President Donald Trump’s tariffs have hit solar panel imports, causing U.S. renewable energy companies to cancel investments and dragging down solar sector-related ETFs.
The Invesco Solar ETF (NYSEArca: TAN), the largest ETF dedicated to solar stocks, fell 7.3% year-to-date.
The solar sector looks dimmer this year after tariffs on solar panels caused U.S. renewable energy companies to cancel or freeze investments on over $2.5 billion in large installation projects, or more than double the $1 billion in new spending plans announced by firms to build or expand U.S. solar factories to capitalize on the new import taxes, Reuters reports.
The 30% tariff is slated to last four years, diminishing by 5% per year.
Trump originally announced the tariffs in January despite protests from most of the solar industry that action would stifle the quickly expanding solar industry.
According to the Solar Energy Industries Association, solar developers completed $6.8 billion in large-scale installations last year. The investments were primarily driven by U.S. tax incentives and the lower costs of imported panels, which made solar power competitive with fossil fuels like natural gas and coal.
Solar Was Going to Take Off
“Solar was really on the cusp of being able to completely take off,” Zoe Hanes, chief executive of solar developer Pine Gate Renewables, told Reuters.
However, in response to the new tariffs, GTM Research, a clean energy research firm, lowered its 2019 and 2020 utility-scale solar installation forecasts for the U.S. by 20% and 17%, respectively.
Solar developers project the tariffs will initially incrase the cost of major installations by 10%.
More companies are tightening their belts as a way to adapt to the sudden changes. For example, utility-scale developer Cypress Creek Renewables said was forced to cancel or freeze $1.5 billion in projects. Developer Southern Current made a similar decision on about $1 billion in projects.
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