Outside the Washington, D.C., headquarters of the U.S. International Trade Commission in early December 2019, Dan Whitten, the communications chief for the Solar Energy Industries Association, yelled into a bullhorn, "Solar jobs are American jobs!" Around him, ralliers called on the Trump administration to lift import tariffs that reportedly are holding back growth.

A mile away on Capitol Hill, lawmakers were sitting on a proposal to extend tax incentives that the association, or SEIA, says are needed to boost project development in order to meet the group's goal of making solar 20% of the U.S. power mix by 2030, compared to about 2% today.

Trade disputes and sunsetting federal subsidies have combined to inflict a year-end malaise on an otherwise booming U.S. solar market. Despite a third-quarter 2019 surge in deployments, the sector is suffering from a "lost opportunity," SEIA President and CEO Abigail Ross Hopper said recently, even as the International Energy Agency is calling on governments to accelerate the deployment of renewables to fight climate change.

Solar companies have also stumbled in equity markets. Solar stocks tumbled in September 2019 as concerns mounted over the outlook for new installations in China, the world's biggest solar market. And the Invesco Solar ETF, which is based on the MAC Global Solar Energy Index, has underperformed the S&P 500 during the closing months of 2019 after rising by more than 56% through the first nine months of the year.

"China's slowing market illustrates [solar] industry vulnerabilities in that government policies are necessary for industry growth, and a lack of, or change to, policies can stop a market in its deployment tracks," Paula Mints, chief analyst at SPV Market Research, wrote in an October 2019 report.

Trade anxiety

The Trump administration seems unlikely to roll back tariffs on most imported solar cells and panels that are scheduled to be in place through 2021. White House trade adviser Peter Navarro recently dismissed as "fake news" a report warning of job losses from the duties.

While SEIA is pushing for the removal of the taxes, the group's chief concern appears to be that the administration will move to strengthen them.

"I think technically if the president wanted to he could extend the safeguard beyond" 2021, International Trade Commissioner Rhonda Schmidtlein, a Democrat, said at a Dec. 5, 2019, hearing on the impact of the tariffs. At least one company, Suniva Inc., has asked the administration to slow the rate at which the tariffs decline.

SEIA and its allies say such actions would further constrain the U.S. market.

"Even with prices down as a result of technological advances and reduced demand in China ... so many more solar projects and solar jobs would have been created had the duties never been imposed," said Matthew Nicely, a partner at New York City-based law firm Hughes Hubbard & Reed LLP who represents SEIA.

Tariff proponents say the market is growing despite the duties — the pipeline of solar projects under development in the U.S. recently swelled to a record 37,900 MW — and argue that the taxes are succeeding in pushing companies to assemble more panels domestically.

"Before long, domestic production should reach over 40% of the U.S. [photovoltaic] market," SunPower Corp. Chairman, President and CEO Tom Werner, who switched from opposing to supporting tariffs after his company bought a factory in Oregon, said at the trade hearing. That sort of growth in manufacturing represents "a success unprecedented in the history of domestic safeguard action," Werner said.

SEIA's critics, meanwhile, say the group has a history of overstating the harm that could come from limiting imports of cheap equipment.

"How many times is SEIA going to reset the alarm on their doomsday clock?" said Matthew McConkey, a partner at Chicago-based law firm Mayer Brown LLP who represents Suniva.

Growth 'under any scenario'

In addition to pressing for an end to import tariffs, some solar companies are running a parallel lobbying effort to extend the federal investment tax credit, or ITC. The campaign marks an about-face after the industry pushed an existing subsidy phase-out plan through Congress in 2015.

At that time, winding down the ITC was seen as a "bridge" to the Clean Power Plan, an Obama-era regulation to limit carbon dioxide emissions from power plants that was expected to increase demand for renewables.

However, the Trump administration's rollback of environmental regulations "altered the framework by which the 2015 agreement was reached," a group of more than 100 Democratic members of the U.S. House of Representatives said in an April letter to House Ways and Means Committee Chairman Richard Neal, D-Mass.

SEIA has said the solar industry needs another ITC extension "to continue growth."

House lawmakers were unswayed. A year-end tax package, agreed to by Congressional leaders on Dec. 16, 2019, did not include an extension of the ITC, which is scheduled to drop to 10% from 30% of eligible project costs by 2022 for commercial tax filers and to eliminate the incentive that year for residential filers.

"Congress let a crucial opportunity slip by, advancing a massive government spending bill without extending one of the most successful clean energy tax policies in history, the solar Investment Tax Credit," said Hopper in a statement.

Others argue that solar is now cheap enough to compete without subsidies.

"I am very confident of the industry's ability to achieve our goal under any scenario," said Dan Shugar, CEO of NEXTracker Inc., a U.S. subsidiary of Flex Ltd. that makes equipment for solar plants.

Philip Hopkins, head of Wells Fargo & Co.'s renewable energy and environmental finance team, said growth in the U.S. solar market may slow if tax credits phase out as planned, though changes in project financing could, at least partially, offset the loss of the incentives.

Required infrastructure investments by utilities will also put upward pressure on customer rates, which "will keep solar competitive in the long term," Nam Nguyen, general manager of SunPower's commercial solar division, said in an email.

However, there are concerns that energy storage, which generally is seen as a crucial tool for deploying renewables at very high penetration levels, will be uneconomic without incentives. In draft legislation released in November, House Democrats proposed extending tax credits to stand-alone energy storage projects, which currently can only qualify for incentives if they are paired with solar. That provision was left out of the final spending package.

"Storage is still expensive," said Cliff Graham, senior vice president of U.S. development at EDF Renewables Inc., an affiliate of France's EDF Group. "It works with the ITC. I am skeptical it will be able to compete without the [tax credit]."

In any case, the industry is resetting after a bruising end to 2019. Yann Brandt, CEO of Quick Mount PV, a California company that makes equipment for the rooftop solar industry, criticized solar advocates for "picking a fight with the White House" over trade tariffs amid the push to extend tax incentives.

"This has been an abysmal year for the industry for federal policy fights," Brandt tweeted on Dec. 17, 2019.