SOLAR INDUSTRy's future cloudING

WASHINGTON - A day after President Donald Trump announced a 30-percent tariff on foreign-made solar panels, solar developers across Texas and the rest of the country raced to figure out how big a financial hit they would take, and how the costs would affect the growth of an industry playing an ever increasing role in the nation's energy mix.

With developers rushing to build utility-scale farms in West Texas and rooftop solar systems gaining some traction in Austin and San Antonio, the tariff announcement comes at a critical moment for the Texas solar industry. Analysts said the impact of the tariffs would be felt most acutely in less established solar markets like Texas and the Southeast, which lack subsidies offered by states like California.

"It's not a helpful development for the industry, for customers, for Texas," said Charlie Hemmeline, executive director of the Texas Solar Power Association, an industry trade group. "We would expect that customer demand would dip."

The falling price of solar panels, driven by cheap imports from China and other countries, has fueled the rapid growth of solar power, which accounts for about 2 percent of the nation's electricity production capacity, up from virtually nothing at the beginning of the decade, according to the Energy Department.

Since 2010, solar power installations have increased an average rate of 72 percent a year - faster than any other generating technology.

The tariffs apply to solar cells, which convert sunlight to electricity, and their components, as well as solar panels and other products that contain solar cells. Industry officials and analysts conceded that the tariffs were not good news, but many were expecting it to be worse since the manufacturers that petitioned for the tariffs had sought a 50 percent price hike to slow a rush of imports from China, Taiwan and Southeast Asia.

On Wall Street, solar stocks rose early Tuesday on news of the tariff, with shares of the solar installation giant First Solar rising 8 percent early in the day before retreating.

The ratings agency Moody's said it expected the tariffs to delay solar investments at first, but have a limited impact in the long term.

"The tariff hurts solar in the U.S. but not as much as feared," Jay Rhame, a portfolio manager at the investment firm Reaves Asset Management, said. "Panel costs have fallen so dramatically. A 30 percent tariff is likely to put solar back to 2015 or so in terms of cost."

In the meantime though, solar developers across the country will have to figure out how to manage increased equipment costs. The Solar Energy Industries Association, the industry's chief lobbying arm estimated the tariff would result in 23,000 job losses, almost 10 percent of the industry's workforce.

In Houston John Berger, chief executive of the rooftop solar developer Sunnova, was fielding phone calls from bankers, the media, and even some friends on Tuesday.

"Obviously we're disappointed," Berger said, "but with that said were going to be great, were going to be fine. It's a speed bump."

While rooftop solar has struggled to gain a footing outside Austin and San Antonio - both of which offer residents subsidies - utility-scale solar projects have boomed on the desolate plains of West Texas in recent years. Last week, California-based 174 Power Global announced that it will begin construction on the largest utility-scale project in Texas - a 236 megawatt solar array in Pecos County with the capacity to power an estimated 50,000 homes.

Solar energy capacity in Texas has climbed from 15 megawatts in 2010 to 1,000 last year, according to the Electric Reliability Council of Texas, which oversees 90 percent of state's electric grid. ERCOT projects solar capacity will triple to about 3,000 megawatts by 2020.

A megawatt can a power about 200 Texas homes on a hot summer day.

Solar projects that are already under construction - and have their solar panels under contract - likely will not be affected by the tariffs, said Hemmeline, of the Texas Solar Power Association. But there is concern that the higher costs created by the tariffs will lead utility-scale projects just getting off the ground to be scaled back or canceled. (A utility scale solar farm is one that generates a megawatt or more.)

For now, Trump's maneuvering on trade is expected to do little to quell the dominance of China and Taiwan's solar industry, which operates on a scale that makes it difficult for U.S. companies to compete on price.

Frank Yu, a Bejing-based consultant with Wood Mackenzie, wrote in a note to investors, "China won't get hit as much as its domestic market is still growing strong. In addition, emerging markets such as India is likely to draw more Southeast Asian production to feed its solar capacity growth."