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How will the U.S./China climate agreement affect solar panel prices?

Avatar for Ben Zientara
Published on 01/19/2015 in
Updated 04/21/2017

One of the things people who are considering installing solar on their homes should be aware of is the cost of the materials their installers will use. In light of the recent agreement between President Obama and Chinese president Xi Jinping to ramp up adoption of clean energy production, we thought we’d explore the possible changes to panel prices in the near future.

One of the most important things about the climate deal is that it’s a symbol of a willingness to work together, rather than fighting back-and-forth, as the two countries had been doing. In June of 2014, the U.S. doubled the tariffs on solar panels after claiming that China was dumping large amounts of low-cost, low-quality solar panels on the U.S. market, and those tariffs are set to increase again in December.

China complained to the World Trade Organization (WTO) about the tariff increase, and the WTO ended up ruling that the tariffs violate international trade rules. It’s not clear whether this new agreement between the U.S. and China will lead to an end of these kinds of disputes, but the joint commitment at least signifies a commitment to working together to create stable trade policies in the future.

That’s good news for pennywise homeowners and solar panel installers across the country, but it isn’t a sure thing… yet. Part of the recent climate deal included China committing to increase its own level of sustainable energy generation, an addition of 800 to 1,000 gigawatts of low-carbon energy sources by 2030. That huge commitment means not only that China’s manufacturing facilities have to dramatically increase production, but also that most of that new production will be absorbed by the Chinese market.

No one knows how soon that production increase will take place, but it’s sure to reduce the costs of solar panels, at least in China. Manufacturers in other southeast-Asian countries will likely also ramp up production, meaning the market might be flooded with more of those low-cost, low-quality panels the U.S. was so concerned about earlier this year.

So what will the effects be? It’s too soon to tell, but with the two biggest polluters in the world agreeing to increase goals for renewable energy generation, it’s looking like solar panel prices will continue to fall as production increases and tariffs will stabilize, making solar ever more affordable in the U.S. and around the world.

As an interesting side note, there are two states in the country that offer extra incentives for installations that use USA-made solar panels. Minnesota has huge solar rebates for using MN-made panels, and Washington offers similar solar incentives.

There are lots of solar panel manufacturers in the US, so maybe the federal government will start to recognize the opportunity they have to ensure good American jobs are created by offering similar incentives in a nationwide renewable energy standard. Well, a solar-loving guy can dream, anyway.

Last modified: April 21, 2017

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