When we started out, about three years ago, there were only about five solar installers in the middle of our state, from Knoxville to Nashville. Now there are more than 25, and there is no reason to believe that new companies won’t continue to emerge, expand and prosper.
But the solar energy industry’s growth could be stalled on the state and national levels by a looming trade war with China. A German-owned company called SolarWorld, with a facility in Oregon, has filed a petition with the U.S. Department of Commerce requesting special tariffs of up to 250 percent on some solar panels imported from China.
You don’t need a solar-powered crystal ball to know what these huge tariffs would mean for the industry. China would retaliate against American-made solar products. Prices would rise on solar components of all kinds, whether manufactured in the U.S., China or other countries. Sales of solar energy systems would decline. Businesses would downsize. Workers would lose their jobs.
Why would new tariffs mean less growth? Because the solar industry relies on steadily falling prices. With the price of solar energy falling by about 30 percent over the past year, the U.S. solar industry added some 7,000 new jobs, for a total of more than 100,000 employees. That’s a growth rate of about 6.8 percent — almost 10 times as much as the meager 0.7 percent employment growth rate in the entire economy. Over the year ahead, the solar industry is expected to add another 24,000 jobs, for a growth rate of about 24 percent. But huge tariffs on solar panels — and higher prices for solar energy systems — could throw this growth into reverse gear.
At Simple Energy Works, most of the solar panels we use are made in Memphis. Their prices are not significantly different from those of modules made in China. Competition keeps American module-makers competitive, and that keeps costs down throughout our industry.
With lower prices, we can cut the cost of solar energy per watt of electrical power generated. This improves a solar energy system’s “payoff” — how long it takes before a system pays for itself by providing electrical power at a lower cost than electricity generated from fossil fuels. Right now, solar energy systems have a 12- to 13-year payoff in houses, which makes sense to many homeowners, and a five- to six-year payoff for commercial installations, which makes sense to many corporate chief financial officers. If prices go up, it will take longer for solar energy systems to pay for themselves. Homeowners’ and corporate executives’ eyes will glaze over when I try to sell them solar energy systems.
It isn’t just my business that’s at stake. It’s a fast-growing industry that’s good for the economy and the environment. Multiply the consequences for our company with the harmful impact on all 25 solar companies from Knoxville to Nashville — and almost 5,000 firms throughout the nation — and you get an idea of how a special tariff on solar panels from China could hurt the entire economy.
With the Tennessee Valley Authority offering a new program to encourage solar energy providers to hook into the power grid, the future for solar in our state should be promising. The tariff’s supporters may think they’re targeting Nanking, but they’re really taking aim at Knoxville.
You can read the editorial at the Knoxville News Sentinal.