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  • Writer's picturePacific Sun Technologies

The price of solar panels just went up—here's what that means for you

solar modules

A steep new tariff on imported solar panels will have a profound effect on the industry.

For the last decade or so, solar energy’s future was so bright, you needed sunglasses to look directly at it. Thanks in large part to the Solar Investment Tax Credit enacted in 2006, the solar sector has seen an average annual growth of 68 percent over the last decade. In 2016, the cumulative capacity of American solar energy surpassed 40 gigawatts, which is enough energy to power 6.5 million households. Some 374,000 people held solar jobs as of 2016 and solar panel installation has been the fastest-growing occupation in the country, according to the Bureau of Labor Statistics. But solar providers worry their perspectives may have suddenly dimmed.

In January, President Donald Trump announced his approval of a 30 percent tariff on all imported solar modules and cells. Looking at this news, you might feel (sun)burnt by the disagreement over Trump’s decision—and left with quite a few questions about solar technology.

What are solar panels made of?

Solar panel technology has evolved substantially in the last few years, but the basic premise remains the same. The panels are a collection of photovoltaic cells. These crystalline silicon cells are typically formed by encasing slices of silicon in glass. When sunlight hits the cells, the electrons flee the silicon. When the electrons are trapped, they create voltage. Once they’re transported through wiring, those volts are pure energy.

Where are these panels produced?

The majority of solar installations in the United States—roughly 80 percent—use imported panels. Most come from Malaysia (36 percent) and South Korea (21 percent), with China, Thailand, and Vietnam each contributing 8 to 9 percent. The raw materials are sourced from all over the world, a reflection of the industry’s globalized supply chain.

While China supplies just a small fraction of American solar panels, it's one of the biggest producer of photovoltaics globally—and has been subjected to solar tariffs before. China’s success in this particular manufacturing sector has a fairly long history. Back in the 1990s, Germany established a solar incentive program that caused an explosion in the nation’s demand for rooftop panels. China saw this need and ran to fill it. Soon, other European countries were instituting similar programs and finding themselves with increased demand, which China sought to fill. By getting in on production early—and doing so aggressively, with enormous semi-automated factories—China outstripped its competitors. Over the last decade, global prices for photovoltaics dropped by almost 90 percent, in part because of China’s efficient production system and market dominance.

What is the rationale for this new tariff?

For many worried about air pollution and climate change, access to inexpensive solar arrays from China was seen as an essential to the industry’s growth and with it the slow replacement of fossil fuels with green energy alternatives. “[The panel] is effectively the resource. In the oil and gas business, you go and find low cost and oil and gas,” Francis O’Sullivan, MIT Energy Institute’s director of research, told PopSci. “In the solar industry, you go and find the lowest possible panels you can.”