With the growing impact of climate change worldwide, people are starting to ditch fossil fuels as their energy source and are now turning towards alternative renewable sources. The most popular among these alternatives is solar power. They’re customizable, cheaper, and they generate electricity faster and simpler than the other options.
Today, we take a look at the market and the overall economic status of solar panels and solar panel installation. What current issues and trends are affecting the market demand and supply for solar panels? What do the statistics say about the future of solar power? What can a solar panel installation business like yours do with these trends and statistics?
Trump’s Tariff on Imported Solar Panels: How does it Affect the Current Solar Industry?
Last 2018, President Donald Trump dealt the biggest blow on the renewable energy industry during his term by imposing 30 percent duties on internationally-made solar panels imported to the country.
According to Trump, the first 2.5 gigawatts (GW) of imported solar panels are exempted from the tariff. The 30-percent tariff would be effective during the first of its four-year implementation and would decrease by 15 percent afterward.
This tariff implementation has caused huge solar companies to halt or lower their production rate to a huge percentage. Some have even left their solar-related projects floating due to fear of the financial impact brought by the tariff.
The tariff aims to uplift the state of the domestic manufacturing of solar panels by decreasing competition from low-priced imported panels, most of which are sourced from China. The president hopes this would also increase the number of available jobs for the American people, but eventually, it backfired.
When the tariff was implemented, 9000 jobs were lost due to solar companies laying off employees or postponing their hiring to make do with the financial burden of the added costs from the tariff.
Solar panel installation has also stalled after reaching its peak in 2016 due to the tariff implementation, according to Wood Mackenzie, an energy research firm, and the Solar Energy Industries Association (SEIA).
Even the two solar panel manufacturing companies who proposed the additional duties on imported solar panels, Suniva and SolarWorld, ended up filing for bankruptcy afterward.
The Good News For the Economic Future of Solar Panels
The tariff may have brought turbulence in the solar power industry, but the other end of the scale still stands strong.
For instance, the number of installed solar panels in the US has finally hit the 2 million mark this 2019, which the industry has spent 40 years achieving.
California leads the list of states with the most number of solar panels installed, making up 51 percent of the two-million population. Other states that have turned to the renewable energy alternative are Texas, Rhode Island, Utah, Florida, and Maryland.
Abigail Ross-Hopper, CEO of SEIA, also predicted that the year 2020 will be the year that the demand for solar power grows tremendously. Wood Mackenzie also anticipated that solar panel installations would reach up to 3 million in 2021, and 1 million more installations by 2023. By 2024, they predict a potential one solar panel installation per minute ratio.
Corporations today like Target are also starting to invest and procure solar panels and other solar products today. Utility companies are also investing in more solar products to save more from electricity costs and indirectly help their customers save money.
If you’re looking for a job as a solar panel installer, or if you’re looking to hire talents for your installation business, the demand is looking bright for you. Glassdoor, a job search platform, predicts that jobs related to solar energy will grow rapidly in the following decade, with solar panel installation jobs leading the line.
What Can Solar Panel Installers Do With These Market Trends and Forecasts?
First off, no need to panic.
The imposed tariff hasn’t brought down international solar panel manufacturers, especially Chinese company GCL System Integration Technology and international company SunPower.
In the recently-held Fortune Global Sustainability Forum in Yunnan, China, Eric Luo, Chairman and CEO of GCL System Integration Technology, said the tariff doesn’t really worry them. It’s the growing demand for solar panels from the US and European countries that are proving to be a challenge for them.
Foreign solar manufacturers are also expected to establish local manufacturing plants in the US. LG Electronics, a Korean giant on solar module production and assembly, announced that it will open a plant in Alabama to continue its supply chain of solar panels in the country.
Other international companies are also planning to establish plants in the country in order to increase domestic solar production and possibly avoid the cost of Trump’s tariff.
If these international solar panel businesses are not seeing the tariff as a threat, then this won’t deal with a major blow on your solar panel installation business too.
The demand for solar panel installation is still present and is expected to grow stronger in the coming years.
The solar power industry is slowly bouncing back, thanks to efforts from the local government.
For instance, the state of California is planning to mandate newly-built residential homes to install solar panels to increase the number of solar panel users in the state. California is planning to pass this mandate in 2020, and it’s projected to drive an 11,000 – 12,000 solar panel installation demand starting this 2019.
Solar advocates are planning to widen this mandate beyond California, so you can expect the demand for solar panel installation growing country-wide in the next following years.
The 30 percent tax credit for solar panels was also extended until 2021, so you can expect more homeowners and companies looking to install solar panels to take advantage of this incentive.
Not only that but if consumers look at the bigger picture, they can still save from installing solar panels on their homes or establishments since the cost of the installation remains 70 percent lower than it was in 2010.
Related article: Top 10 Residential Solar Panels in the US 2019
The facts are already there – you just need to cultivate the demand more.
Solar panels are still worth it, consumer-wise. Just take this infographic as proof. You just need to help convince people to make the transition into this renewable energy source to make more demand for solar panel installation.
Chances are high that most people are still unaware of these cost-efficient benefit from using solar panels instead, plus the incentives offered by the government when they transition to this popular alternative energy source.
We’ve all witnessed how a trend can upsurge a business’ sales in a matter of a few days when it blows up online. If you prioritize spreading information and these market trends to potential clients online (like on social media), you can expect the same surge in the demand for solar panel installation too.
For instance, you can highlight the extended deadline for the 30 percent tax incentives for installing solar panels until 2021. When homeowners and businesses did not take this opportunity firsthand, they would only enjoy a 10 percent tax incentive instead.
It pays to plan your investment moves carefully.
It’s still important to keep a watchful eye on the market for the solar industry. The Trump era is known for surprises, especially in terms of economic factors, so make your moves wisely.
There’s still a rough road ahead, especially with the growing trade war between China and the US. Don’t be afraid to make investments in marketing, manpower, and more, but take it easy when there are looming news or issues threatening the solar panel industry.
Is it still ideal to start a solar panel installation business in 2020?
The simple answer is YES. No matter how nerving the news of Trump’s tariff sounds, you have nothing to worry about, at least for your future panel installation business. Aside from their plans to establish domestic manufacturing plants, solar panel manufacturers are also developing ways to maneuver around this additional importation duties, particularly with their current pricing.
If that’s not enough to convince you, then remember the forecasted demand for solar panels. The world is facing an environmental crisis, and it’s not slowing down anytime soon. That’s why more countries are mandating their citizens to embrace solar energy. Add to that the fact that fossil fuel is slowly running out.
And if the world’s population continues to spike, people will be forced to look for alternative energy sources, particularly for the consumer-friendly solar power.
The surge of installation demand may not that evident today, but once people learn this gradual depletion of fossil fuels, expect more people running in line to your future solar panel installation business
There are also certain businesses that had stayed longer in the industry despite the fluctuations in the financial aspect. As long as people see the need for installing solar panels, they won’t hesitate to make the switch, no matter the price.
Simply put, there’s nothing to worry about in terms of demand for solar panel installation.
Brilliant minds from the solar power industry are also on a nonstop basis to further improve what solar panels can do. With their innovations targeted to improve efficiency and continue lowering their costs, that would mean more people can afford to switch to solar energy. And that means more future clients for your future installation business.
The government is also making continuous efforts to allow more incentives for people installing solar panels at their homes or businesses. Once these incentive proposals are greenlighted, you’ll want to be there for the wave of people looking to install solar panels.
Related article: Solar Financing Market in the US
Here are a few tips we can share to make your solar panel installation business a success in the years to come:
- Choose your panel options
Want to know which panels to invest in your future installation business? Study the available panel varieties out there. You can choose among brands, but mainly, there are two main categories you can go over with: the cheap but less productive ones, or the expensive ones with powerful production powers.
This is important so you can stock up on solar panels that fit with your target client. For instance, households switching to solar energy might be looking for cheaper options to try out solar power first.
If you’re targeting huge businesses and larger households, they’ll be looking for panels that can handle the large conversion of sunlight to energy. For that, you should invest in the expensive variety.
Aside from recommending the right panels to your clients, you can also avoid having a surplus supply of solar panels. No surplus means a better chance of achieving double ROI for your business.
Related article: Wholesale Solar Panel Costs in the US
- Support your local solar energy community
If you’re looking to cater to your local community of households and/or businesses, educate them on the benefits of installing solar panels. Chances are, plenty of people in your local area still aren’t aware of the economic benefits of solar panels. Or if they are, they’re still not convinced.
It also places you as a local authority in the solar panel industry, which could be beneficial for you once the competitions start rolling in. If you’re planning to expand your business on an international scale someday, supporting your local community would be a good start to build authority and expand your clientele base in the future.
- Pricing is important
Speaking of competition, if you want to stay ahead in the game, think about your future pricing for your installation service(s) carefully. You want to offer reasonable pricing that:
- Attracts the right client
- Matches the skills and the time you’ll spend for the whole installation
- Matches the price of your panels while garnering additional profits for you
Remember, offering prices that are too low doesn’t guarantee success. Your business might seem too good to be true, and if you’re targeting wealthier clients, they might think your business is offering low-quality services. It’s always important to know who your target clients are before you start throwing in ideas for your installation business.