Trump’s Homegrown Solar Push Risks Widening Green Energy Divide

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessTrump's Homegrown Solar Push Risks Widening Green Energy DividePresident Donald Trump’s latest move to shun foreign solar power equipment is part of his effort to rebuild US manufacturing clout. It may simultaneously exacerbate the fast-widening green technology split between the US and the rest of the world.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.9lnmjdibod7h4v)26t16mgg(_media_dl_1.png BloombergNEF(Bloomberg) — President Donald Trump’s latest move to shun foreign solar power equipment is part of his effort to rebuild US manufacturing clout. It may simultaneously exacerbate the fast-widening green technology split between the US and the rest of the world.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountTrump announced a plan to impose tariffs and minimum prices on imported polysilicon used in semicondictors and solar panels. The levy comes a week after the Federal Communications Commission tightened curbs on inverters, another vital component of solar-powered energy.Such protections can encourage the growth of domestic manufacturing — but as multiple economies have found over decades, restrictions often come at a financial and technological cost.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againIn the near term, curbs will drive up the price of solar panels in the US, a country that already pays more than double the global level thanks to years of tariffs on imports – and where Trump has pursued an anti-renewables policy during his second term.If domestic manufacturing doesn’t establish a foothold quickly, it could put the US further behind in technological and power terms as the rest of the world presses ahead with cheap Chinese alternatives.“The US is limiting this source of energy when the country so desperately needs more electricity to scale up high tech and AI,” said Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute in Washington DC. “It looks so different from solar markets you’ll see anywhere else in the world.”Trump’s directive, which takes effect Dec. 4, subjects derivatives including silicon wafers, photovoltaic cells and solar modules to 15% tariffs, and sets minimum price floors for each product that are higher than current costs in the US. For example, the new minimum price for imported solar modules will be 38 cents per watt. That compares to 27 cents per watt for modules currently shipped to the US, according to BloombergNEF, while the global average is 11 cents. Trump, who has pushed the revival of US industry since his first term in office, is also offering a carrot, however. If companies commit to starting construction of US factories to build the solar products by Jan. 20, 2029, they can avoid the higher costs.Advocates for reshoring — effectively bringing home US manufacturing capability — have feted the news. According to Jon Toomey, president of the Coalition for a Prosperous America, global import barriers can put an end to circumvention, when companies set up facilities in third-party countries to avoid tariffs. The directive also applies all parts of the supply chain, which should help solve the problem of investing in downstream assembly plants only to find they are still dependent on other countries for upstream inputs.“For the first time, the United States is protecting the entire solar supply chain with a single action,” Toomey said.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.In the solar supply chain, ultra-refined polysilicon is shaped into rectangular ingots, which are in turn sliced into ultra-thin squares known as wafers. Those wafers are wired into cells and pieced together to form solar panels.Building a complete chain from the ground up could have enormous benefits for the US, JPMorgan analysts including Mark Strouse said in a research note. It could “reduce pricing, reduce geopolitical risks, and improve long-term investor sentiment for the space.”Green technology has been at the heart of global efforts to boost industrialization, including in the US. But the clean-energy race, accelerating along with the scramble for computing power, has increased the divide between the US and economies open to using Chinese technology — with one side benefiting from rock-bottom prices and existing, advanced technology, and the other seeking to build its own.As recently as 2012, the US was the world’s largest producer of polysilicon. That year, President Barack Obama kicked off a tariff war over solar products that saw Beijing slap duties on US production. China revved up its domestic industry in response and now controls more than 95% of global output of the material.The US has made some strides in recent years, and the country now has the world’s third-largest capacity for assembling solar modules. Still, it remains reliant on overseas suppliers for cells, wafers and polysilicon, meaning it could struggle to catch up even if US solar manufacturing gains a foothold, according to Youru Tan, a BloombergNEF solar analyst in Hong Kong.“US production is much more expensive than China,” Tan said. “Plus, most US factories rely on equipment from China.”Investors in new factories will have to weigh the support offered from Trump’s new directive against messages that have created uncertainty around long-term appetite for clean energy. So far in his second term, Trump’s policy moves also including ending tax credits for solar installations, eroding federal policies encouraging emission-free power and green energy permitting delays have done more to hold back the deployment of US renewables. And if the manufacturing boom fails to materialize, US solar developers will be hit by a steep hike in module prices, which will amount to about a 12% hike to the overall cost of solar systems, according to Guggenheim Securities analysts. The question of who ends up absorbing the increased costs, whether it’s developer profit margins or higher power tariffs, remains open. The AI boom should help users cope with short-term risks. Rising demand and higher-than-normal prices for competing sources of power will counter the extra cost, according to JPMorgan. Even while paying more than the rest of the world, solar remains among the cheapest options for electricity in the US, according to BloombergNEF data.That doesn’t account for the opportunity cost of not embracing cut-price modules. Countries from Nigeria to Pakistan have taken advantage to radically reshape their undersupplied power grids in a matter of months. Sales of solar panels to the Philippines are booming. Even Europe, which is battling Chinese trade negotiators over other areas of clean tech like EVs and wind power, has all but waved the white flag when it comes to solar.“Solar is arguably the fastest energy you can deploy, and in a free and open market it’s one of cheapest power sources,” said Asia Society Policy Institute’s Li. “The US is not going to enjoy those two advantages.”Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.