While many of the initial concerns of solar industry and its advocates regarding polices under Donald Trump as the president of the United States may never materialize, the Trump Administration has provided a whole new set of very real concerns, at times through policy measures not directed at the solar industry.
Yesterday, following the bombshell news of Suniva’s Section 201 petition, which included a request for an extremely high minimum import price on imported cells and modules, another piece of news broke which could also have serious consequences for solar, in the form of a tax plan.
Among the changes that the Trump Administration has proposed is a reduction in the corporate income tax rate from 35% to 15%, which could greatly limit the flow of available tax equity that developers need to monetize the 30% Investment Tax Credit (ITC).
There is a great irony here in that while many expressed concern regarding the potential repeal of the 30% ITC in the immediate wake of last November’s Presidential election, that what Trump may end up doing is not to repeal the ITC, but to make it far less useful.
In a February interview with pv magazine, CohnReznick Capital President and Founder Rob Sternthal expressed the concern that reducing the tax rate and limiting the available amount of tax equity will have an effect on solar project development.
“I don’t think you are going to cripple the industry, but you are going to create a slow-down and a funnel to the better projects,” Sternthal told pv magazine. He said that as of February, tax equity was already “pushing back” in preparation for these reforms. “If they put in 40% of the project typically, they might put in only 30% going forward, and the other 5-10% needs to be put in by the developer, you are going to see a lot less projects that may make economic sense as they currently stand.”
Sternthal further predicted consolidation in the sector. “You are also going to have a lot of consolidation of projects to sponsors that can handle it, that have balance sheet capacity. The tax equity guys are going to look for credit-worthy counterparties.”
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.