A solar tariff is a supplemental charge imposed by a country on different types of solar power equipment brought in by foreign manufacturers. This can frequently be included in solar modules (panels), module components, and the necessary raw materials for module production, although it may also encompass other components. The main objective of a tariff is to create a fair competition environment for both local and global solar equipment manufacturers, enabling them to compete based on factors beyond just the lowest price.
Purpose of Solar Tariff
The implementation of a solar cell tariff increases the overall expenses of importing solar modules from foreign countries, reducing the purchase of cheaper modules from abroad compared to investing in domestically produced panels. If the solar cell tariff is sufficiently high, domestic solar distributors have the potential to thrive in the industry, all while upholding stringent labor standards and providing employment to American workers.
Basically, solar tariffs are based on the concept that if the domestic solar industry can achieve financial competitiveness with foreign manufacturers, they will have the means to invest in future growth, increase sales, and ultimately generate more career opportunities. The presence of more job opportunities often results in a surge of consumer spending, ultimately contributing to a more robust domestic economy.
However, in the event that individuals persist in purchasing solar panels from foreign nations, the government stands to generate supplementary income by imposing tariffs on said imports.
Also See: What is On-Bill Tariff (OBT) Financing?
Pros and Cons of Solar Tariffs
Despite being a positive approach, solar tariffs have some more advantages as well as drawbacks.
Advantages
- According to solar tariffs supporters, they allow the country to develop the necessary capacity to compete in the solar supply chain worldwide.
- These tariff plans can help meet the demand for domestic solar installations more effectively.
- Implementing solar tariffs is a powerful strategy to stimulate domestic manufacturing of solar cells.
- The domestic solar industry has seen a remarkable threefold growth since the implementation of these tariffs.
Also Read: Origin Solar Feed In Tariff: A Comprehensive Guide
Disadvantages
- Installers and businesses that buy cheap solar panels may experience slower growth in the solar industry due to higher costs.
- Solar tariffs may hinder innovation.
- The implementation of tariff protection measures could reduce the motivation to invest in innovative strategies to adapt to evolving market conditions.
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