• 3 minutes Don't sneeze. Coronavirus is a threat to oil markets and global economies
  • 5 minutes Boris Johnson taken decision about 5G Huawei ban by delay (fait accompli method)
  • 9 minutes This Battery Uses Up CO2 to Create Energy
  • 12 minutes Shale Oil Fiasco
  • 9 mins Historian Slams Greta. I Don't See Her in Beijing or Delhi.
  • 3 hours We're freezing! Isn't it great? The carbon tax must be working!
  • 18 hours Indonesia Stands Up to China. Will Japan Help?
  • 8 hours US (provocations and tech containment) and Chinese ( restraint and long game) strategies in hegemony conflict
  • 4 mins Beijing Must Face Reality That Taiwan is Independent
  • 19 hours Tesla Will ‘Disappear’ Or ‘Lose 80%’ Of Its Value
  • 23 hours Environmentalists demand oil and gas companies *IN THE USA AND CANADA* reduce emissions to address climate change
  • 10 hours Might be Time for NG Producers to Find New Career
  • 2 days Phase One trade deal, for China it is all about technology war
  • 6 hours Trump has changed into a World Leader
  • 1 day Anti-Macron Protesters Cut Power Lines, Oil Refineries Already Joined Transport Workers as France Anti-Macron Strikes Hit France Hard
  • 2 days Angela Merkel take notice. Russia cut off Belarus oil supply because they would not do as Russia demanded
Alt Text

A Serious Contender To Lithium-Ion Batteries

Sodium batteries are getting increasingly…

Alt Text

The Remarkable History Of Solar Energy

The benefits of solar energy…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

U.S. Solar Developers Benefit From Chinese Subsidy Cuts

The U.S. solar market has been rattled twice this year by two separate policy decisions, one in the United States and one in China. U.S. manufacturers and developers are now caught between two conflicting market forces as the two policies have had opposing effects on them.

A Chinese policy from June to cut domestic solar subsidies caught the global market by surprise and is now expected to benefit U.S. solar developers who import the solar panels they install because the global market will be flooded by low-cost Chinese products.

Yet, the Chinese subsidy cut is also expected to reduce the profit margins of the solar panel manufacturers in the United States, offsetting the profit boost that the U.S. tariffs had intended. The glut of solar products worldwide is pushing prices down, eroding the profits of the manufacturers in the United States.

The lower prices could totally offset by November the initial profit boost from the U.S. import tariffs announced in January, Paul Strigler, vice president at Boston-based investment firm Esplanade Capital, which has a solar energy investments fund, told Reuters.

But while the U.S.-based manufacturers could see their profit margins slimming, the Chinese subsidy cut would be a boon for the companies developing solar installations and relying on imported solar panels—their costs would now be lower.

That’s a reversal of the fortunes and prospects for the manufacturers and developers in the United States after the import tariff was announced in January.  

The tariffs on solar products imports that U.S. President Donald Trump levied in January—aimed at safeguarding U.S. manufacturing—led to a surge in U.S. panel prices—a boon for U.S. manufacturers. Several foreign companies announced new investments in manufacturing factories in the United States, relying on boosting their profits if they make panels in the United States.

China’s JinkoSolar said in January it was planning the construction of an advanced solar manufacturing facility in the United States. Hanwha Q CELLS Korea Corporation said in May that it would start construction of a solar module production facility in Georgia this year, scheduled for completion in 2019.   Related: Oil Rallies On Flurry Of Bullish News

At the same time, hit by higher costs on imports, some U.S. solar developers told Reuters in early June that they had either canceled or frozen US$2.5 billion worth of large installation projects, more than double the US$1 billion in investment that manufacturers had announced in domestic solar panel manufacturing to take advantage of the tariffs on imports.

Also in early June, the Solar Energy Industries Association (SEIA), the trade association representing both solar developers and panel manufacturers, said that this year, the U.S. installation and developers would be somewhat insulated from the impact of the tariffs.

“But in the longer term, the impacts of these tariffs are significant – several developers have announced project cancelations, and more are in negotiations to restructure their PPAs due to the higher costs resulting from the tariffs,” SEIA said.

Around the same time came China’s decision not to issue approvals for any new solar power installations this year and cut the feed-in tariff subsidy that had been a major driver of the solar business in the country, which accounts for as much as 50 percent of global capacity.

According to Wood Mackenzie, the sudden reduced demand in China after the subsidy cut will result in an oversupply in the global PV module market and further reductions in prices.

The drop in panel prices globally and in the United States is helping to revive installation activity and boost the margins of projects in the pipeline, executives at U.S. solar developers told Reuters, noting that the falling prices have yet to revive projects that had been put on hold after the Trump tariffs.

SEIA, which has criticized the tariffs since the beginning as a ‘loss for America’, thinks that the declining prices could take some of the sting out of the tariffs, but growth would still be slowed down.

“It may be less bad than it could have been, but it’s still not nearly as good as it should be,” spokesman Dan Whitten told Reuters.

The falling prices could help U.S. solar developers to blunt the impact of the import tariffs. Ironically, they have China to thank for it.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage




Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play