President Donald Trump promised last week that a new 30 percent tariff on foreign-built solar cells and panels will “create jobs in America for Americans.”
Curt Shellum, who runs a solar panel installation business in Rochester, doesn’t see it.
The tariff comes too late to save Minnesota’s biggest manufacturer of solar panels, which shut its doors in May, and only one solar-panel plant continues to operate in the state. The effect on installers like Shellum, who rely on the foreign producers that make 90 percent of all solar panels, is likely to be higher costs.
Some in the industry fear that the tariff could slow the growth of renewable energy by raising prices, a possibility that could cost hundreds of solar jobs in the state. The Minnesota Solar Energy Industries Association, a trade group, believes roughly 600 of the state’s estimated 4,000 solar jobs may be lost.
“I have 14 employees with mortgages and car payments and kids to support,” said Shellum, who opened Solar Connection in 2010. “I don’t know who the president thinks he’s helping. But he’s not helping us.”
Trump’s plan is part of a broader effort the administration said is necessary to protect American manufacturers against low-priced competition from China and other countries. He also enacted a new tariff on imported washing machines after hearing from companies that wanted help against foreign competitors.
Trump and U.S. Trade Representative Robert Lighthizer think penalizing foreign solar-panel makers whose governments subsidize production costs will spur companies to build and staff production plants in the United States. Last week, the U.S. Energy Department announced a $3 million “prize competition to accelerate U.S.-based solar manufacturing.”
“You’re going to have people getting jobs again, and we’re going to make our own product again,” Trump said last week. “It’s been a long time.”
The stark division over the new tariff highlights a larger national conflict concerning the benefits and costs of protectionist policies in a global economy. At the center of the debate is the struggle to replace U.S. manufacturing jobs lost to foreign companies that offer the same products at lower prices.
Too late for Ten K Solar
Among the Minnesota victims of that trend were workers at Ten K Solar, a Bloomington-based solar-panel manufacturer that last May announced it was discontinuing its business. Ten K was the only solar-panel manufacturer of any size in Minnesota, once employing 200 people and generating at least $50 million in annual sales. Ten K closed after being battered by low-price competition, primarily from Chinese solar panel manufacturers.
Heliene Inc., based in Sault Ste. Marie, Ontario, operates the only solar-panel manufacturing plant left in Minnesota. The Mountain Iron facility uses foreign-made solar cells to make panels. Heliene President Martin Pochtaruk doesn’t believe the Mountain Iron plant will be significantly affected by Trump’s action because there’s an allowance for a certain number of foreign-made solar cells to be imported without tariffs.
But Pochtaruk said that overall, the tariff will have a negative effect on the U.S. solar industry and isn’t likely to produce manufacturing jobs.
“This is supposed to bring employment to the U.S.,” Pochtaruk said, “but I don’t see how.”
Several analysts and solar-industry executives say an overall decline in employment is much more likely than any gain. Today, most of the 260,000 solar jobs in the United States are in development or installation, and fewer than two in 10 are involved with manufacturing.
Caught in the squeeze are people like Rob Appelhof. His decade-old company, Cedar Creek Energy, develops and installs solar-energy systems. The Coon Rapids businessman employs 31 people.
“The president made a political decision that hurts our economy nationally and in Minnesota,” Appelhof said.
With roughly 90 percent of solar panels produced outside the U.S., prices will rise for Cedar Creek and other domestic companies, large and small, solar-industry trade groups say. Rising prices also cut the financial return to potential investors in big solar projects. Growth slows in a renewable energy sector that was starting to take off.
“I’ve seen solar go from 20-year [profitability] to four-year [profitability],” Appelhof said.
Large utility companies such as Minneapolis-based Xcel Energy have invested in solar energy to produce electricity.
“Once you see utilities shift to renewables, that tells you they’re mainstream,” Appelhof said. “I’m very disappointed in this [tariff] decision.”
Boston-based GTM Research, which studies solar energy, predicted that increased solar-panel costs will result in an 11 percent decrease in new U.S. photovoltaic solar installations over the next five years. “The overall effect is a meaningful, but not destructive, reduction to expected solar installations,” the company concluded.
GTM said it believes the utility-scale solar business will be more heavily affected than the residential and commercial segments. Utility-scale, which refers to large solar plants built for electricity providers like Xcel, will shoulder about 65 percent of the reduction in solar rollouts as measured in megawatts.
Trent Mostaert, vice president for solar and emerging renewables at Minneapolis-based construction giant Mortenson, called solar energy “one of the primary energy sources of the future” and one that “has experienced tremendous growth and job creation over the past several years.” Mortenson is one of the country’s largest renewable-energy project builders.
In a statement, Mostaert said “the U.S. government’s decision to impose tariffs on imported solar cells and panels adds an unnecessary and significant headwind to this progress.”
The tariff grew out of unfair trade complaints to the U.S. International Trade Commission by Suniva, a company with majority Chinese ownership, and SolarWorld, once a subsidiary of a German company. Both are insolvent.
NAFTA impact unclear
Some in the solar industry consider the tariff “a bailout of bankrupt, foreign-owned companies,” said Eric Pasi, chief development officer at 25-year-old IPS Solar in St. Paul. Pasi said repercussions to Minnesota’s solar industry will be especially serious if the tariff applies to solar panels made in Canada and Mexico. Both countries are part of the North American Free Trade Agreement (NAFTA). But Trump is trying to renegotiate that trade deal and has threatened to withdraw from it.
“The solar industry as a whole has been severely hamstrung over the past year” by Trump’s emphasis on restoring coal mining as a power source and questioning whether there is man-made climate change, Pasi said.
Like others in Minnesota’s solar sector, he is counting on the sunset of the solar tariff in four years to control damage to renewable energy.
It will be, he hopes, “a speed bump and not a car wreck.”