Solar energy shines brighter in California than practically anywhere else, with solar panels perched on more than 450,000 rooftops.
Now the state’s solar industry has been sent reeling by President Donald Trump’s decision Monday to impose a 30 percent tariff on solar panels imported from overseas.
Imports make up 70 percent of the solar panels deployed in the United States, with China accounting for the lion’s share. The influx of imported panels has eviscerated America solar manufacturers, including several that set up shop in the Sacramento area a decade ago but have since disappeared.
At the same time, though, solar energy has flourished in other forms in the United States, particularly in California. About 100,000 Californians work in the solar business, installing panels, manufacturing components and developing large-scale “solar farms” that have sprouted in the sun-drenched Central Valley, according to the California Solar Energy Industries Association.
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Industry experts said Trump’s decision, announced by U.S. Trade Representative Robert Lighthizer, will make solar more expensive for homeowners and business owners. They don’t think the higher prices will kill the industry, but it could depress demand and slow a business that has made renewable energy a rising star in California’s economy. The tariffs will start at 30 percent and taper off to 15 percent in the fourth and final year they remain in effect.
“It’s definitely not going to help our industry,” said Scott Wallace, a project developer with Spectrum Energy Development Inc. in Elk Grove. Spectrum develops and installs solar panels for businesses and apartment complexes.
For homeowners, a typical rooftop array of solar panels costs around $15,000, although homeowners are eligible for a 30 percent federal tax credit, said Ed Murray of Aztec Solar Inc., an installer in Rancho Cordova.
As it stands now, Murray said homeowners can expect the panels to pay for themselves, in the form of cheaper electricity, in six to nine years. With the tariffs, he said, the payback time will likely be eight to 10 years.
“There will still be people wanting (solar),” Murray said. “We always bounce back from these things. We will prevail.”
Solar’s growth in California has been explosive, thanks in part to declining costs and the effect of the tax credits. Solar generated 9 percent of California’s electricity in 2016, a one third increase from the year before. About 20,000 homes in greater Sacramento are powered by solar, according to SMUD, and the increasingly familiar dark blue panels are found on Golden 1 Center and some of the region’s other signature buildings.
For all its success, the industry still thinks of itself as an up-and-comer that will suffer damage from the effect of pricier solar panels.
“We’re an emerging technology,” said Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association. “Anything that increases our cost is bad.”
Because manufacturing represents such a small slice of the American solar industry, the U.S. Solar Energy Industries Association said the tariffs will eliminate an estimated 23,000 jobs. Of the estimated 260,000 solar jobs nationwide, only 38,000 are in manufacturing, the association said, and only 2,000 of the factory workers make solar panels.
Solar advocates accused Trump, who has been outspoken in his support of coal and other fossil fuels, of undermining a popular form of renewable energy. “Declining solar costs have been critical to the growth of solar as a tool for states, cities and utilities to provide energy bill assistance to low-income customers, and the growing industry has created tens of thousands of good jobs,” said Grid Alternatives, an Oakland nonprofit that works to bring solar power to low-income communities.
The Trump administration portrayed the tariffs, however, as an attempt to support a troubled U.S. manufacturing industry that has suffered at the hands of unfair competition from China. In its official findings, the office of the U.S. trade representative said imports have grown by 500 percent since 2012, and “by 2017, the U.S. solar industry had almost disappeared.” It added that China’s government subsidizes solar panel production and its companies sell in the United States “for less than their fair market value, all to the detriment of U.S. manufacturers.”
The tariff comes as one Chinese company, CSUN, prepares to open a solar panel factory at McClellan Business Park in North Highlands. The company has said its U.S. subsidiary, Sunergy America, could employ 200 workers at McClellan.
“The plant is being built right now,” said Ken Giannotti, a senior vice president at the business park. “We see them under way. A number of their employees are already in the space, in pre-startup mode.”
McClellan and the rest of the Sacramento region have had poor results with solar manufacturing. At least four companies were in the process of opening factories in the area in 2009, during an initial wave of solar expansion, raising hopes that green energy would help lead Sacramento out of the recession. One company, OptiSolar Inc. of Hayward, said it would hire more than 500 workers at McClellan.
But the companies collapsed under the weight of inexpensive imports. Giannotti said Sunergy America could open a new chapter.
“I hope it’s a second coming,” he said.
The biggest debacle in the U.S. solar industry took place in the Bay Area, where solar panel startup Solyndra fell apart after receiving a $500 million loan guarantee from the Obama administration as part of the economic stimulus package.
Nevertheless, the solar industry has continued to expand as rooftop installations have become increasingly affordable. SolarCity, the solar installer owned by Elon Musk’s Tesla Motors Inc., employs several hundred installers and customer-service workers in the Sacramento region – although it did lay off 140 workers in Roseville last summer.
Other companies have found mico-niches. Eco Foundation Systems Inc. of Sacramento, which installs specialty screws for mounting solar panels on the ground, said it believes it can withstand the impacts of an increase in solar panel prices.
“Business is always being faced with challenges,” said Ed Ayala, the company’s president. “This is no different than a fuel increase or an insurance increase. You can’t let this stop you.”