July 30, 2018
(Reuters) – A steep global decline in the price of solar modules in recent weeks is nearly offsetting the effect of the Trump administration’s 30 percent tariff on imported panels, the chief executive of a major U.S. solar company said on Monday.
While the price drop is trimming the profit margins of manufacturers, it is welcome news for purchasers of solar systems, who had been facing higher prices since the tariffs went into effect in February.
“If you are building a large power plant your pricing has certainly come back at least halfway to what it was pre-tariff if not all the way,” Tom Werner, the CEO of SunPower Corp (SPWR.O), said in an interview following the company’s second-quarter financial results announcement. “It’s muting the impact of tariffs.”
Solar module prices are down about 12 percent globally since China announced changes to its incentives for solar power on June 1 that have led to an oversupply of panels that had been intended for installation in China, the world’s largest solar market.
SunPower is both a manufacturer of solar panels and an installer of solar power systems. The San Jose, California-based company makes its products primarily in the Philippines and Mexico and is seeking an exclusion from the U.S. tariffs.
SunPower makes high-efficiency, premium-priced panels, and Werner told analysts on a conference call that the company was “responding” to the price declines and would not allow its premium to expand.
The company is in the process of buying rival SolarWorld Americas, expanding its domestic manufacturing in Oregon to stem the impact of the tariffs.
The price decline “makes domestic manufacturing that much more challenging,” Werner said, adding that SunPower was committed to closing its deal to acquire SolarWorld.
“We’re going to have to increase scale to compete,” he said.
SunPower expects to spend $51 million on tariffs in the second half of this year, an amount the company would prefer to invest in its next-generation technology and scaling up its U.S. manufacturing, Werner said on a conference call with analysts.
SunPower reported a narrower-than-expected second-quarter loss and revenue that topped estimates due to strength in its rooftop solar business and cost controls. The company also said it would begin manufacturing its next-generation technology later this year.
SunPower’s stock was up 4.8 percent at $7.22 in after-hours trade.
Reporting by Nichola Groom in Los Angeles; Editing by Leslie Adler