Turns out, it is always sunny in Arizona. Arizona’s solar industry is optimistic according to the Solar Energy Industries Association (SEIA) after President Trump passed a 30 percent tariff on all solar modules imported from China.
Preparing for the tariff was already a part of the plan for solar companies throughout the state. Keeping Arizona, the third highest ranking state for renewable energy efficiency.
The Renewable energy standard and Tariff (REST) passed in 2006 requires, “electric utilities must generate 15% of their energy from renewable resources by 2025.”
Tax rebates and exemptions are in place as incentives to encourage the installation of solar energy technologies. Known as the Solar Investment Tax Credit, the rebate is worth 30 percent of the system cost and is deducted from federal income tax. The Arizona Corporation Commission according to their website said, “The commission’s renewable energy standards encourage utilities to use solar, wind, biomass, biogas, geothermal and other similar technologies to generate “clean” energy to power Arizona’s future.”
The new tariff approves four years of tax that start at 30 percent in the first year, then drops to 15 percent by 2022. Because the tariff taxed only imported goods, the Solar Energy Industries Association has projected tens of thousands of job losses.
Over the last ten years’ solar growth in Arizona has reached 496,189 homes run by solar. Installations from residential to solar farms have made an increase of 432 workers, including 74 manufactures, 211 installers, and 129 others according to Arizona’s Solar Industry Association. Creating 5.92 percent state electricity from renewable energy as of 2017.
On a residential scale, 1.5 million American homes had installed a solar system as of quarter three of 2017.
For Arizona companies like Natural Energy Reduction Designs, (N.E.R.D Power) the tax is not scaring them out of the industry.
“Many companies like us were already purchasing from American solar panel providers, we were preparing for a tax like this for a while now, but feel as though the demand will continue to rise.” said the owner of N.E.R.D Babe Kilgore.
The average cost of solar panels in Arizona breaks down to $3.01 per watt according to EnergySage, an online comparison-shopping marketplace for solar. Averaging savings of $17,000 over 20 years.
Arizona’s Solar energy workforce is keeping the state’s ranking for renewable energy. Although the tax will take a hit on the imported supply that almost 80% of the industry use, many companies began “bulking” or finding American made suppliers as early as six months before the tax.
Joseph Barrios of Tucson Electric Power said: “we don’t expect this change to have an immediate impact on us and it’s too early to tell if it could impact our long-term plans to expand solar energy in our community.”
The Annual Energy Outlook was released Tuesday, Feb. 6, but “Due to the timing of the tariff announcement, it will not be included in the AEO2018 Reference case; however, one of several releases over the next few months will involve a discussion of the solar tariffs.” Said Kevin Jarzomski, Operations Research Analyst of the U.S Energy Information Administration.
In retrospect, Trump’s tariff will force the industry to adjust to American made solar equipment, potentially creating a self-reliant solar industry.
When talking specifically about the Arizona market for solar energy, it is suggested that the “overall impact could reduce the solar market from 10%-20% the first year.” According to AriSEIA.
The active REST initiative continues to require 15% of energy from Solar and renewable sources. The mandate is taking precedence over the tax in Arizona, pushing the state’s tax-payers towards to industry of renewable solar energy.
“While it is hoped that solar manufacturers will move their companies back to the US, we will be working to invite those companies to relocate here in Arizona,” said Lucy Mason on the AriSEIA website.
Megan Lange is a reporter for Arizona Sonora News, a service from the School of Journalism with the University of Arizona. Contact her at [email protected]