BRISTOL — Though widely expected, President Trump’s announcement in January that the United States would impose a tariff on imported solar electric cells and modules has set off alarms in Vermont.
The tariff, which the Solar Energy Industries Association (SEIA) called “a loss for America,” is only the latest in what many say is a series of troubling setbacks for Vermont solar, including recent changes in solar power billing rules (called net metering) and a gradual reduction in federal tax incentives.
But at this point it is unclear what these changes mean to the future of solar energy in the Green Mountain State.
Chris Marion of Bristol Electronics, which sells and installs many solar arrays in Addison County, offered a concise response to the issue:
“Don’t believe the hype.”
Such negative coverage is not only detrimental to the industry, she said, it’s unnecessary.
“It’s not gloom and doom and all done. Solar is not in trouble in Vermont,” Marion said.
UNFAIR COMPETITION
Last spring two manufacturers of domestic solar panels petitioned the U.S. International Trade Commission for relief against lower-cost imports. In September the commission agreed imports were injuring the companies and in November submitted a trade remedy report to President Trump.
Two months later the president announced that, effective Feb. 7, a 30 percent tariff would be imposed on imported solar cells and modules. The tariff is set to last four years but will decline by 5 percent annually.
The tariff was meant to level the playing field, Bristol Electronics’ Marion said, and while it’s too early to tell, she did not expect the tariffs to dramatically affect her business. Solar modules, she pointed out, represent only about a quarter of the total cost of an installed system.
Peter Cassels-Brown of Bristol’s Mountain Energy Design, which sells and installs solar power cells, doesn’t think the Trump tariff will directly affect his business, either. In fact, he supports the tariff — up to a point.
“China is subsidizing solar the same way the U.S. is subsidizing oil,” Cassels-Brown said. As a result, China’s subsidy undercuts the global market with products of sometimes questionable quality, he said.
But he doesn’t think unilaterally limiting imports is a good idea.
“Canada is not flooding the U.S. with cheap panels,” he said. The loss of quality Canadian products at prices that were already consistent with those of American manufacturers might in the short term create a supply-side bottleneck in Vermont.
SunCommon co-founder James Moore said business is booming. Despite net metering changes, the state’s largest solar installer saw its business increase in 2017, and it expects growth to continue in 2018, despite the tariff.
When the White House made the announcement in January, potential customers who’d been on the fence about going solar contacted SunCommon with a sense of urgency.
“They called us and said, ‘I’m ready,’” he said.
The company has warehoused enough panels to accommodate projects through the first half of 2018. In the meantime SunCommon has been working to cut other costs to offset equipment that’s about to get more expensive. Moore said he’s not yet sure to what extent the company can avoid raising its prices.
NET METERING CHANGE
Like others in the industry, Austin Davis of Renewable Energy Vermont, an industry trade group, was less concerned about the Trump tariff than about recent changes in net metering rules.
Net metering allows Vermont electric customers to produce their own power with renewable sources and earn credits from their utility companies for excess electricity they send back to the power grid. It’s one of several programs that help Vermonters switch to solar power.
The new rules reduce the rate new net metering customers will receive for the energy they produce, according to the Vermont Public Interest Group. And the new rules establish a cost structure for “preferred locations” to encourage builders of large projects, like solar farms, to site their arrays on rooftops, parking lots and landfills, rather than farmland or locations with aesthetic value.
Davis says the new regulations have damaged Vermont’s solar industry.
“The change to net metering is, without doubt, the factor leading to the decline we’ve seen in solar installation in our state,” he said.
He predicted the tariffs will damage efficiency- and community-scale arrays the most.
“Just as solar is becoming an easier option for low-income Vermonters, it is being pulled out of reach,” he said.
Robert Dostis, vice president for stakeholder relations at Green Mountain Power (GMP), offered a different view of the rule changes.
Net metering has been extremely successful for solar developers, he said, but it is the most expensive incentive program for GMP.
Larger systems like solar farms (up to 500 megawatts), which were eligible for incentives similar to those offered to residences and small businesses, have driven up the cost of net metering, which after netting out the benefits of solar to the grid, will still leave a $24 million cost shift to GMP customers, including those who don’t participate in the program, Dostis said.
The utility, which recently topped Fast Company’s list of most innovative energy companies, has seen a 1,300 percent increase in net metering applications since 2013.
For GMP, the question is “How do you set growth for a sustainable path? How does this impact all of our customers?” Dostis said.
JOB LOSS
According to the SEIA, an education and lobbying organization, the new solar tariff could result in the delay or cancellation of billions of dollars in solar investments.
The association also said the new tariff could lead to a loss of more than 20,000 solar jobs across the country.
In Vermont, though it’s too early to make predictions, Renewable Energy Vermont’s Davis suggested it would further put the squeeze on small businesses.
“Generally, it is your mom-and-pop shops that are going to be hurt the most by the regulatory volatility we see coming out of Washington; if you then layer on volatility from local regulators, you create an environment which will make it harder for smaller, local solar businesses,” he said.
Citing data from the Solar Foundation, he pointed out that Vermont lost 232 solar jobs in 2017. The 13 percent decline was more than three times the national average.
According to the same data, however, the Vermont solar industry employs more workers per capita than any other state in the country. In 2017 the state ranked third — behind sunnier California and Nevada — in ratio of solar workers to overall workforce.
Whether the data reflects a slight dip in healthy long-term industry growth or the beginning of the end remains to be seen.
SHRINKING INCENTIVES
The third, and for some the most significant, challenge facing the solar industry is the gradual decline of the Business Energy Investment Tax Credit, which allows homeowners and businesses to claim a 30 percent federal tax credit when they purchase and install solar systems.
In 2015 this tax credit was extended, but the incentive will gradually decline to 10 percent by 2022.
For Marion, who said Bristol Electronics was already using American-made solar panels, this is the problem most in need of a solution.
Amid the outcry over tariffs and net metering, however, “no one is talking about it,” she said.
LOCAL SOLUTIONS
Faced with these new obstacles, and increasing competition from large corporate installers, Bristol Electronics and Mountain Energy Design, which have both been in business for more than 40 years, plan to keep doing what they do best: provide personalized service.
“We spend a lot of time with our customers,” Marion said. “I’m not a salesperson, and I don’t want to be. I see myself as a solar educator, and I take that role seriously.”
She spends anywhere from 10 to 20 hours crafting and delivering quotes to her customers.
“It’s basically Solar 101. With so much information out there, it’s important to get it right,” she said.
For Cassels-Brown, staying competitive will require more personal service, lower overhead, and constant innovation.
“There may be minor setbacks along the way, but I think it’s going to be pretty good,” he said.
The incentives were designed to jump-start the industry, he said, and that has happened.
“It’s going strong now. We’re already there.”
Christopher Ross can be reached at [email protected]