3 Cents Of Headwind. We live in a funny time, several days after the 232 proclamation, this version of the Sunshot team proclaims a 3 cent per kWh utility solar target by 2030.
Negotiating Offtaker Agreements? I want to hear from you and see what you’re getting from off takers post 232 and expected Capex increases.
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Yann
The Point of 232. Stop relying on foreign made solar panels and create a domestic manufacturing ecosystem. Through a series of duties and tariffs, the US has built out a supply chain for domestic module assembly, nearing 60GW and growing while starting a cell manufacturing ramp up. There is a hopeful mission that can be written as a headline with an undertone of shifting margin to a few companies that are taking victory laps for the 232 proclamation that gives domestic suppliers room to breathe in that 40cent per watt range. I don’t know that this is the end of the road though and whether the runway exists to drive the Capex for the full build out of the domestic supply chain given the ITC and 45x sunsets.
Fixing The Downsides. The cost of modules is going up and that’s going to hurt the economics of every project that isn’t taking delivery by December, which means they’ve likely already ordered the modules. There are a couple of things that are worrisome, first is the 10-15cents per watt that projects will have to absorb, second is what happens to the projects that are circa 2030 and don’t have an ITC to support the current off take levels pre-232 costs and third is how the manufacturers will raise the capital for the Capex of the production plants. If you take all of those into a simple umbrella, the solar industry is looking at a future that needs an extension of the ITC and 45x, ideally soon. Soon, so that certainty allows for capital to continue to be invested for projects and manufacturing. The reality is that there is significant pressure on PPA itself with most of you being told that off takes will have the need to adjust the pricing, a message that I am being told you should be pressure checking because the people in the room don’t know how likely that is.
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Yann
Anti-Solar Consequences. Solar forces behind The Invest in Tomorrow Coalition PAC pushed and succeeded in helping Representative Ogles lose his primary race in Tennessee. There is a political price to pay for members of Congress that are anti-solar and it appears that this is true on both sides of the aisle. Pro-solar is pro-jobs, pro-business, anti-inflation and just makes common sense. Here is my new tagline for members, Keep your job and support solar!
232 Coming In. Last week came the 232 proclamation, with an enforcement date of December of this year. This gives limited time for folks to figure it out but a watchful eye on mass importation to try and warehouse inventory. I am getting some sense on where prices are going, would love to get your thoughts on how this develops and where the supply chain will try to expand asap. Certainly, projects will die and energy cost for solar will go up, net jobs will decline but we will have domestic manufacturing. Is 250% too steep a tax to pay for this? That is the political bet that has been made and we’re paying for.
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