Despite the weakness in the utility-scale solar market in the U.S due to Trump’s 30% tariffs on imported panels, the large volumes of projects that are being set up, along with China’s decision to heavily subsidies solar panels has led to solar energy prices being cheaper than ever before.
As per a report commission by the U.S. solar industry’s primary trade group, solar installations in the country have fallen by 15% during the third quarter. Much of this can be attributed to the imposition of tariffs by the Trump administration on solar panels made overseas.
However, the current weakness in the utility-scale market, has been offset by larger volumes of projects than had been expected over the next five years since solar energy is now cheaper than ever before.
As per the report by Wood Mackenzie for the U.S. Solar Energy Industries Association, quarterly installations of utility-scale solar were 678 megawatts – their lowest levels since 2015.
The total market, which includes residential and commercial installations, came in at 1.7 gigawatts.
In the first three quarters of this year, electricity generated through solar installations saw a rise by 30% in capacity additions.
The tariffs imposed by the Trump Administration will have an impact on large solar projects as their costs is likely to rise by as much as 50%.
The levy was announced by Trump in January 2018 as part of his opening salvo in the trade war. It was aimed at helping U.S. manufacturers rebound from years of decline. The move was opposed by solar installers since they rely mostly on cheap imported panels.
Most of the panels installed in the United States are manufactured in Asia by companies including China’s JinkoSolar Holding Co Ltd, Canada’s Solar Inc and U.S.-based SunPower Corp.
Wood Mackenzie lowered its 2018 utility-scale forecast to 6.6 GW from 6.8 GW as more projects get pushed into 2019. Mackenzie however raised the forecasts for 2019 through 2023 by a combined 2.5 GW, since utilities are likely to receive a federal tax credit for projects. The state support will however be phased out in 2020.
Developers are likely to start projects in 2019 but delay buying modules until 2020 or later since the tariff drops by 5% each year.
Cost effective solar panel prices are also leading to a growing from utilities.
Earlier this year, following a strategic move by China to slash subsidies for solar installations has led to a flood of low-cost Chinese-made panels to flood the global market, pushing down prices.
According to the report, the prices of solar energy systems are at their historical lows in all segments of the market.