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Trade dispute could turn solar boom into a bust

Copyright © 2017 Albuquerque Journal

Solar industry leaders in New Mexico and nationally are anxiously awaiting a federal decision about imposing tariffs and price floors on imported solar cells and panels, which the national Solar Energy Industry Association says could potentially throw 88,000 U.S. employees out of work.

That includes hundreds in New Mexico, where local solar equipment manufacturers and installation companies are bracing for price hikes on cells and panels that could dramatically slash market demand.

Companies in the utility-scale solar market, like Array Technologies, would be most affected by any new tariffs as cells and panels account for about half the cost of large-scale systems. (Dean Hanson/Journal)

Albuquerque-based Array Technologies Inc. says it could be forced to cut up to two-thirds of the 300 people it employs in local operations, which include a 70,000-square-foot manufacturing plant. Array makes solar trackers that tilt and turn panels to follow the sun, increasing electric output from photovoltaic systems.

“We’re facing a huge impact,” said Array President and CEO Ron Corio. “This could kill the domestic market for us.”

The International Trade Commission in Washington, D.C., ruled Friday that cheap solar panel imports, mostly from China and other Asian countries, have harmed domestic producers. The commission will now recommend import tariffs or other relief measures to President Donald Trump, who will make the final decision.

U.S. industry leaders say tariffs and price floors might help a few domestic panel makers, but it would devastate the rest of the industry, which employs about 260,000 workers in everything from equipment supply to system installation. About 14 percent are in manufacturing, but only a few of them are in solar cell or panel production.

About 3,000 people are employed in New Mexico at more than 100 firms, according to the national Solar Foundation. That includes 16 manufacturers for things like trackers, mounting systems and electrical components.

Cheap imports have helped cut prices for solar cells and panels by about 70 percent since 2010, generating a huge, yearslong boom in solar development nationwide. If the levies requested by the ITC petitioners are approved, projected solar development over the next five years would fall by about two-thirds, from an estimated 72.5 gigawatts of new capacity now expected to come online to just 25 gigawatts, according to GTM Research in Boston, which tracks market trends for the Solar Energy Industry Association.

The issue arose from two bankrupt panel makers operating in the U.S. – Suniva and SolarWorld Americas. They petitioned the ITC for two new import levies, including a 40-cent-per-watt tariff on solar cells and a price floor on fully assembled solar panels equal to 78 cents per watt.

There are no broad tariffs on imports today, and panels currently cost about 38 cents per watt. If the government imposes those measures, it would effectively double the price for solar cells and panels, said Regina Wheeler, CEO of the local installation firm Sunpower by Positive Energy Solar.

A typical solar panel of between 300 watts and 400 watts currently costs between $120 and $160 wholesale. With the new levies, that would climb to between $240 and $320, Wheeler said.

Both the petitioning companies are majority-owned by foreign firms – SolarWorld by a German company and Suniva by Hong Kong-based Shunfeng International Clean Energy. Ironically, Shunfeng opposes the ITC petition, but it’s backed by UK-based venture firm SQN Capital, which wants to recover a $55 million investment in Suniva.

Companies in the utility-scale solar market, like Array, would be most affected, because cells and panels account for about half the cost of large-scale systems. Array’s pipeline of projects is based on today’s price of 38 cents a watt, Corio said.

Ron Corio, CEO of Array Technologies

“At 78 cents a watt, our project pipeline would simply go away,” Corio said.

Residential and commercial-scale solar businesses might be less affected, but their markets could also suffer, said Ryan Centerwall, CEO of Albuquerque-based installation company Affordable Solar. Affordable also manages utility-scale projects, such as three solar facilities it’s developing for Public Service Company of New Mexico to supply electricity to Facebook in Los Lunas.

“This is a meaningful threat to our business, and to the industry as a whole,” Centerwall said, although he declined to discuss the impact on the PNM Facebook contract.