Neyart uneasy about import fees on solar panels

April 5, 2012

Energy

Tom Neyhart, president of Green Grants LLC, a New Orleans solar installation firm, said it’s too early to tell what impact a recent U.S. Commerce Department decision to levy import fees on solar panels made in China will have on his business. But he can’t help but feel uneasy about the decision.

Green Grants works mostly with low- to middle-income homeowners to research energy tax credits that apply to them. It then scours the global market for affordable panels to install.

The company offers lease-to-own agreements and finances installation with a mix of private funds and money recouped from tax credits and grants.

Neyhart said competitive Chinese manufacturers have helped push down prices for panels and made solar an option for more of his customers. Import fees could slow that trend, he said.

“Even a small difference in price does have a big impact on what we do,” Neyhart said.

The Commerce Department decided to impose the import fees in March after it learned that the Chinese government is giving improper subsidies to solar panel manufacturers there.

The decision is the first to stem from complaints filed by several U.S. solar panel manufacturers, led by Oregon-based SolarWorld USA. The manufacturers say they are struggling to compete with Chinese competition as demand in Europe, a key market for U.S. solar products, slows.

Import fees on Chinese panels will range from 2.9 percent to 4.73 percent per solar cell, rates most New Orleans solar installers say are too small to drastically affect solar prices.

The average U.S. home requires a 5 kilowatt solar system or about 25 200-watt solar panels to fully power a house. Such systems cost about $23,000.

Market prices for solar cells, the sunlight-absorbing components that make up the large, flat panels that end up on rooftops, now average about 47 cents per watt.

Tariffs would tack on 2 cents per watt at most, meaning residential customers would only see a price increase of about $96 for the average Chinese solar power system.

Neyhart worries new tariffs will crimp the industry’s reach in lower income areas in New Orleans, but one of his peers expects the impact to be minimal.

Scott Oman, founder and chief technology officer at South Coast Solar in Metairie, sources most of his panels from manufacturers in the Philippines and Mexico. The tariffs imposed in March fell far short of the 30-cent per watt increase on Chinese panels analysts predicted early this year, he said.

“Now you’re talking about paying a few extra pennies per watt. That’s not going to create an undue burden on the industry,” Oman said, adding that cheaper raw materials and more efficient production lines are also driving solar prices down.

He already sees the solar supply chain adjusting to the tariffs. One of South Coast Solar’s suppliers, German panel manufacturer Conergy, recently shifted manufacturing from China to the Czech Republic in response to the tariffs.

John Smirnow, vice president of trade and competitiveness at the Solar Energy Industries Association, a trade group, said the recent import fees are “only half the equation.”

The Commerce Department will decide in May whether Chinese manufacturers are dumping solar panels into the global market, selling them below cost. Tariffs for dumping cases could be higher than those intended to offset subsidies, Smirnow said.

That’s not exactly welcome news for Green Grants. The company just closed a deal with Talesun Solar USA, a U.S. subsidiary of a Chinese company, to supply 4 megawatts of ready-made rooftop solar power systems — enough to power about 1,000 homes.

Green Grants’ Neyhart said he can’t help but wonder what will happen if China decides it wants to impose tariffs on the United States. The Chinese government has threatened to investigate claims that the U.S. is subsidizing exports of polysilicon, a key raw material used to make solar panels.

“All of a sudden we shut down renewable energy for both countries. Where does that leave us?” Neyhart asked.

Smirnow doubts anything that drastic will happen. He said the Commerce Department has narrowed its investigation to the smaller, solar cell components rather than completed solar panels. That means U.S. manufacturers potentially could manufacture solar cells and ship them to China, where the larger panels are assembled.

The industry has yet to see what impact tariffs could have on the exchange between U.S. and Chinese manufacturers, Smirnow said.

“If you see a decrease in the number of imports, that could have a ripple effect,” he said.

Jeff Cantin, president of Solar Alternatives Inc. in New Orleans, said import fees might actually help the solar industry nationwide and locally. The subsidized growth of Chinese solar products has opened the door for cheaper products and questionable manufacturing practices instead of new technology, he said.

Cantin said he’s concerned more about the impact on the local industry’s reputation when solar installers target low-income homeowners with cheap Chinese solar panels.

“The industry is changing so fast and so artificially,” Cantin said.

LINKS

Green Grants

www.greengrants.org

Levy import fees

http://articles.latimes.com/2012/mar/20/business/la-fi-china-solar-tariffs-20120321

Solar World

www.solarworld-usa.com

South Coast Solar

southcoastsolar.com

Conergy

www.conergy.com

Solar Energy Industries Association

www.seia.org

Talesun

www.talesun.com/english/pages/HO.php

Solar Alternatives Inc.

www.solalt.com

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6 Responses to “Neyart uneasy about import fees on solar panels”

  1. Amy McCullough Says:

    Amy McCullough did not write this post. She no longer works for the Mississippi Business Journal. Please correct your website.

    Thank you.

  2. mohderasa Says:

    The sun is the most abundant and the cheapest source of energy, yet we do not exploit its potential. In these times of depleting resources and increasing prices, the solar energy proves to be the most beneficial and the most economical power solution.

  3. James Anderson Says:

    If the US government was really serious about promoting solar energy (and from US manufacturers), then it could easily do so without the need for making new laws and tax credits. All it has to do is to start purchasing solar panels and their installation from US firms to install on top of the buildings that are owned by the government.

    That large purchasing power would generate business, research, jobs, etc., etc. And it would all be done without laws and the additional bureaucracy that it causes. That would also go a long way to dealing with China subsidizing their national companies.

  4. JakeyM Says:

    Well said, but everyone needs to realise that adding Solar in their property is an purchase which could increase the longer term worth of their residence if / when they decide to sell. With the environment the way it is going we cannot ignore any item that supplies no cost power at no cost to both the consumer and more importantly the world!

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