JD Dillon, vice president of marketing at Enphase, opened an executive roundtable for installers at Solar Power International last month with a call for questions. The first hit on a theme that continues to dog the industry: tariffs.
“Someone said, 'I've got to lead with the tariffs,'” said Dillon. “So yeah, it’s [at] the forefront of mind.”
It’s been an unrelenting year of tariffs for the solar industry. The latest hit came in September, with a 10 percent tariff, imposed under Section 301 of the U.S. Trade Act, on products including inverters. It went into effect just as the nation’s largest solar trade show kicked off in Anaheim. The previous year, Section 201 tariffs on solar cells and modules were the major topic of discussion at Solar Power International.
While the administration’s trade negotiations didn’t dominate the official schedule this year, when asked if tariffs still occupied industry conversations, Dillon answered with a resounding, “Oh good God, yes.”
“There’s been too much ambiguity and uncertainty on what’s going to happen. That’s what’s uncomfortable,” he said. “When you get down to it, it’s not a huge impact, but not knowing is worse than knowing.”
The most recent round of tariffs steps up to 25 percent in January, which Dillon said will be even more “uncomfortable” from a business perspective. But Enphase sits in a unique spot. Immediately after the hit from the new set of tariffs, the administration announced exclusions on Section 201 tariffs that benefit one of its largest customers, SunPower.
That shot and chaser could soften the consequences for Enphase. But Dillon said the impacts of the exclusion on the company shouldn’t be overvalued.
“That impacts us in a good way because it impacts a partner in a good way. Does it substantially impact us? No,” he said, adding, “It can’t hurt, that’s all I can say.”
Enphase announced its acquisition of SunPower’s inverter business this summer. The deal means SunPower will use Enphase inverters in its AC modules rather than those from SolarBridge. Though still in the process of closing, Dillon said ramping that deal will put SunPower among Enphase’s top five customers.
Ben Gallagher, a senior solar analyst at Wood Mackenzie Power & Renewables, said the ultimate impacts of the tariffs and the exclusion are mixed. Though the exclusion provides some security, Enphase said the most recent tariffs will impact its business, Enphase customers and end-use solar customers, if only moderately. Some portion of the supply chain, from the product coming into the U.S. to its installation on a roof, will have to absorb the price increases brought by new duties.
"Ultimately, this is a perfect example of how the Trump administration's approach to tariffs has thrown a wrench into doing business as usual in the industry," said Gallagher.
Though Dillon said the industry now has some surety and concrete information about tariffs, the Trump administration’s potential negotiations with China — and their fickle nature — mean the situation is fluid.
“What’s next? The implication is 25 percent in January, but who knows?” said Dillon. “We can plan for the worst, expect the best, have scenario planning. But predicting precisely? It’s impossible.”