solar tariff

I am going solar. Now.

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We have the fortune of exploring solar with dozens of homeowners each month. No two conversations are the same, but common themes prevail. We normally commence with a simple question: Why solar, why now (in terms of the homeowner’s interest)?

Solar is not a panacea and it does not make sense for all homeowners. Further, there is no single, silver bullet that prompts people to pull the trigger; here are a selection of “why solar, why now” anecdotes from homeowners:

1. PG&E: Opinions sway from virtual venom to distrust to steady rate inflation to I’m sick of paying PG&E so much every month. As you may have noticed, PG&E raised residential electricity rates ~42% over the past three years, and there’s more to come …

2. Climate change: Everyone wants to do their part, and solar is a the most impactful measure a homeowner can employ to reduce their carbon footprint. Furthermore, our state is burning (no-duh) and homeowners acknowledge the latent liabilities PG&E is accruing for the Santa Rosa, Redding and other fires; there’s a general belief (we agree) that ratepayers will bear financial responsibility for PG&E’s liabilities. Hence, going solar insulates you from future rate increases.

3. Donald Tariff Trump: Regardless of your political stripes, nobody likes to pay more for something. President Trump’s first two tariffs were applied to washing machines and solar panels. (Washing machines?) Fortunately, the quantity of solar panels imported into the U.S. in the fourth quarter of 2017 increased 1900% (versus Q4-2016); the solar industry has been working through a surplus of stockpiled, pre-tariff solar panels. However, supply is dwindling — prices have most likely bottomed — and the solar industry foresees tariffs in the next few months.

4. Donald Tax Credit Trump: There’s much concern among homeowners that the POTUS will eliminate the 30% federal tax credit (for solar, wind and other forms of renewable energy). For now, the tax credit is galvanized into the tax code, at the full 30%, through the end of 2019. We believe it is unlikely Congress (and then Trump) will abort the credit; perhaps we’re being overly naive! The safe bet, of course, is to lock it in in 2018.

5. Investment accounts: This one’s common … if I’m making less than 1% in my checking/money market account and I’m nervous about the stock market and my 401K, solar is an investment vehicle where I can confidently generate 12%+ annual returns. We agree, and the math is quite simple. 

6. I need a new roof: We are currently helping six homeowners who are replacing their roof and, in concert, installing solar panels. The timing is perfect to maximize and optimize warranties from the roof material and solar panel manufacturers (minimum of 25 years) and the roof and solar installation contractors (25 years). Importantly, we orchestrate the process (roof + solar) on behalf of homeowners.

7. Electric vehicle: This one’s a no-brainer, particularly if you plan to own your home for at least five years. Leveraging PG&E’s electric vehicle rate schedule (EV-A), our typical eV + solar homeowner only needs their solar system to generate ~80% of the electricity they use to offset 100% of their electricity costs. (Simple math: Your amortized cost to generate solar electricity is in the 8 cents per kWh range, and you will garner ~4 miles of charger per kWh … so, your cost to drive is ~2 cents per mile.)

Are we missing any obvious motivations (to go solar)? If so, please advise, or feel free to contact us if you’d like to amplify any (or all) of the above.

Trump tariff: #Sad #NotFakeNews #TheSunAlwaysRises

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On Monday President Trump instituted a 30% tariff on solar panels manufactured outside the United States. Optics/first take: Defies logic, common sense, and basic economics … not surprising given the ignoramus in chief.

On the surface, it's sad: Ideology trumps reality. Here's a quick summary of the irrationality of POTUS's move: 

  • Solar is the fastest growing industry/job creator in the U.S., and is projected to grow faster than any industry over the next 10 years.
  • Less than 5% of solar panels are manufactured domestically. Why such tepid market share? We cannot produce a reliable, cost-effective product.
  • When property owners go solar, the economy benefits and is decentralized: Less money is paid to utilities, more money is kept (and recirculated) by home- and business-owners.
  • And, the environment benefits, immensely.

In reality — importantly -- it will not matter. The 30% tariff will increase the gross cost (investment) of a solar system by 8-10%, at worst. Much of this inflation has already been priced into the market: Solar panel prices increased $0.15-0.20 per watt in September, in fear of the pending tariff. (We were fortunate to secure enough solar panels (at pre-tariff prices) to supply Repower property owners through early spring.)

And, the first 2.5 gigawatts (GW) -- or, 2,500 megawatts; 2.5 million kilowatts; 2.5 billion watts; simply, ~8 million solar panels -- imported each year are exempt from the tariff. (By comparison, an estimated 7 GW of imported solar modules were installed in the U.S. in 2017.)

Worst-case: The simple payback for a residential system will increase by 4-6 months. From an article in today's Politico:

Since solar cells and panels make up only a fraction of a new solar system's costs, analysts expect the tariffs to bump up overall installed prices by 6 percent for residential rooftops and about 10 percent for utility-scale plants. Rocky Mountain Institute's own analysis says that the ongoing decline in solar installation costs will wipe out the price increases from the tariff in 18 months.

It could have been worse, and many solar industry leaders are relieved the Trumpster did not throw the solar industry in the dumpster. Solar is a but a crumb of our economic pie, and the tariff is much like a small sliver in your had: Temporary pain, but long-term it's nothing.

Solar is an ever-growing bonfire. Even with the tariff, solar-generated electricity still much less expensive that utility electricity (i.e., you can generate solar energy for ~8 cents per kWh; the average cost in PG&E territory is 26 cents/kWh). Again, from Politico:  

"I don’t want to suggest that anyone is invulnerable," said Greg Wetstone, CEO of the American Council on Renewable Energy. "But we have a tremendous amount of momentum in the marketplace. I think the administration understands it's not in their interest to get in the way of the driver that is producing tremendous amounts of investment and creating jobs."

Be calm, solar on.