Consumer Reports – Even with the new U.S. tariff on imports of solar panels, this is still a good time for consumers to go solar.
That’s because any price increase in solar panels is likely to be minor—and there are plenty of other incentives for homeowners to make the switch.
The Trump administration announced Monday that it would impose tariffs on solar panels as well as washing machines because of complaints from domestic manufacturers that they were being hurt by cheap imports.
The price of solar panels, especially from China, has dropped sharply in recent years, fueling consumer demand and a booming business for U.S. solar installers.
But any price increase on panels isn’t likely to halt that growth, says Noah Ginsburg, a director at Solar1, a New York-based nonprofit that connects consumers with installers.
For one thing, “solar panels only make up a fraction of the total cost for home installations,” he says.
Most of the expense is for other costs, including labor and permits.
Moreover, the tariff is temporary, says Malcolm Woolf, senior vice president of Advance Energy Buyers Group, an energy consortium. Over a four-year period, the tariff will fall from 30 percent to 15 percent. After that, there will be no tariff at all.
Woolf and Ginsberg both say that solar energy continues to be a good investment for homeowners, especially in regions of the country with high energy costs, like New York State, which has the most expensive energy in the continental U.S.
In fact, Woolf says that homeowners who are considering installing solar energy might want to act sooner rather than later.
For one thing, one of the largest solar subsidies is going away. Currently, taxpayers can claim a 30 percent federal tax credit on the cost of solar installation. The credit decreases to 26 percent in 2020 and 21 percent in 2021, before being phased out completely in 2022.
In addition to the federal subsidies, there are many state and local incentives for solar installation.
In New York, for example, there is a 25 percent state tax credit, a 20 percent property tax abatement, and an up-front New York State Energy Research and Development subsidy that reduces the cost of a solar installation by 10 percent when homeowners hire eligible contractors, Ginsburg says.
Even if you don’t plan to install a solar energy system, the new tariff could affect you in other ways.
Because solar panels have been so cheap, electric power utilities have committed to expand their use of solar to reduce their carbon footprint and meet local government sustainability standards, says Frank Maisano, spokesman for the Trade Action Coalition, which represents utilities, retailers and energy service companies, among others.
In addition, large corporations such as Google, Amazon, and Walmart, in reaction to consumer demand, have committed to building large solar farms for their own energy use. Solar projects of this scale could become considerably more expensive to build, Woolf says.
Eventually, these costs will be passed on to consumers in one way or another, he says.
“Without a doubt, a government tariff makes solar less competitive compared to other sources,” says Abigail Ross Hopper, CEO of Solar Energy Industry Association, an industry group. “However, we still believe solar is a good investment for American consumers due to the economic and environmental benefits it provides.”
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