Solar industry growing, but tariff sparks fears
Solar installer Mark Waldo isn't panicking.
A longtime electrician who started Waldo Renewable Electric in Old Saybrook with his wife, Rebecca, about 12 years ago, Waldo says there are too many unknowns about a recently announced tariff on imported solar cells to believe it will do lasting damage to an industry that's steadily grown in Connecticut.
"I don't take it too personal," Waldo said of the tariff. "The industry is strong because solar works."
President Donald Trump, who has pushed for increased manufacturing, recently approved a 30 percent tariff on most imported solar cells following a recommendation from the U.S. International Trade Commission in October. The ITC unanimously found that an oversupply of imported solar materials, especially from China, had forced dozens of U.S. manufacturers out of business in the last few years.
Industry analysts expect the tariff to hike project costs by about 10 cents per watt, an amount that's particularly concerning for some developers of large-scale projects. Trade groups and renewable energy advocates have fumed about the tariff for months, arguing it will hike solar prices, forcing demand to nosedive and jobs to disappear.
"Connecticut stands to lose 342 jobs due to the tariff," said Alexandra Hobson of the Solar Energy Industries Association (SEIA), a trade group.
SEIA calls Connecticut "one of the fastest growing of the smaller states in the solar industry." Connecticut is home to 187 solar companies employing 2,100 installers, manufacturers, consultants and developers.
SEIA expects tariff-related price increases to lead to the elimination of almost 1,500 jobs throughout New England and at least 23,000 nationwide.
But Waldo said for small-scale installers and homeowners, the impacts of the tariff may not be as dire as predicted. The bigger downfall, he said, could be customer confidence shaken by uncertainty and politics.
"While everybody's up in arms, there's an unknown number of customers who would buy solar but are waiting for this to die down or don't know what the costs are," Waldo said. "We've worked really hard to create customer confidence and stability. (The industry) has proven itself."
Made in China
Solar World and Suniva Inc., contending imports had hurt their business in the United States, filed petitions last year seeking the tariff, which declines by 5 percent annually before phasing out after four years.
Solar World's corporate headquarters are in Germany. China-based Shunfeng International Clean Energy owns a majority stake in Suniva.
The influx of cheaper foreign materials — spurred in part by China's aggressive subsidization of manufacturing, per the ITC — led to sharp price drops for U.S. solar companies and customers in the last several years.
Solar prices in Connecticut have dropped by 55 percent over the last five years, according to SEIA.
Demand continues to rise as installation costs have dipped from at least $5 per watt to close to $3.50 per watt, according to Bryan Garcia, president and CEO of the Connecticut Green Bank.
"Back in 2012, the state was deploying maybe three or four megawatts of residential solar," Garcia said on Thursday. "We're now doing 40 to 50 megawatts a year."
The Green Bank is a state-funded organization that spurs private investment and helps customers finance solar installations and other energy improvements.
Data tracked by the Green Bank shows 60 percent of the panels installed through the bank's program since 2012 were made in China. That's 400,772 panels out of the 665,488 installed in 23,000 Green Bank projects over the last five years. About 107,000 panels came from Korea, while 51,609 were made in the U.S.
Last year, however, Green Bank's partner companies installed 13 percent fewer panels made in China. Garcia said it's possible developers already started to shift to other options while the tariff was under consideration.
Garcia argued residents wouldn't be hit too hard by the tariff, as the average install price will rise from about $3.50 per watt to $3.60 per watt. For a typical 5 kilowatt system, the project price might rise from about $17,500 to $18,000, before tax rebates and other incentives.
But Garcia said the tariff significantly could impact commercial and industrial systems, where install costs are about $2 per watt but substantially more wattage is needed.
'Every landfill in Connecticut should be its own power plant'
James DeSantos, vice president of Middletown solar company Greenskies, described the tariff as "very, very shortsighted" because it could halt growth by forcing companies to cut back on projects.
"It will affect everybody's bottom line and ability to hire," DeSantos said. "There's no doubt about it."
Founded in 2008, Greenskies is an international commercial and industrial solar developer purchased by California-based Clean Focus last year.
The company has six projects slated for southeastern Connecticut this summer, but is holding off on new hires.
DeSantos says the best way to combat the tariff is with progressive state actions.
The Connecticut Fund for the Environment is pushing for greater use of shared or "community solar" projects in landfills, Brownfield sites or cleared industrial parcels that can bring solar power to customers who can't access it because they own homes in shaded areas or rent apartments.
"Every landfill in Connecticut should be its own power plant," DeSantos said. "Wind, solar, fuel cells, battery. I'd love to see that."
Previous pilot programs for shared solar have fallen through or stalled. The state Department of Energy & Environmental Protection selected three pilot projects last year, each between 1.6 and 2 megawatts, that should be operational by next year in Shelton, Bloomfield and Thompson.
New energy strategy
While tariff talk dominated solar news in recent weeks, DEEP on Thursday night released updates to the state's Comprehensive Energy Strategy. The plan commits to a 45 percent reduction from 1990s levels of carbon emissions by 2030 and calls for a host of new renewable energy initiatives.
But some advocates and companies fear DEEP's proposed method to transition from net metering could minimize incentives for solar customers.
Net metering lets residential customers receive energy bill credits from utilities, compensating them at full retail rates for excess energy their solar panels feed into the grid.
DEEP says net metering is unsustainable because it's directly tied to retail rates. Over time, solar customers will receive higher compensation levels, yet non-solar ratepayers are the ones largely footing the bill through continually increasing rates, regulators say.
"When designing programs, policymakers consider the costs of programs ... from the perspective of all ratepayers, not just the program participants," DEEP wrote in the CES.
The Acadia Center and 20 other organizations and advocates wrote to DEEP on Dec. 22 to argue the proposed changes would lead to higher metering and billing costs and imperiled "the future of smart homes with storage and energy management."
"Everything you're generating on-site should be credited at the retail rate," Emily Lewis O'Brien, a policy analyst with Acadia Center, said last week.
But DEEP says future solar customers should be credited "a fixed amount on a cents-per-kilowatt hour basis for each kilowatt hour produced to receive savings on their electric bill."
A competitive bidding process among utilities, structured by the Public Utilities Regulatory Authority, will establish the fixed amount residential solar customers will receive. Regulators say the fixed price will represent a fairer, more accurate value for customers' solar generation and its carbon emission avoidance and grid reliability, as opposed to an amount susceptible to fluctuations in retail rates.
A bill from Gov. Dannel P. Malloy under review by the Energy and Technology Committee calls on PURA to establish a bidding plan by Sept. 1, 2018.
Mary Sotos, DEEP deputy commissioner, said Friday the agency "definitely (wants) to allay" fears that residents, businesses or municipalities won't be adequately compensated for their solar power generation moving forward.
She notes the new rules and rates will apply to new installations. Existing projects will be grandfathered and keep the same metering systems for residential, state, municipal or agricultural projects for up to 20 years from their in-service date.
DEEP is calling on utilities to annually spend $35 million spread evenly among residential solar projects; competing zero-emission renewable projects; and competing low-emission renewable projects. The latter two include commercial, industrial and shared solar developments and state, municipal and agricultural efforts; this system replaces the expiring low- and zero-emission renewable energy credit programs (LREC and ZREC) that gave a boost to large-scale projects the last few years.
United Illuminating and Eversource said they back the proposed changes.
Waldo, the solar installer, said he is worried about the rate of return for customers in the potential new system. But he's confident solar and renewables are sustainable, which is why he and his wife got into the business years ago.
"I feel like we're trying to do our part to make a better planet for our kids," he said. "Logically it's the right thing to do. And we're making a living doing it."