The battle between U.S. and Chinese solar manufacturers
continues to get worse according to Friday's announcement by the
Department of Commerce that they were adding a very punitive
anti-dumping tariff to Chinese and Taiwanese solar manufacturers.
The announcement has a far-reaching impact on the industry and
Last week's anti-dumping tariffs will be placed on top of the
anti-dumping tariffs announced in June
and will make it next to impossible for Chinese manufacturers to
be competitive in the U.S. Here's a look at what's going on and
how investors should look at it.
Solar communities are springing up in the U.S. but tariffs may
make it more expensive to get clean energy from the sun. Image
What tariffs will look like
The anti-dumping tariffs, like the anti-subsidy piece announced
in June, depend on the manufacturer. Here's how they look right
will pay a 26.33% anti-dumping tariff.
will pay a 58.87% tariff.
- 42 other manufacturers will be subject to a 42.33%
- The surprise is that two Taiwan manufacturers --
-- received preliminary dumping tariffs of 27.59% and 44.18%
Keep in mind that these are on top of 26.89% anti-subsidy
tariffs for Chinese manufacturers except for
and Trina Solar, which will pay 35.21% and 18.56%
SolarCity's workers put up a residential solar system, one
of over 1 million the company hopes to install by 2018. Photo:
Yingli Green Energy
noted that solar panels made using cells made in a third
country and assembled in China using some Chinese components
would receive a 47.27% tariff, about what other manufacturers
would see as well.
The impact on the world's biggest manufacturers
These tariffs will have a ripple affect across the industry,
, which is by far the largest residential solar installer in the
SolarCity's purchases were a big driver of Trina Solar and
Yingli Green Energy's growth, even into this year. Trina
Solar sent 31.9% of its first quarter shipments to the U.S.,
up from 16.3% in the fourth quarter. After sending 20% of
shipments to the U.S. in the fourth quarter, Yingli Green Energy
saw that share grow to 24% in Q1 and expected 20% of shipments to
come here in the second quarter.
It's likely that shipments to the U.S. will drop to nearly
nothing for Trina Solar and Yingli Green Energy, and others will
certainly see the same trends.
How this impacts installers
The impact won't just be felt by solar manufacturers, it'll be
seen by installers in the form of higher costs. If they were
buying panels from China they must have been getting the best
product for the cost, meaning they'll have to pivot to new
SolarCity is one company already doing that, agreeing to buy
panels from REC Solar as well as buying panel manufacturer
Silevo. The Silevo acquisition won't produce a significant amount
of panels for at least two years, but the move was a nod to
coming tariffs that would impact the company long-term.
Utility scale projects like this one will be most affected
by tariffs, but that will help First Solar and SunPower. Photo:
What should be noted is that
, which is the second largest residential solar installer in the
U.S., won't be affected because it makes its own panels.
Incrementally, the tariffs are an advantage for SunPower, but
with residential costs higher on a per watt basis than larger
systems, residential installers will only see a small impact in
the pivot to higher cost suppliers.
Who tariffs help
The big impact of these tariffs will be felt on the commercial
and utility scale. These projects are much lower cost overall and
therefore much more price sensitive than the residential solar
While residential solar gets all of the publicity, it's
actually commercial and utility solar that account for most of
the installations -- and by a wide margin. According to GTM
Research, 4,751 MW of solar were installed last year and
just 792 MW, or 17%, was residential. Commercial projects
were 1,112 MW. and 2,847 MW, or 60%, was utility scale.
So the bigger impact will be felt by SunPower and
, which are two of the biggest utility scale solar builders in
the country. They were already two of the lowest cost builders on
a per kilowatt hour, or kW-hr, basis, but this will only help
widen their margin over competitors and may even allow them to
buy projects from other installers for cheap.
The bottom line is that U.S. based companies that make their
own panels will benefit from Chinese solar tariffs. Long-term,
they're lower risk for investors because they are manufacturers
and have downstream projects, so they're not reliant on fickle
market or political moves.
If you're thinking about jumping into solar, SunPower and
First Solar should be on the top of your list. The escalation in
the solar trade war is just the latest reason why.
More from The Motley Fool:
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U.S.-China Solar Trade War Continues to
originally appeared on Fool.com.
manages an account that owns shares of SunPower and is
personally long shares and options of SunPower. The Motley Fool
recommends SolarCity. The Motley Fool owns shares of SolarCity.
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