Solar panel financiers downplay impact of import tariff

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It could have been a lot worse.

The Trump administration’s decision to impose a tariff on imported solar panels will have a relatively limited impact on residential installations, according to panelists at a securitization industry conference.

Katya Baron, a managing director at Mosaic, noted that panels account for just 15% to 20% of the total cost of a residential rooftop installation; much of the rest of the cost is labor and marketing. That means the total price of installation will not rise by the same percentage as the tariff itself. “The overall impact will be fairly muted” on residential demand for solar panels, she said.

David Ridenour, of counsel at DLA Piper, and another panelist at the Structured Finance Industry Group’s annual conference in Las Vegas, went so far as to call the President’s action a "bit of a win” for the U.S. solar industry. He noted that the U.S. International Trade Commission had recommended a 50% tariff.

Instead, the U.S. Trade Representative last month announced a 30% tariff that steps down over four years.

Katrina Niehaus, a managing director at Goldman Sachs, noted that tariff will have a larger impact on utility scale installations, where the cost of panels relative to the cost of installation is higher. But eventually, Chinese solar panel manufacturers are likely to move factories to the U.S. to avoid the tariff. “People are just going to move here,” she said.

Eric Neglia, a senior director at Kroll Bond Rating Agency, said he’s heard that some installers have been stockpiling panels in anticipation of the tariff, and may not have to start importing panels subject to the tariff until the second half of the year.

The fact that solar panel prices have fallen so sharply over the past several years also takes away some of the bite for both residential and utility consumers, Ridenour said.

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