Dan Hofmann

By Dan Hofmann, RegenEn Solar

On May 17, the U.S. Department of Commerce announced a preliminary ruling that ordered tariffs of 31 percent on solar panels imported from China.

United States officials argues that Chinese solar panel manufacturers “dumped” their products after the Chinese government provided massive subsidies deemed illegal by the World Trade Organization.

As shown in the chart below, the infamous Solyndra loan was puny compared to the amount of money the Chinese government is spending to support their solar industry. This is typical behavior in China’s “controlled economy” brand of capitalism.

USA vs. China on loans to solar companies

In the end, however, there will be very little real impact on the solar industry in the US:

• First, the cost of solar panels has dropped so dramatically over the past couple of years they are becoming a smaller and smaller piece of a complete solar installation.

When calculating the total cost of a solar panel system, there are also inverters, racking, system monitoring, shipping, labor, insurance, administrative costs, etc. So, a 30-percent increase in the price of solar panels for my company would only translate to about a 5-percent increase in the installed cost to the end user.

• Second, none of what I listed in my first point matters because there is a huge loophole in the US Department of Commerce ruling that will enable Chinese solar manufacturers to get around the 30 percent tariff. It is succinctly stated in this Clean Technica article:

If these Chinese solar companies produce modules, laminates, and panels in a different country, using Chinese solar cells, they are exempted from this ruling. So, many are assuming these companies will simply move those processes to a nearby country with low labor rates (i.e. Taiwan). This will still lead to an increased module cost of 10-12 percent, but module costs aren’t everything.”

Moreover, even if this leads to a small increase in the installed cost of solar, it will have little impact as we’ve already achieved grid-parity and can install solar cheaper than what you are already paying LG&E (after the 30 percent Federal Tax Credit). And, by the time the 30 percent FTC tariff expires in 2016, the price of solar likely will be low enough to stand on it’s own.

When I launched my company RegenEn Solar in March, 2009, we were installing 220-watt solar panels; we are now installing 240-watt solar panels. Only a 9-percent increase in efficiency over three years; it’s moving at a snail’s pace.

Solar technology is not following Moore’s Law like computer processing speed did in the last two decades. However, solar prices are following Moore’s Law in that the prices have plummeted in recent years. My cost to buy the panels has dropped about 80 percent since I launched the company.

If you’re waiting for the technology to increase by leaps and bounds, you’ll be waiting for a long time. I’ve been reading about “breakthroughs” in the lab since 2009 and none of them is close to being commercially available.

Install Example: Solar and LG&E Grid-Parity

LG&E electricity prices increase over the long-term an average of 5 percent per year. They were about 5 cents per kilowatt-hour (kWh) in 2003. Now, nine years later, LG&E customers are paying about 8 cents/kWh. A total increase of 60 percent and an average increase of about 5 percent per year.

The average LG&E customer uses about 11,000 kWh per year. Over 25 years (using this time period because the solar panels, inverters, and labor are under warranty for 25 years), that customer will pay about $42,000 for a total of 275,000 kWh (assuming prices follow their historical increase of 5 percent per year). That equals 15 cents/kWh.

To produce 11,000 kWh of electricity with a solar panel system in the Louisville area, you would need an 8.4 KW grid-tied, net-metered system. Most solar contractors should be able install this system for net cost of about $20,000 after tax credits. The system would produce about 282,072 kWh over the 25 year warranty period. That equals 7 cents per kWh. That’s half the average cost you would otherwise pay to LG&E over the same period!

Now, I know not everyone has $20,000 sitting around. That’s why about half of my customers use a Home Equity Line of Credit or they refinance their home to buy a solar panel system. There are also FHA loans available specifically for energy efficiency improvements to your home. If you take out a loan to pay for the solar panel system (30 yrs, 4%), you would pay a total of $35,280. This equals 12 cents per kWh.

Financed solar is still cheaper than LG&E!

About Dan Hofmann: Dan Hofmann is President of RegenEn Solar LLC,  a solar panel installation company located in Louisville, KY.

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