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US solar panel imports rebound after tariff-driven crash

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US solar panel imports rebound after tariff-driven crash

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A solar farm near Sumrall, Miss., in March 2018.
Source: Associated Press

U.S. imports of solar panels continued to climb through the end 2018 after bottoming out in April as companies adjusted to tariffs President Donald Trump imposed last year and equipment prices that subsequently tumbled globally following policy changes in China that slowed the pace of growth in the world's biggest solar market.

Solar panel shipments rose by 29% quarter over quarter in the final three months of 2018, for the strongest period of the year, according to data from Panjiva Inc., a division of S&P Global Market Intelligence. The U.S. Energy Information Administration reported a similar trend through October, reflecting its most recently released data. According to the EIA, third-quarter 2018 U.S. solar panel imports jumped to 1,780 MW, up by 68% from the second quarter. Imports rose another 10% month over month in October 2018, with 662 MW of modules imported.

"We continue to see module prices declining and we're currently placing orders for modules ... for delivery in the first part of next year," Dana Russell, executive vice president and CFO of rooftop solar company Vivint Solar Inc., said on an earnings call in November 2018.

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While project developers have benefited from the recent drop in equipment prices, the latest round of tariffs on most imported solar cells and panels is still weighing on the U.S. market, said Alex Hobson, a spokeswoman for the Solar Energy Industries Association, or SEIA, a trade group.

Annual solar shipments into the U.S. were down 54.7% versus 2017 according to Panjiva, reflecting the greater costs of solar imports and the late 2017 boom in panel imports made by companies looking to import panels ahead of the tariffs.

Installations of new solar capacity in the U.S. fell by 15% year over year in the third quarter after project developers delayed work due to earlier trade uncertainty, analysts at SEIA and Wood Mackenzie Power and Renewables, a consulting firm, said in December 2018. The tariffs led analysts to cut forecasted solar demand in the U.S. by 10% for the period from 2017 to 2022, Hobson said.

"We think headwinds are going to continue into next year because of the tariffs, but that the industry is resilient and will recover," Hobson wrote in an email.

Changes China made to its national solar policies in mid-2018, however, have offset much of the tariffs' direct impact and led to an oversupply of panels worldwide that has frustrated efforts by the Trump administration to boost domestic solar manufacturing. For the most part, efforts to assemble more solar panels in the U.S. remain in the planning phase, Paula Mints, chief analyst at SPV Market Research, wrote to clients in December 2018.

But conditions in China's solar marker are still in flux. Executives of equipment manufacturers and raw-material producers in late 2018 told investors they expect renewed support from the Chinese government. Last year, the government slowed the pace of growth in the country's solar market in order to lower subsidy costs and spur corporate consolidation.

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Since then, however, signs of an economic slowdown in China have roiled global financial markets.

If China sticks with its current solar policies, panel prices will remain low until manufacturers cut back production, Mints said. However, China seems likely to change course and "continue installing solar," she said, adding that the central government and local officials will probably look to preserve industry jobs and boost infrastructure spending in the face of slowing growth.

In a pair of research notes Jan. 5, CFRA analyst Angelo Zino said a "potential recovery" in China's solar market in 2019 "should support a more stable pricing landscape," though supply is likely to exceed demand "in the intermediate term," he said.

"As we look forward, the spot prices for modules are lower," Robert Komin, CFO of rooftop solar company Sunrun Inc., said on an earnings call in November 2018, citing the planned phaseout of the latest round of U.S. solar tariffs.