US solar power installations forecast slashed after Trump slaps tariffs on panels
The United States will install less solar power than previously expected in coming years as big projects face challenges in the wake of President Donald Trump’s decision to slap tariffs on solar equipment, according to a new report.
The taxes on solar cell and panel imports announced earlier this year are dampening demand and compounding other headwinds in the industry, from slower expansion in critical state markets to a financial reckoning for installers who prized growth over balance sheet discipline.
That is the assessment of the Solar Energy Industries Association and clean tech analysis firm GTM Research in their annual review of the industry.
On the bright side, 2017 marked the second straight year of double-digit gigawatt growth in the solar industry. The sector added 10.6 gigawatts of photovoltaic capacity, the most common type of solar power technology.
“The solar industry delivered impressively last year despite a trade case and market adjustments,” SEIA President and CEO Abigail Ross Hopper said in a press release. “Especially encouraging is the increasing geographic diversity in states deploying solar, from the Southeast to the Midwest, that led to a double digit increase in total capacity.”
But 2017 saw a 30-percent decrease from the record-setting addition of 15 gigawatts in 2016, when buyers rushed to purchase equipment ahead of the expiration of tax credits that were ultimately extended.
The outlook is more sobering over the next five years.
GTM lowered its forecast for solar installations during the 2018-2022 period by 13 percent, chalking up the revision to changes in federal and state policies, a potpourri of market headwinds across the major solar power segments, the fallout from Trump’s tariffs and corporate tax reform impacts.
Trouble starts in 2018
This year, GTM expects U.S. growth to be flat at 10.6 gigawatts. The Trump effect won’t play a big role in 2018 because many buyers purchased solar modules before the tariffs took effect.
This is especially true in the utility-scale segment, which builds large solar farms that feed into electric power markets and essentially work like power plants. GTM Research expects this segment to grow slightly more than it did last year.
But growth in utility-scale solar will be stagnant between 2020 and 2022 because the tariffs will delay and possibly kill some projects, GTM forecasts.
Projects will probably go forward in regulated markets like North Carolina and Florida, where state power authorities guarantee a return on investment. But the tariffs could have a big impact in smaller state markets that are just starting to adopt utility-scale solar.