Solar earnings season is in high gear. (I've covered First Solar's (NASDAQ:FSLR) improved guidance, SunPower's (NASDAQ:SPWR) reduced guidance, Vivint Solar's (NYSE:VSLR) transition to solar sales, and Sunrun's (NASDAQ:RUN) growth in depth.) Companies are facing ups or downs, depending on their market segment, but so far this year, the overall solar industry is much stronger than we expected, and will get stronger going forward -- unless there's an unexpected disruption (which I'll cover below).

Next week, all eyes should be on the Section 201 trade case being considered by the U.S. government. Opening arguments for the case that could upend the solar industry as we know it begin Tuesday. 

Large solar installation with mountains in the background.

Image source: Getty Images.

Section 201: Get your popcorn ready

I've covered the trade case in detail here, but the gist is that bankrupt solar manufacturers Suniva and SolarWorld say that cheap solar imports have hurt their business, and that as a remedy the U.S. should place tariffs or price floors on solar products coming into the country. They've proposed a minimum price of $0.40 per watt for solar cells and $0.78 per watt for solar modules, which analysts at research company Greentech Media say could raise the cost of a utility-scale solar plant from $1.08 per watt to $1.56 per watt. In other words, it would kill the cost-effectiveness of the solar industry overnight. 

The coming week is important because on Tuesday, Aug. 15, Suniva and SolarWorld will make their case for "effective remedies" in front of the U.S. International Trade Commission. This week, the companies provided a report that claims remedies will create 115,000 new jobs in the U.S. 

On the other side of the debate are the Solar Energy Industries Association; the governments of Canada, Mexico, South Korea, Taiwan, China, and Thailand; and every other solar company in the industry. Even major manufacturers such as First Solar and SunPower aren't supportive of the "remedies" being proposed. 

The arguments on Tuesday are a first step. Next, the International Trade Commission will make a recommendation by Sept. 22 to President Donald Trump, who may decide what to do as early as Nov. 13. The solar industry's future could lie solely in Trump's hands, and that's not a comforting thought for anyone investing or working in the industry today. 

Earnings roundup

There were a few earnings reports this week that I won't cover in depth, but I'll discuss at a high level here: 

  • Hanwha Q Cells (NASDAQ:HQCL) saw second-quarter revenue jump 33.7% to $577.7 million. However, gross margin fell from 23.7% a year ago to 11.6%, and net income fell from $76.8 million a year ago to $18.7 million. Declining margins is going to be a common theme for Chinese solar manufacturers, so the question is whether they'll be able to overcome falling solar-module prices with lower costs. The answer is... not really. Unless competition cools down and module prices rise, it will be tough for solar manufacturers to make money this year. 
  • Pattern Energy Group (NASDAQ:PEGI) reported a 15% rise in revenue to $107.8 million, and cash available for distribution (CAFD) rose 39% to $49.2 million. Management also reconfirmed guidance of $140 million to $165 million in CAFD for full-year 2017. The dividend was also increased slightly, to $0.42 per share, or $1.68 on an annualized basis. 
  • NRG Yield (NYSE:CWEN) also reported earnings. Revenue rose just $1 million, to $284 million, while net income fell $4 million, to $28 million. But adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose from $257 million a year ago to $270 million, and CAFD increased from $65 million to $74 million. There was also a dropdown of 25% of the NRG Wind TE Holdco from NRG Energy in the quarter. Management increased the dividend 3.7% to $0.28 for the third quarter. 

That's all for this week in solar. Check back to for more solar coverage next week. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.