On January 22nd, President Trump imposed a 30% tariff on solar panels made overseas.
You might be wondering if it’s still worth it to purchase solar for your home. Yes, for four reasons:
1. Some manufacturing is likely to move to the U.S.
While we can’t say we were big supporters of the tariff on solar panels, we admit that in the past 60 days three manufacturers have told us they are seriously looking at moving some (or more) of their production to the United States to avoid the tariff. These manufacturers have undoubtedly “done the math” and concluded that any higher cost they incur from operating in the U.S. will be less than the tariff they would pay on imported panels. Thus, we expect the impact of the tariff on domestic panel prices to be less than the 30% headline figure might suggest.
2. Solar panels are less than half the cost of a home solar system
Another reason solar makes sense in Illinois even with the tariff is that panels account for less than half of the cost of a typical system. The labor to design, install, and commission your system accounts for about half of a system’s cost. Other essential (but less visible) equipment such as inverters, racking, mounting, and wiring accounts for another significant part.
3. Federal solar incentives mitigate the impact of the tariff
Homeowners and companies that purchase solar for residential use are also eligible to receive a 30% federal solar tax credit. The value of this credit is based on the price of the system. Thus, the federal government will pay for about a third of any price increase due to the tariff.
4. Illinois solar incentives will increase of offset impact of tariff
Finally, the Illinois solar incentives set to roll out later this year will adjust to take the tariffs into account. The Illinois Power Agency is tasked with setting the incentives at level that makes adopting solar in Illinois attractive. The Illinois Commerce Commission, which overseas the IPA, issued an order on February 26th telling he IPA that “…the final prices should take into account the new tariffs for solar cells…”
The headlines from President Trump’s tariff on solar panels were not good for this industry, but the truth is that home solar is a great economic decision with or without the tariff.