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Clouding the Future of Solar

Trump’s tariffs on foreign-made panels couldn’t come at a worse time for the Bay Area’s solar industry.

Solar penetration in San Francisco by neighborhood (data courtesy of Powerscout) 


The morning of January 22, Jeanine Cotter heard about President Trump’s new 30 percent tariffs on foreign-made solar cells and modules the same way most of us get our Trump news now: on Twitter. “I ran to my desk and printed it out and read it,” says Cotter, the president and CEO of Luminalt, a Mission district–based solar design and installation firm. “And then I started getting calls from folks.”

Cotter, her clients, and the more than a quarter million Americans working in the solar industry all wanted to know the same thing: Was this the end of solar as we known it?

The answer, it seems, is: Yes. And no. Colin Smith, a solar analyst with GTM Research, says his firm is expecting an 11 percent reduction nationally in solar sales over the five-year term of the tariffs—bad by any measure. On top of that, any slowdown would mean less work for solar installers (one of the fastest-growing job fields in the country). “Everybody is still sort of figuring this out,” says Bernadette Del Chiaro, executive director of the California Solar and Storage Association, who characterized the tariffs as more of a speed bump than an industry killer. But one thing is clear: “This speed bump couldn’t come at a worse time.”

That’s because 2017 saw the first slowdown in solar’s overall growth ever in California, with 626 megawatts of residential solar capacity added, down from 847 megawatts the previous year. Del Chiaro chalks it up to a combination of market forces: the introduction of new PG&E “net energy metering” rates, which reduce the buyback amount that utilities pay for customers’ surplus energy; last year’s heavy rains, which dampened enthusiasm for solar and delayed construction on many projects; and a lowering of the federal solar investment tax credit. Together, those factors—combined with the phasing out of California’s own tax credit in 2014, the acquisition of San Mateo’s floundering solar panel installer SolarCity by Tesla, and the March 2017 bankruptcy of Oakland’s Sungevity—added up to instability in a market that had seen hockey-stick-curve growth. Even in solar-loving San Francisco, installation slowed by 6.2 percent—the first pullback since 2011.

But there’s reason to hope for a rebound, at least locally: According to the city’s Department of Building Inspection, 938 permits for solar installs were requested in 2017, a 6 percent increase over 2016, suggesting that installations could pick up in the coming year. Plus, while the added cost of the new tariff s might discourage people elsewhere in the state, San Francisco homeowners tend to be less cost-conscious. Consider: Under the parameters of the new tariffs, the increase in price on a typical $15,000 system for a single-family home would be perhaps $700 to $1,000. The usual seven- or eight-year payback period—the time it takes for the system to pencil out—might be extended by perhaps six months.

There are also local policies that help soften the blow of the tariffs. The citywide GoSolarSF incentive, which offers a $300-per-kilowatt rebate (and more for certain types of businesses), has been up and running since 2010. And, thanks to legislation that went into effect in January 2017, all new buildings under 10 stories are required to install solar panels. Says Cotter, “Policy really, really matters.”

And finally, there’s that other oh-so-Bay Area commodity we have in such abundance: disrupters. The morning of Trump’s announcement, the buzz of innovation could be felt inside Emily Kirsch’s Oakland-based energy-focused incubator and seed fund, Powerhouse. With more than 20 startups working on services and software aimed at streamlining supply chains, designing financing products, and finding efficiencies in energy storage, any volatility in the market represents a new opportunity. “I’m not at all going to say this is a good thing,” Kirsch says of the tariffs. “But it speaks to the need for innovation…. When things are slower for the big players”—the SolarCitys and their ilk—“those companies are going to come to us like, ‘All right, what do you have that can make us better, faster, and cheaper?’”


Originally published in the March issue of San Francisco 

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