faster than the average for all occupations.”
In total, 2,500 new solar photovoltaic installer jobs are projected to open annually. However, it’s estimated that repealing the tariff suspension will immediately eliminate 30,000 American jobs, including 4,000 from the manufacturing sector.
This may result in a prolonged negative impact on the accessibility of skilled personnel, as individuals choose to bypass the necessary training opportunities, such as technician courses, that would sustain a strong and expanding workforce. The renewable energy industry already faces significant obstacles in attracting skilled talent, and diminishing enthusiasm for these sought-after positions will only intensify these difficulties.
Key Message to Lawmakers: Rethink Tariffs Now
The recent decision by the House and Senate to repeal the suspension of tariffs on solar panels has far-reaching and detrimental consequences for the solar industry. The imposition of tariffs hinders domestic investments, restricts access to essential products, and discourages job creation within the renewable energy sector.
At a time when solar power is experiencing rapid growth and holds great potential for addressing climate change, it is crucial that policymakers reevaluate their stance and focus on nurturing the solar industry. At the same time, we need to support President Biden’s promised veto of the bill and oppose concessions related to these tariffs during debt ceiling negotiations.
Supporting the expansion of solar energy is vital not only for the environment and energy independence but also for creating a sustainable, thriving economy in which innovative industries and jobs can flourish. It’s time for lawmakers to reconsider this decision now.
—Scott Graybeal serves as CEO at Caelux, a pioneer in utilizing perovskites to make solar energy more powerful and cost-effective, enabling the next generation of solar innovation. He is a veteran executive who previously led the Energy Solutions Segment at Flex Ltd, a $2-billion division within the company serving the solar, energy storage, and LED lighting markets. Under his leadership, Flex Energy Solutions grew 700%, became the third-largest producer of PV modules outside of mainland China, and patented several key solar manufacturing innovations. For more information, visit www.caelux.com or connect on LinkedIn or Twitter.