Why China Tariffs are Bad for the Solar Industry 0

Last week marked the first day of Spring – a time of optimism and growth, eagerly awaited by sun lovers everywhere, and certainly by those of us in the Solar Industry.  But unfortunately, last week was also marked by news that trade sanctions in the form of tariffs would be imposed upon Chinese solar panel manufacturers.  That is bad news for the Solar Industry as a whole, even if it boosts – temporarily – the prospects of a few domestic manufacturers.

The tariffs that were imposed this past week were quite modest – far lower than some had predicted – and range from 2.9% to 4.73%.  Given that some had predicted tariffs of as much as 50%, these modest penalties were generally greeted with sighs of relief in the industry.

At Run on Sun, the majority of the solar panels that we specifiy are unaffected by the tariff decision since Sanyo panels (Japan and Mexico) and and LG panels (South Korea) are not manufactured in China.  Of our featured products, only Suntech panels were affected, and they at the lowest rate imposed.

The vast majority of our clients will not see any impact from this decision.  Still, anything that can potentially drive up the price of solar equipment at a time of diminishing rebates and tax incentives (such as the expiration of the section 1603 grant program) is a cause for concern.  As this decision established, prices for solar panels have been falling worldwide because of a stronger manufacturing supply chain combined with a weakening demand in some markets, particularly in Europe, and not because the Chinese government was massively subsidizing its solar manufacturers as some had claimed.

Anyone who has ever been to a solar trade show has seen hundreds of Chinese panel manufacturers sitting in small booths, waiting for potential customers.  (Indeed, the New York Times reported that there are presently more than 700 solar panel manufacturers in China!)  The vast majority of those products are third-tier, cut-rate products that are used by companies who only care about the lowest possible cost – not reliability, performance, or safety.  In solar, like everything else, you get what you pay for.  If clients demand quality, they will get it – whether from high-quality domestic producers or top-tier importers like Sanyo, or LG, or Suntech.

We are proud of all of the products that we feature – including Suntech solar panels – because we believe that they offer great quality for our clients.  But for those who only care about finding the cheapest dollar per watt solution, they will continue to put undue pressure on quality manufacturers around the globe – whether in the US or China.  Consumer demand for quality is the ultimate way to improve this situation – and that means educating consumers as to what quality means in this market – but tariffs are not the answer.

Original Article on Founder’s Blog

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