There is a sinking feeling of inevitability that creeps into conversions around the questionable supply chains and production of durable goods like the iPhone. Companies discuss their sourcing choices as if they are powerless against the pull of the “free” market and cheap foreign labor.
Washington State’s solar industry offers a unique counter point. While not exactly a free market operation, our local solar industry is an example of how a little piece of isolationist legislation can go a long way towards supporting the local economy. Washington State Senate Bill 5101 is that little piece of legislation, and here are the two key components:
- The bill establishes different production incentives for different solar products ranging from $0.15/kWh-$0.54/kWh. The highest production incentive is reserved for made in Washington systems meaning both the modules and the inverter must be made in state.
- The production incentive can only be paid to the owner of the property.
The effects of these two elements of the bill are dramatic. The media is awash with stories about cheap solar modules coming out of China, and American manufactures that cannot keep up, but with a $0.54/kWh incentive for Washington made products, imported module prices would have to drop 50% or more to match the payback from a made in Washington system.The fact that the incentives must be paid to the property owner is equally if to more important than the fast payback from Washington made systems. This requirement has insulated Washington from the 800lb gorillas of the solar industry. Without this requirement companies with Power Purchase Agreement business models like SunRun along with their friends at Home Depot would have quickly descended upon Washington pulling the profit from the production incentive out of the local economy.
Some would argue (and they are probably right) that the lack of power purchase agreements has stunted the growth of large scale solar in Washington, but you don’t have to look any further than the momentum around community solar projects to see yet another way Washington is keeping solar local.
This type of legislative intervention is not applicable to every industry, but it’s a nice reminder that there are alternative models, and we are not tied to a system that will slowly pull all of our manufacturing jobs to China and hand over the profits to multinational corporations.