How Trump’s tariff clouds one company’s outlook

Source: Christa Marshall, E&E News reporter • Posted: Tuesday, February 20, 2018

When President Trump slapped tariffs on solar imports, he torpedoed Sun Tribe Solar’s plan to add at least two jobs to its 20-employee workforce.

But it could have been even worse.

Rich Allevi, 30, co-founder of the Charlottesville, Va., company, said he knows of two other Virginia solar firms that plan to lay off workers, which he “can only imagine” is due to the tariffs that took effect earlier this month.

“The misguided development of this is going to ultimately affect the American population in a negative way,” he said in an interview. “At the end of the day, this is just bad policy.”

Allevi’s company — which develops, designs, engineers and installs utility-scale and commercial systems around Virginia — has grown from two employees since its 2016 launch and now has “several hundred megawatts” under development, including a solar garage canopy and a university rooftop system.

The tariffs, he said, translate into a 10 percent price hike for his customers and create an “artificial headwind” for his company.

Allevi is one of many solar entrepreneurs in states that are each projected to lose more than 500 jobs this year because of Trump’s decision, according to new data from the Solar Energy Industries Association (SEIA). Initially, the trade organization had estimated 23,000 jobs would be lost nationally.

A separate breakdown from GTM Research shows economic challenges in many states not usually first mentioned as solar country, like Oregon and North Carolina. The analyses, which don’t mention Trump, nonetheless raise the question of how tariffs might play out politically, considering that the greatest impacts are projected in many swing states the president would need for re-election.

“If national office Republicans stand with Trump on the tariffs, they risk further alienating voters who have a generally negative opinion of Trump,” said Eric Herzik, a political scientist at the University of Nevada, Reno. “So I see this as both a jobs issue, but also one that tags opponents with the Trump label.”

Tariff supporters say there’s bias in the job-loss numbers, and that regardless, it’s wrongheaded policy to cede the U.S. solar manufacturing industry. Trump imposed the duties to address a “serious injury” to two U.S. solar manufacturers that say Asian companies are dodging existing rules (E&E News PM, Jan. 23).

“Without these tariffs, the U.S. would become completely dependent on Chinese solar manufacturing, a very dangerous long-term strategy for the industry and the U.S. economy as a whole,” said Jeff Ferry, research director at the Coalition for a Prosperous America, a group pushing to eliminate the trade deficit.

SEIA says California could lose more than 3,000 jobs this year from tariffs, with Florida, Arizona, Nevada, Texas and New York erasing more than 1,000.

Utah and North Carolina would lose more than 800 jobs across the solar supply chain. Virginia, where Allevi lives, ranks ninth in the country in terms of lost jobs, with a decline of 794.

The numbers are based on forecasts submitted to the U.S. International Trade Commission in October by IHS Markit and are calculated against the baseline of what the numbers would have been without tariffs. SEIA said they considered the offset of created manufacturing jobs.

Allevi pointed to a ripple effect for U.S. manufacturers of solar equipment that are not subject to the tariffs. The steel his company uses in frames and racking made in rooftop systems is manufactured domestically. So any slowdown in growth could affect them.

“The negative consequences are far greater than the intended benefits,” said Allevi.

In its report, GTM Research outlined state-by-state dynamics hitting companies like Sun Tribe. Utility-scale solar, a dominant part of Allevi’s business, is expected to be more sensitive to tariffs than the residential sector.

That’s because the overall dollar per watt for the utility sector is lower, so any increase hits margins that much more, said GTM Research analyst Colin Smith.

“Emerging” markets where solar was just starting to be economically competitive with natural gas also are where tariffs could really delay procurement, he said.

That includes commercial systems in Virginia and residential markets in Florida and Texas. States like Washington, where multiple big corporations might now be more likely to look at wind in procuring renewables, also could be affected, Smith said.

Sunny side of the street

Tariff supporters say similar warnings about stalled growth and job losses never materialized years ago when duties were imposed on Chinese solar panels. The job-loss numbers are misleading, since they refer to adding fewer positions, not terminating existing ones, they say. They also don’t pinpoint the cause of any job declines.

“In our view, if you look at realistic figures for the U.S. solar industry, this industry will continue to grow, and going forward, there will be employment growth in both solar manufacturing and installation,” the Coalition for a Prosperous America’s Ferry said.

Allevi said his experience supports that in that he expects continued growth for his company, albeit at a slower pace.

“The transition to renewables is ultimately controlled by other major factors,” like coal’s decline, he said.

There’s also evidence that the trade barriers are starting to revive some solar manufacturing and bring jobs with it.

Last month, Chinese Solar manufacturer JinkoSolar Holding Co. Ltd. said it was planning to open a solar manufacturing facility in the United States and tied the decision to tariffs.

“JinkoSolar continues to closely monitor treatment of imports of solar cells and modules under the U.S. trade laws,” the company said. Last week, the company registered lobbyists, saying it was “seeking tariff-free access for solar cells.”

Other companies, including Tawainese cell maker United Renewable Energy, recently announced their intent to build facilities or hire workers.

Scott Cramer, CEO of Go Solar Group, wrote an op-ed last week with a different view from Allevi, saying there could be benefits in revealing which companies can be “trusted.”

“The tariff will only cause job losses and cut corners in the customer experience for solar companies that have over-leveraged themselves,” he wrote on the TriplePundit blog.

The larger question could be how the jobs issue is perceived both by voters and state lawmakers. The biggest hit to industry is likely to occur next year, according to GTM Research.

At the state level, the Trump administration’s position on fossil fuels has created momentum for climate bills of all types, said Jeff Mauk, executive director at the National Caucus of Environmental Legislators. “The tariffs do add to the pressure for states to address climate,” he said. It’s unclear, though, if that will translate to solar legislation.

State policy has not been the driver of growth, to date, for Sun Tribe Solar, Allevi said, but there are bills in the Virginia Legislature that could help his company.

One in consideration now would expand the ability to execute power purchase agreements, he said.

“Virginia is very far behind in terms of solar policy,” he said. “I hope [the tariffs] will catalyze some movement.”