No Hidden Costs: How We Keep Your Prices Low Despite Tariff Hikes

Over the past few months, you might have heard of tariff increases affecting the solar industry. Understandably, this can be a cause for concern regarding increasing costs for LED lights, solar panels, and hybrid inverters. At Eagle Solar Supply, we stand by total transparency and are dedicated to keeping your costs as low as possible, regardless of what happens. Here’s how we make that happen.

Which tariffs have gone into effect?

The solar sector has witnessed several tariff hikes in recent times on imported solar materials and electrical components. These tariffs are imposed on critical materials like aluminum, steel, and photovoltaic (PV) cells — critical components used in the manufacturing of solar panels, LED chips, and hybrid inverters.

For instance, the Section 201 solar tariff placed duties of up to 30% on imported solar cells and modules to promote domestic manufacturing. Section 301 tariffs, on the other hand, placed additional charges on raw materials such as aluminum and steel, which are essential in producing solar panel frames and inverter casings. Together, these tariffs have resulted in increased prices industry-wide.

Such tariffs caused by the act, according to the Solar Energy Industries Association (SEIA), increased the average price of solar panels by approximately 16% and increased costs for both homebuyers and builders. Such increases are significant on large commercial installations, where bulk purchases are a requirement.

Though the purpose of imposing such tariffs is to promote local production, they can lead to increased expenses for companies and customers. Consumers and solar contractors interested in investing in solar products should know how the tariffs impact the market.

How Tariffs Impact Businesses

For businesses like Eagle Solar Supply, tariff increases create several challenges:

• Material Costs: The cost of imported solar panels, LED components, and hybrid inverters increases with higher import duties. For instance, aluminum prices increased almost 20% after Section 301 tariffs implementations, which increased costs significantly for businesses that procure materials worldwide.

• Production Expenses: Manufacturers might experience increased costs in acquiring critical materials such as PV cells, wiring, or metallic parts. Such costs tend to pass down to distributors and retailers, causing a ripple effect that reaches everyone involved. 

• Operational Adjustments: Businesses need to reorganize supply chains, find other sources, and better manage their inventory to cover increased costs. This usually demands more investment in logistics and forecasting.

• Profit Margins: With high costs, businesses tend to experience pressure to hike product prices or cut back elsewhere on customer services or product innovation.

How Tariffs Affect Business Metrics

Tariff increases influence several core business metrics, including:

• Inventory Management: Businesses need to better predict demand more accurately so that they do not overstock expensive products or run out of stock at times of high demand. For example, solar installers installing multiple homes may not be able to get sufficient panels if suppliers face delays or prices fluctuate.

• Cash Flow Challenges: Bringing in more expensive materials ties up more capital in inventory, leaving less money for marketing, customer service, or expansion initiatives.

• Project Delays: Installers of residential or commercial solar panels can face delays if shipments of the products are delayed due to supply chain disruptions associated with tariffs. For instance, a 50kW solar installation can take months of preparation to acquire cheap panels in the face of unstable pricing patterns.

Long-Term Effects of Tariffs

While some tariffs are intended as temporary measures, their long-term effects can create ongoing challenges. So, if tariffs are increased, what is the long-run effect?

• Market Price Increases: Prolonged tariffs can slowly drive up prices across the industry, making solar solutions more expensive for budget-conscious residents and businesses. For instance, a typical 6kW rooftop solar system that once cost $12,000 might now range over $14,000 owing to higher material costs.

• Slower Renewable Energy Growth: Increased costs could discourage some homeowners from embracing solar energy, hindering renewable energy uptake progress. Based on SEIA data, U.S. solar installation rates declined by 11% in areas highly impacted by tariff increases.

• Global Trade Disruptions: The effects of the impact of increased tariffs are not only local — they impact global trade patterns, disturbing the free flow of raw materials and manufactured products across borders. These disruptions impact global supply chains, leading to unpredictable fluctuations in the availability of products and their prices.

How We Keep Your Prices Low Despite Tariff Hikes

At Eagle Solar Supply, we’ve adopted several proactive strategies to help mitigate the impact of Section 301 tariffs, U.S. Section 301 tariffs and ensure you receive affordable solar solutions:

• Sourcing Smartly: We’ve diversified our network of suppliers to include partners in areas with limited tariff effects. By having multiple vendors in various markets, we can keep sourcing high-quality materials at competitive prices. For instance, by partnering with Southeast Asian manufacturers, we’ve diversified our supply chain to reduce dependence on tariff-prone areas.

• Bulk Purchasing: Our plan involves purchasing solar panels, LED lighting, and hybrid inverters in bulk whenever possible. By pre-buying before tariff hikes and obtaining volume discounts, we insulate our customers from unexpected price jumps. For example, by pre-buying inverter components in advance of the next peak season, we secured lower rates, allowing contractors to keep their project budgets intact.

• Efficient Operations: We continually optimize our warehousing and logistics operations to keep operational costs at a minimum. By enhancing our in-house processes, we eliminate waste and unnecessary spending, allowing us to transfer those cost savings directly to our customers. For instance, our computerized inventory management system allows us to have optimal levels of stock without over-investing in products with unpredictable price surges.

• Strategic Partnerships: We’ve established strong relationships with transport providers, which assist us in negotiating favorable freight prices and the best delivery routes. This allows us to manage our costs despite periods of international supply chain blockages. For example, when there’ve been recent freight price increases, our relationships allowed us to consolidate shipments, reducing costs while ensuring timely delivery.

• Product Innovation: Our engineering team continually searches for new solar products that incorporate alternative materials or new manufacturing processes to lower costs without lessening quality or performance. 

Final Thought

We realize that every dollar matters when it comes to solar investment. This is why we work hard to take care of your expenses to ensure they are as low as possible despite tariff increases. At Eagle Solar Supply, our commitment is straightforward: quality solar products at affordable prices, no hidden costs.

Through adopting smart sourcing, operational excellence, and customer-centric practices, we are committed to offering cost-effective but sustainable solar solutions. If you face any issues or need to enquire about tariffs or product prices, don’t hesitate to contact us. We’re committed to supporting you every step of the way!