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This Week in Solar

By Travis Hoium – Updated May 1, 2017 at 12:29PM

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Trump's tax plan, a bankrupt manufacturer, and new solar policies could all have long-term implications for solar industry investors.

A variety of policy proposals dominated the week in solar, just ahead of the beginning of earnings season. There's a lot to get to, so here are the highlights of the week. 

Trump's tax proposal and solar

The Trump Administration released the outline of tax reform this week, and it's worth highlighting how it could affect the solar industry. Although it's just a proposal, Trump wants to cut the highest federal corporate tax rate from 35% to 15%, which could have a big affect on the solar industry. 

The solar investment tax credit of 30% allows companies with taxable profits in the U.S. to buy tax equity stakes in solar projects to reduce their tax bills. If a company's tax bill goes down, there would be less tax equity available. 

We don't know if any tax reform will pass, or what it will look like, but it's worth understanding that tax equity is a key portion of a solar project's financing, covering 40% to 50% of a project's cost. If the availability of tax equity goes down, or investors require higher rates of return, it will be a negative for the solar industry and could make some contracts that have already been signed less economical in the future. 

Solar panel installation with a wind turbine in the background.

Image source: Getty Images.

Bankrupt solar manufacturer wants to ruin U.S. solar industry

U.S. solar companies have been in a strange tug of war over what tariffs on Chinese solar imports should look like. Regulators slapped tariffs on companies subsidized by the Chinese government, but those were easy to get around, and right now, the solar industry is just taking the benefits of cheap solar panels on the open market. 

The bankruptcy of Suniva threw a wrench in the relative peace when it used a rarely used Section 201 request to ask for a minimum price of imported solar panels of $0.78 per watt and a minimum price for cells of $0.40 per watt. That's about double the price on the open market and would potentially kill the economics of solar projects large and small. 

The Solar Energy Industries Association already came out against the proposed pricing scheme, but this will be a filing worth watching with an administration more inclined to protectionist trade policies. 

Countries expanding solar in 2017

According to a new report from the International Energy Agency, solar energy now provides 1.8% of the electricity demand in the world. That's incredible progress from 1.2% at the end of 2015 and almost nothing a decade ago. But the solar boom may just be beginning. 

Mercom Capital expects India to be a 10 GW solar market this year, which would be about one in every eight solar panels installed worldwide. The country has a goal of 100 GW of solar by 2022, and with just 12.8 GW installed, it has to pick up the pace. By the end of the year, India could be the second biggest solar market behind China, making it a key place for solar companies to keep an eye on. 

France announced winners of another 150 MW of rooftop solar projects this week, part of a 1,450 MW in rooftop tariffs the country is assigning. France has become another growing solar market, and with high electricity prices and abundant sun in the southern part of the country, it should have a lot of growth ahead of it. 

The Philippines advanced 162 MW of solar and 30 MW of battery energy storage this week, according to Enerdata. This will add to 903 MW of previously installed solar capacity in the country. Indonesia has also adopted a new solar policy scheme for its 17,500 islands. The feed-in tariff will be capped based on the supply cost of traditional electricity, which could allow for more renewables. Solar and energy storage are going to be economical first on island countries, where burning oil for electricity is commonplace, so growth in countries like the Philippines and Indonesia could be a leading indicator of how the solar and energy storage industry will provide solutions to other parts of the world. 

News and notes

Here are a few other notable items from the industry this week. 

  • NRG Energy (NRG 0.78%) completed a 20 MW solar project in Blythe, California, that will provide energy to tech giant Cisco. This was NRG's 12th solar project in California alone, giving it a leading position in the market and a key line to the important corporate renewables market. 
  • NextEra Energy (NEE -1.07%) has agreed to build a 20 MW solar plant in Arizona with a 10 MW, 40 MWh battery energy storage system attached through a power purchase agreement with utility Salt River Project. The goal will be to test using the energy storage system as a way to offset high demand when the sun isn't shining, and Salt River Project will optimize its operations over time. Look for solar-plus-storage to become more common in the coming years as utilities look for more flexible sources of energy. 
  • Canadian Solar (CSIQ -0.37%) said this week that it's supplying 10 MW of solar panels to the largest solar project in Uganda. Africa should be a big market for solar, and this is another place where demand is opening up. The company also announced that it secured $97 million in debt for a 92 MW solar project in Fayetteville, North Carolina, from Prudential Capital Group. It will also sell tax equity to U.S. Bank in a separate deal. Solar development is competitive, but financing is still free-flowing for companies who need it. 

Next week starts solar earnings season, so check back on to see where the industry's key players are headed. 

Travis Hoium owns shares of Cisco Systems. The Motley Fool owns shares of NRG Energy. The Motley Fool recommends Cisco Systems. The Motley Fool has a disclosure policy.

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