The Implications Of Trump’s Election For Solar

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by Paula Mints
 

The US election will have an affect on the US climate policy potentially swaying it much more towards
conventional energy including fracking for natural gas and oil and away from deployment of renewables and
incentives towards this end. The Clean Power Plan as established is unlikely to survive and states will start pulling
back plans – not all states, but many of them.

  • The Three Branches of Government: The Republican Party now controls the Executive, Judicial and Legislativebranches of government this means that the agenda followed by the country for at least two years until the midterm elections and potentially for decades because of the Supreme Court will be that of the party in power.
  • The Supreme Court: The next justice will set the tone for the country on wide ranging cases including the Clean Power Plan
  • The Clean Power Plan: President Elect Trump has vowed to turn back all reforms and likely will – and – cases reaching the Supreme Court may not fare well.
  • The DoE and NREL: The new president will select the energy secretary who will set the direction, tone and budget at the DoE. Funding for solar and all RE is at risk.
  • The ITC: Though this is a bipartisan agreement and a law, it can be overturned. Best case, it continues as planned. Worst case it is overturned by the new president and congress.
  • The EPA: President Nixon, a republican, established the EPA so it is not a foregone conclusion that it’s powers will be decreased. However, the president appoints its administrator and the direction is likely to be far less focused on the environment than it has been.
  • The Paris Climate Change Agreement: President Elect Trump has made it clear that he plans to exit theagreement and he is likely to do so.

This is all against a backdrop of ongoing oversupply in the solar PV market.

  1. China: Along with decreasing its FiT rate and continued high curtailment, China has decreased its solar deployment goal from 150-GWp to 110-GWp by 2020 and increased coal production from 900-GW to 1100-GW by 2020. The goal is to install 60-GWp of DG, 45-GWp of ground mounted and 5-GW of CSP. At the end of 2016 China will have installed ~78-GWp of solar PV, only 15-GWp of which is DG. This means that China’s annual PV installations will be reduced from 15-GWp (~30-GWp in 2016) to ~9-GWp. This also means that manufacturers based in China are significantly overcapacity.
  2. Global Curtailment: Globally, curtailment is a trend and with low bidding on tenders also a global trend quality is a concern and margins will continue to be tight.
  3. India: Low bidding in India is a crisis and as a result, low quality will be a crisis. This incentive driven market is a bubble and this bubble will pop.
  4. Module Price Crash Dive: With the changes in China’s solar PV deployment goals the PV industry is now significantly overcapacity. Module prices will be held down throughout 2016 and well into 2017. Manufacturers outside of China and N-type manufacturers will feel significant price and margin pressure going forward.
  5. Low PPA bidding: Overcapacity means that it is a buyer’s market for modules and also means that developers of commercial (including Utility scale) solar PV must compete with developers from China. Basically, with solar deployment in China constrained in 2017 Chinese developers must seek out new markets. This will push tender bidding to new lows and will threaten profitability globally.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here.

This article was adapted from the SPV Market Research November 2016 quarterly call presentation and is printed with permission.

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