A federal tariff case that could raise the cost of most new solar panels is already casting a shadow on parts of Ohio’s solar energy industry — but could also create new opportunities for one of the state’s manufacturers.

The case before the U.S. International Trade Commission (ITC) could result in a tariff on imports of crystalline silicon solar cells. If adopted, it “would cut new projected solar projects by two-thirds,” reported Dan Whitten of the Solar Energy Industry Association at the Society of Environmental Journalists’ annual conference earlier this month.

Melink Corporation in Cincinnati is already seeing impacts in the form of “increased module prices in anticipation that the tariff will get passed,” said company founder and CEO Steve Melink. “So manufacturers are adjusting prices.”

“The uncertainty is messing it up a bit,” said Dovetail Solar & Wind President Al Frasz in Cleveland. The problem is especially acute for larger commercial projects, which have a longer lead time for design, development and approval. “Right now I can get a quote from a vendor…, but that’s only good for a short time,” he explained. “And oftentimes people don’t make the decision that quickly.”

Thin film vs. silicon

In contrast, First Solar, which has a manufacturing plant in Perrysburg, supports the proposed tariff. The thin film manufacturer weighed in with comments to the International Trade Commission on October 10, urging the ITC to “reject the notion that the U.S. CSPV [crystalline silicon photovoltaic] industry must be left to die so that the downstream solar industry may live.”

Among other things, the letter by First Solar CEO Mark Widmar noted that the company had eliminated about 400 manufacturing jobs from the Perrysburg plant in order to accelerate a switch to its upgraded “Series 6” thin film product.

That decision, announced last November, was independent of the tariff case, which was filed in April, said First Solar spokesperson Steve Krum.

“We saw just the general direction of where the technology in the industry was going a year and a half ago, and realized that in order to stay competitive and to stay on equal footing with other technologies that we needed to more rapidly implement the Series 6 technology that we’re retooling for,” Krum explained.

First Solar’s stock price has generally risen since the trade case was filed earlier this year. One reason is that the company has been able to offer price certainty. Even though the company does import a substantial amount of product from its Asia facilities, those imports would not be subject to the proposed tariff.

“Thin film is not silicon,” Krum explained. “We deposit a really thin layer — hence the words ‘thin film’ — of conductive material on glass. And then it is etched into little cell pieces and connected back together. So we have a material that’s deposited onto the glass and then sealed.” In contrast, “crystalline silicon is silicon wafers that are chopped up and then put into sequence to make solar cells.”

Upgrades at the Perrysburg plant are on schedule, and the plant should be able to start making First Solar’s Series 6 thin film product by the end of this year or early next year, Krum said. Whether any of the laid-off employees will get jobs again is unknown. “It depends on how the demand goes and how the ultimate operations scale up,” he said.

Compared to the company’s current product, the new product should have “a higher wattage rating per module than some of the silicon modules that are of equal size.” Also, Krum added, the installation time should be faster.

Previously, thin film modules had been cheaper to produce per panel than ones made from crystalline silicon. However, they were less efficient.

So, Frasz said, while thin film modules have been great for large field projects in desert areas, they faced a disadvantage for rooftop-based projects with limited areas. Meanwhile, thin film’s price advantage has been challenged as prices for silicon panels have fallen.

“Because of the Chinese scaling up the manufacturing of silicon panels, the cost has come down so much to where it’s competing very favorably with thin film on a price basis only,” Melink said. “Then when you add on top of that the efficiency advantage, I think it’s the way to go. If you’ve only got so much roof space or space above your parking lot or on the ground, you want to convert as much of the sunlight that’s falling on that area to electricity as possible. And that’s what silicon does, versus thin film.”

First Solar’s Series 6 product could address some of the efficiency concerns if it in fact performs as the company projects.

And, as Frasz noted, “if crystalline has a higher [price] floor on it, then they’re going to be able to compete better.”

The trade case is moving swiftly through the U.S. system, Whitten said. Last month the U.S. International Trade Commission unanimously ruled that increased imports of crystalline silicon solar cells were being imported into the country in enough quantities to cause “serious injury to the domestic industry producing an article like or directly competitive with” the imported products.”

Post-hearing briefs and comments have been submitted to the ITC by a variety of interested parties. The commission’s final recommendation on a remedy is due to the president next month, with the final decision on any tariff to be made by Trump.

Any tariff imposed might still be challenged afterward if another country were to start proceedings at the World Trade Organization. Although it’s unclear whether that will happen, the ITC case file includes comments from government organizations in Canada, Korea, Indonesia and Brazil, as well as the Taiwan Photovoltaic Industries Association.

Solar vs. natural gas

A tariff on imported solar panels would particularly affect commercial and industrial projects, Frasz said. Higher panel costs would increase the payback time for those projects, he said. And that could affect whether a customer decides to go ahead with a solar project at all.

Solar energy also competes with other forms of generation, including electricity from coal-fired power plants and from natural gas, either from utilities or from combined heat and power projects.

But hamstringing the solar industry with tariffs could lead to less diversification in the energy sector and too much dependence on natural gas, which would be a bad idea, in Frasz’s view.

“As long as you’re depending on extracting stuff…, it’s still a finite resource, and you’re competing with other parts of the world for that finite resource,” he said. For renewables, though, “because there’s zero fuel, you have much more predictability about what your costs are going to be if you make an investment.”

“The other big part of it is climate change is real,” Frasz continued. “So the more you continue to put that stuff [greenhouse gases] in the air, the more expensive to live on the planet is going to be, and the more of a challenge it’s going to be.”