{"id":1689,"date":"2018-03-12T14:49:33","date_gmt":"2018-03-12T18:49:33","guid":{"rendered":"http:\/\/blogs.bard.edu\/mba\/?p=1689"},"modified":"2018-03-12T14:49:33","modified_gmt":"2018-03-12T18:49:33","slug":"the-trump-solar-tariffs-a-local-new-york-state-perspective-by-jesse-cutaia","status":"publish","type":"post","link":"https:\/\/blogs.bard.edu\/mba\/2018\/03\/12\/the-trump-solar-tariffs-a-local-new-york-state-perspective-by-jesse-cutaia\/","title":{"rendered":"The Trump Solar Tariffs: A Local New York State Perspective–by Jesse Cutaia"},"content":{"rendered":"
\"\"<\/a>
Photo Credit: (Rebecca Zisser \/ Axios)<\/figcaption><\/figure>\n

The new Trump solar tariffs<\/a> mean that a majority of the solar panels installed in this country are now 30% more expensive.\u00a0 Lots has been written already on how the tariffs might affect US solar equipment manufacturers (here<\/a>), national solar jobs (here<\/a>), and larger scale solar farms (here<\/a>). \u00a0Instead of rehashing those macro issues, I\u2019m going to approach the topic from a different perspective: the small-scale, local one.<\/p>\n

I work for a regional solar installer in New York State (NYS), outside of NYC.\u00a0 We don\u2019t do the same volume as the bigger national installers, but we’re the largest of the regional players in our market.\u00a0 The Trump solar tariffs will affect our business in all the expected ways, but also in ways that are wholly unexpected:<\/p>\n

Top line prices<\/strong><\/strong><\/strong><\/span><\/p>\n

The new tariffs impose a 30% duty on all imported solar panels.\u00a0 Though not insignificant, the rise in panel costs will actually only add approximately 5-7% to the overall price that end customers will see.\u00a0 This is because panels are no longer the biggest line item in overall costs for our solar projects and haven\u2019t been for some time.\u00a0 In fact, the panels only make up about 15-18% of the total cost of an average installed system in the NYS market.<\/p>\n

Bottom line prices<\/span>
\n<\/strong><\/strong><\/strong><\/p>\n

Despite the increase in top line prices, most customers will not feel the full brunt of the 30% import duty reflected in their bottom line prices.\u00a0 This is because the solar Federal Income Tax Credit (ITC<\/a>) will be in effect through a majority of the 4 year life span of the new solar tariffs.\u00a0 The ITC will dampen the effects of the tariffs by turning a 30% price hike into a 21-23% bump to the bottom line of a solar installation contract, depending on the year of the install.\u00a0 NYS also has a solar income tax credit (NYS-ITC<\/a>) for certain eligible equipment that has the potential to lessen the price spike even further, especially for smaller sized systems.<\/p>\n

Margins<\/span>
\n<\/strong><\/strong><\/strong><\/p>\n

Contrary to what many customers think, the solar contracting business is actually a low margin business.\u00a0 The Trump solar tariffs, if not passed through to customers, will erode margins.\u00a0 Profits are necessary to maintain a healthy business, fund future growth, and honor long term warranties, so it’ll be a lose\/lose scenario for both solar installers and their customers if already thin margins are lost completely.<\/p>\n

Employment<\/strong><\/strong><\/strong><\/span><\/p>\n

Employment in the NYS solar market grew by 11%<\/a> in 2017 according to the Solar Foundation<\/a>, which tracks national and state employment data on the solar industry.\u00a0 2017 was another year of growth and great news for nearly every stakeholder involved.\u00a0 Despite Trump\u2019s insistence that these tariff will boost jobs in solar panel manufacturing (like at the Tesla plant in Buffalo), solar manufacturing jobs make up just 15%<\/a> of jobs in the industry compared to just over 50% for installation-related jobs. \u00a0The potential for tariffs to drive a net loss in solar jobs in NYS is a strong possibility in 2018.<\/p>\n

Lead Generation<\/strong><\/span><\/p>\n

Perhaps the biggest fallout from the Trump solar tariffs is not about pricing at all, but rather perception.\u00a0 Despite the rapid growth of the solar industry over the past 10 years, the vast majority of homeowners have never investigated going solar.\u00a0 Many homeowners sit on the fence, despite the fact that they could viably go solar and save money on their electric bills.\u00a0 They believe solar won\u2019t work for them either for technical, aesthetic, or economic reasons.\u00a0 Getting people to call or email solar installers is critical to market growth, and the cost to do that has been rising.<\/p>\n

Customer acquisition costs make up close to 20%<\/a> of a solar system cost \u2013 very high compared to other industries.\u00a0 Anything that makes this more difficult or more expensive is a drag on sales and growth.\u00a0 Installers will be forced to spend even more money to get customers into the fold now that Trump’s tariffs have created the perception that solar just became more costly, a daunting prospect for small regional firms.<\/p>\n

Of the items listed above, I suspect that the hit to lead generation will be the most detrimental aspect of the Trump tariffs.\u00a0 In NYS, prices won\u2019t rise in a meaningful way, margins may be squeezed, and net job losses may come, but it is the perception that solar just got more expensive that will keep thousands of homeowners from joining the ranks of the clean energy revolution.\u00a0 And what a shame that will be.<\/p>\n","protected":false},"excerpt":{"rendered":"

The new Trump solar tariffs mean that a majority of the solar panels installed in this country are now 30% more expensive.\u00a0 […]<\/p>\n","protected":false},"author":360,"featured_media":1690,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[259,5],"tags":[142,23,24,484,483,324,191,486,485,7,482],"class_list":["post-1689","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mba-students","category-news","tag-bardmba","tag-clean-energy","tag-green-jobs","tag-local-business","tag-nys-solar","tag-renewable-energy","tag-solar","tag-solar-cac","tag-solar-jobs","tag-sustainability","tag-trump-tariffs"],"jetpack_featured_media_url":"https:\/\/blogs.bard.edu\/mba\/files\/2018\/03\/Trump_SolarPanels.jpg","_links":{"self":[{"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/posts\/1689","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/users\/360"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/comments?post=1689"}],"version-history":[{"count":18,"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/posts\/1689\/revisions"}],"predecessor-version":[{"id":1708,"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/posts\/1689\/revisions\/1708"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/media\/1690"}],"wp:attachment":[{"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/media?parent=1689"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/categories?post=1689"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bard.edu\/mba\/wp-json\/wp\/v2\/tags?post=1689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}