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US solar update

By Camila Sarmiento, ESG Analyst

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New policies brighten the outlook.

The US solar industry has had a slow start to 2022, but two recent policy moves may offer a helping hand to installers and manufacturers alike.

First, President Biden has halted imposing any new tariffs on solar panels from Southeast Asia for two years. This is part of the president’s declared emergency concerning the availability of electricity to meet US needs – and it’s good news for US solar installers.

Prior to the announcement, US-China tariff investigations had resulted in mounting uncertainty, supply chain shortages, and stalled projects across the industry. These headwinds were evident in US solar instalments for the first quarter of 2022, which were down 24 per cent on the same period in 2021, according to the analysts at Wood Mackenzie. We think the freeze on tariffs will help bring confidence back to the industry and enable more solar projects to make progress.

Second, President Biden signed an executive action to spur domestic clean energy manufacturing with a clear focus on solar. One of the reasons the US first introduced tariffs on imported solar components in 2012 was to support local manufacturers. But while US demand for photovoltaic equipment has surged, it has not been accompanied by a similar rise in US manufacturing; US installers still rely on Asian countries, which supply around 80 per cent of global solar panels.

This latest move aligns with the efforts made by policymakers to advance the US energy transition. Indeed, solar plays a key role in meeting US Paris Agreement-aligned goals, and President Biden’s 2035 carbon-free electricity goal. According to the US Department of Energy’s Solar Futures 2021 Study, solar energy represents 3 per cent of power generation today, but could represent 37-42 per cent of electricity by 2035, provided the right policies are brought forward.

While supply chain disruptions are now being addressed, the solar industry is still waiting on the potential extension of solar tax credits, which are due to decline at the end of this year. If granted, an extension would help accelerate the solar industry further. We think the recent moves by President Biden reaffirm the continued support for solar growth, and bode well for conversations on tax credit extensions.

First published 8th June 2022.
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