Analysts expect solar panel costs to drop by a third. That could be a lifeline for U.S. developers, who sidelined billions of dollars in projects over the tariffs.
Nicholas Kusnetz reports for Inside Climate News:
The American solar market may be about to get boost from an unexpected source: Energy analysts say the Chinese government’s decision to dramatically cut its solar power subsidies will create a glut of solar panels and send their prices tumbling worldwide.It comes at a crucial time for American solar installers. Falling prices could take the sting out of President Trump’s solar panel tariffs, which have raised costs in the United States and led to billions of dollars in cancelled and frozen U.S. investments.
“It’s changing the tone from negative to positive for the U.S.,” said Xiaoting Wang, an analyst with Bloomberg New Energy Finance (BNEF).
Last week, the Chinese government announced it would halt approvals of new subsidized utility-scale solar plants, limit the amount of smaller-scale distributed generation installed and shrink the subsidies it provides to solar generators. All told, these policies are expected to cut the amount of solar capacity installed this year in China by 30 to 40 percent, according to Wood Mackenzie and BNEF.
Because China leads the world in new solar installations, the steep drop in demand will ripple across the global market.
BNEF expects prices of some panels to fall 34 percent as result. That will bring down installation costs for new solar projects, particularly large, utility-scale systems, and spur new investment in other countries, though BNEF said that new investment is unlikely to make up for the drop in China.
Lower Prices Could Counteract the Tariffs
Morgan Lyons, a spokesman for the Solar Energy Industries Association, said it’s too soon to know what the effects on the U.S. market will be, but that it will likely lead to lower costs.
The drop could also counteract the impact of new tariffs the Trump administration imposed on imported solar panels. The tariffs, which started this year at 30 percent and will decline over the next three years, gave a boost to domestic manufacturers of solar panels, who faced competition from cheap imports from China and other countries. One of those manufacturers, First Solar Inc., saw its stock price fall sharply after China’s announcement because it’s now expected to face lower-cost competition once again.
But the tariffs have the opposite effect on the solar installation sector, which employs far more people than manufacturing.
U.S. solar developers have canceled or frozen more than $2.5 billion in investments, Reuters reported Thursday. A report by GTM Research said the tariffs would cut solar installations by 11 percent over five years, or about 7.6 gigawatts less new capacity than previously forecast.
