US Energy: Strategies for Weathering the New Tariffs

Nick Arehart  |  July 27, 2018   |  Energy & Sustainability  

Share

The summer of 2018 has seen a rapid escalation of trade tensions between US officials, the EU, and China. New tariffs on steel, aluminum, solar panels, and a host of other goods may cause economic difficulties for parts of the US energy sector, and have led some to suspect a larger trade conflict with China is on the horizon.

What forces led us here – and what strategies can domestic energy companies and their corporate customers use to protect their bottom lines?

Escalating Trade Tensions

The US administration’s goal of protecting domestic industry from overseas competition has led it to enact a broad range of tariffs since January, 2018. These tariffs have begun a back-and-forth escalation that has led to tense negotiations with the European Union, and which some fear may ultimately lead to a trade war with China.

Economists project that these tariffs may hurt the domestic economy as a whole. An open letter signed by former Federal Reserve chairman Ben Bernanke reads, in part, “Additional steel tariffs would actually damage the U.S. economy … Tariffs would raise costs for manufacturers, reduce employment in manufacturing, and increase prices for consumers.” More US firms use steel than produce it: higher steel prices mean higher costs for all of these businesses, US energy companies included.

The Impact for the US Energy Sector

Domestic energy providers are likely to see rising costs as a result of additional duties on imports. Solar tariffs are projected to increase the average 5,000-watt solar panel installation cost by $750 – $1,000. Meanwhile, alongside already-depressed oil prices, US oil producers are seeking relief from steel tariffs which threaten to sharply increase the costs of new pipeline installations. These additional costs are likely to be passed along to business and residential customers.

The problem this creates is twofold. On one hand, fledgling energy firms like domestic solar providers will face tightening profit margins and depressed demand as prices rise. These firms will need new revenue generation strategies to remain economically secure. On the other hand, businesses nationwide may see higher energy costs, further reinforcing the need for smart energy management strategies.

 

Does your energy management strategy account for the latest best practices? Use the Energy Resolutions Checklist to find out.

Industry Fighting Back

Tough times call for inventive measures.

The current round of tariffs appear to be here to stay, but US energy providers and their customers aren’t completely out of luck. A variety of smart sales and energy management solutions – including some powered by great utility data – are available for domestic businesses to mitigate the impact of tariffs on their bottom lines.

As we’ve covered before, innovation in the solar sales cycle can present a new opportunity for solar installers to generate additional revenue. By incorporating utility data into the lead qualification and sales process, installers can more strongly target their efforts to the prospects most likely to purchase solar panels and offer them a reliable ROI projection. When incorporated alongside other emerging solar solutions platforms, utility data can help installers thrive despite ongoing trade turbulence.

When it comes to reducing energy spending, data is king. Intelligent energy management remains the number one way companies of all sizes can curb their energy expenditure. Software providers like Thinkstep and Goby give energy managers the power to draw deep insights from their energy use patterns, allowing them to monitor the impact of retrofits and new energy conservation strategies. With timely, accurate utility data from Urjanet at the heart of these programs, energy managers have nothing to fear from a little energy market volatility.

How is the trade landscape affecting your bottom line? If you’re feeling the pinch from new tariffs, or if you have thoughts about what trade conflicts could mean for energy markets, let us know on Twitter. And if you’d like to learn more about what utility data can do for your business, contact us today.

Related Resources:


If you like what you’re reading, why not subscribe?


About Nick Arehart

Nick Arehart is a marketing intern at Urjanet who specializes in financial services and sustainability. He's passionate about content that informs and inspires. When he isn't writing for us, he's finishing up his chemistry degree at Emory University.