Best stock to invest in – 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
  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 T
witter @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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