By - Jim Vess

Price of solar falls below $1 a watt, but future prices imperiled by trade case

Energize Weekly, June 21, 2017

The federal SunShot Initiative set a goal of an installed price for photovoltaic solar modules of less than $1 a watt by 2020. It looks like the future is now as module prices in 2017 have dipped below $1 a watt.

“The price for a module dropped much faster than anyone expected,” said Ben Gallagher, a solar analyst with GTM Research, a cleantech marketing and consulting firm. “Prices have fallen more than a third in a year.”

The result is continued strong growth in the market with more than 2 gigawatts (GW) of utility-scale, community solar and rooftop solar installed in the first quarter of 2017—the sixth consecutive quarter of at least 2 GW, according to the 2Q U.S. Solar Market Insight Report by GTM and the Solar Energy Industries Association (SEIA).

The trend and the gains in cost reductions could, however, be rolled back if Norcross, Ga.-based module maker Suniva’s petition to raise the price of foreign solar modules is approved by the U.S. International Trade Commission and Trump administration.

Invoking an obscure trade law, Suniva is seeking a 40-cents-a-watt tariff on imported cells and a minimum price of 78 cents a watt. The trade commission will make a recommendation by this fall to President Donald Trump, who will make the final determination.

“We ultimately don’t know what the ruling of the International Trade Commission will be and what Donald Trump will do with that ruling,” Gallagher said. “It could be quite disruptive.”

The move would have the effect of pushing prices back to 2015 levels, Gallagher said.

“If Suniva’s proposed minimum import price on modules and tariff on imported cells are approved, PV installations would significantly drop across all three market segments,” the market insight report said.

For the moment, the price declines are fueling the market. Those drops in installed solar modules costs accelerated in the last 18 months and are due to three factors, Gallagher said.

First is the price of modules, which in early 2011 were tracking at about $1.15 a watt. Module prices, with a flood of product from Asia, are now as low as 34 cents a watt, Gallagher said. The Suniva petition would in effect double the price for solar cells.

Second, according to Gallagher, the companies doing the engineering and construction of solar facilities have been under pressure to reduce costs and have done so by simplifying and integrating products.

After China, the U.S. is the world’s largest solar market and that has drawn more foreign manufacturers and companies with international supply chains, primarily Asian-based, which has also lowered costs.

Finally, the installers are getting better through experience. “Learning by doing,” Gallagher said. This has led to a reduction in the number of man-hours for installing a system.

Similarly, for distributed solar—primarily rooftop and community units—there has been a steady overall cost decline on the logistics, design and engineering costs as installers become more experienced and some of the local barriers for things such as permitting are removed.

GTM is forecasting 12.6 GW of new PV installations will come online in 2017, down 16 percent from record-breaking 2016. Overall solar installations are projected to triple by 2022.

“Looking at the long-term view with the prices of solar equipment dropping, what we are seeing is a growing number of states where solar is reaching grid parity,” Gallagher said. “The economics are really driving the industry.”

The wildcard is the Suniva petition. The trade law Suniva invoked, just days after it filed for bankruptcy, does not require proof of dumping or violating trade rules, but rather that imports are hurting U.S. manufacturers. The law gives the president the power to unilaterally impose broad tariffs—and not against just one trading partner, against global production.

Another solar cell maker, SolarWorld, brought a dumping case at the trade commission against Chinese manufactures charging that they were selling below cost, or dumping. In 2011 and 2012, tariffs were levied against the Chinese. “The duties didn’t give SolarWorld the result they wanted,” Gallagher said.

Much of the manufacturing capacity was moved to other low-cost Asian countries like Thailand, he said. SolarWorld has joined the Suniva petition.

SEIA, the trade association for the solar industry, on June 15, issued an assessment of the proposed tariffs saying it would cost 88,000 jobs—about a third of the total solar workforce.

Among the states standing to lose the most jobs are California with an expected job loss of 15,800, another 7,000 jobs would be lost in South Carolina and 6,300 in Texas, according to preliminary SEIA estimates.

“These new estimates show the potential damage to the solar industry as a result of this petition,” SEIA President and CEO Abigail Ross Hopper, said in a statement.

The trade commission recommendation is scheduled to be sent to President Trump in early November. In a touch of irony, Suniva’s majority owner is the Hong Kong-based solar company Shunfeng International Clean Energy Ltd. and SolarWorld’s parent is SolarWorld AG, with headquarters in Bonn, Germany.

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