SPI 2015: Industry gears up for ‘ITC cliff’

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

After the warning note sounded last night at the launch of Solar Power International 2015 over the impact of the pending investment tax credit drop-off, the first full day of the show saw this theme take centre stage.

Some informative insights into how the industry is readying itself were on offer during a CEO panel, in which, inevitably, the ITC was one of the big issues for discussion. The debate, under the title ‘Surviving in a highly competitive environment’, brought together the CEOs from downstream specialist Conergy, residential and commercial installer, REC Solar, and developer Soltage.

Session chair Jenny Chase of Bloomberg New Energy Finance asked the panellists how they were preparing for the pending changes to the ITC, which is due to be stepped down from 30% to 10% for commercial solar and to zero for residential from January 2017.

Andrew de Pass, chief executive of specialist downstream player, Conergy, which is active in a number of international markets, said his company had learned the hard way about the speed with which markets can go from boom to bust, lessons he said companies in the US should take heed of.

He cited the UK, where Conergy has thrived in recent years, but which has in the space of just a few weeks gone from being Europe’s fastest growing market to one that looks to be uncertain to say the least.

“All of us should have eyes wide open with regards to what could happen,” de Pass said.

“In Europe last year, and globally, the largest market [for us] was the UK, where we developed and constructed over 250MW. We knew that was going to be tailored down with regards to the ROC and feed-in tariff and our expectation was to reorient towards rooftop, which is what we have to do globally in most developed markets. And then two weeks ago the government just pulled away all the subsidy for rooftop, so basically just killed the solar market in the UK. So I would keep your eyes open with regard to the US.”

De Pass said a resolution to the ITC was unlikely until after the 2016 presidential election, because the political environment was “just too volatile and toxic”.

“So post-November 2016, the question will be who’s in congress and can they broker a deal. But assume they don’t and we have the ITC cliff, it’s going to be good – basically we will have to put 20 or 30% more equity into projects, we’re going to push our suppliers, push our subcontractors, returns are going to go down, developer margins are going to go down, it’s not going to be pretty. So as of today I would urge people to talk to their senators and congressmen, pressure needs to be put on them; we also need our lobby groups to be very focused and perform.”

Al Bucknam, CEO of REC Solar, agreed a “rescue” of the ITC was not something to be counted on, although some kind of “soft landing” was something the industry would like to see.

“It’s unrealistic to expect an outright extension at 30%, but if it declined 1.25% per quarter for a period of time, or whatever they could come up with, it would allow it to less of a shock and allow some orderly market reaction. If we leave it like it is we’re going to be jamming everything into the front half of 2016, we’re going to be doing nights and weekends, we’re going to be compromising quality and safety because all the industry is going to be trying to beat the deadline. And that’s not the way to run a market,” Bucknam said.

But should that desired scenario fail to transpire, Bucknam said, “we’re prepared”.

“We prepare by working our costs for procurement through to our construction costs on site, working with our subs. We try to build flexibility into our workforce. So we’re expecting a certain baseload of work, so we have a team that’s dedicated to that. But we’re also having all our teams, engineering, construction, finance, HR, to try to bring on more flexible resource…so we can adjust to changes. Because frankly no one knows exactly how this is going to play out, so flexibility is going to be extremely important.”

Jesse Grossman, CEO of Soltage, echoed the need for flexibility, adding that the industry needed to approach the ITC cliff “with a degree of belt-tightening”, something he said the “whole industry is prepared to do”.

But Grossman also downplayed the eventual impact of the ITC drop-off, highlighting the fact that the investment community as much as the solar industry did not want to see a hitherto profitable sector fall away.

“In an environment where there’s a 10% ITC, certainly there’s still tax equity available and the tax equity sources are prepared to provide tax equity on some of the same terms or even on enhanced terms. And a lot of those tax equity sources are also looking at participating in other parts of the capital stack so that they can continue to put through the same amount of volume they’ve been doing on an annual basis and keep their teams intact; you can imagine that a team that’s been doing a billion dollars of transactions a year, they’re not immediately going to want to go down to US$300 million of transactions a year – that’s a lot of jobs lost.

“So I think we’ll see a lot of innovation on the capital side to be more flexible in how capital is put into the market to keep the aggregate numbers high and growing. Certainly there will be come marginal states that will fall off, especially those states with a lower reference electricity prices. What I think this will do from an innovation perspective, and we’re seeing a lot of this in business plans today, is really figuring out ways of continuing to sell kilowatt hours at the retail environment.”

Grossman said his company had been modelling 2017 and beyond for some time and “we’re not particularly concerned”.

“We think it would be great if there’s an extension, I share my panellists’ view it’s unlikely. But I do think the solar industry will continue to grow and thrive from January 1st.”

Under the microphone, de Pass was heard to say this analysis was “overly optimistic”.

19 August 2021
The utility-scale PV market is poised for exponential growth and yet the industry still has many fundamental opportunities to improve on standards and best practice. Tracker shade loss has been one of those topics that deserve more attention, but has been typically handled by derate factors rather than trying to accurately forecast the loss over the life of the system. Join Nextracker’s subject matter experts, Aron Dobos and Neelesh Umachandran, and Rounak Kharait, director of solar energy assessments at DNV, for a webinar about why shade modeling matters and recommendations on what the solar industry should do about it.
25 August 2021
Energy Next is a new industry exhibition focusing on the latest renewable energy and energy efficiency technology, which will be held for the first time in 2021 in Sydney, Australia alongside the Clean Energy Council’s Australian Clean Energy Summit, the peak gathering of leaders driving Australia's energy transformation. Organised by the same people behind Australia’s largest clean energy event, All-Energy Australia, Energy Next will give visitors two days of access to key suppliers in the industry, free-to-attend professional development and industry workshops, and networking opportunities to better understand clean energy issues and solutions and learn about the latest developments in this transformational, dynamic sector.
25 August 2021
The Intersolar Summit Brasil Nordeste takes place in Fortaleza, Brazil. It addresses leading local and international experts on solar power and renewable energy in the region. The Summit’s mission is to provide in-depth education, enable high-quality networking opportunities, expand the use of PV technologies at regional and national level and strengthen the local PV industry. The Intersolar Summit Brasil Nordeste is organized by Intersolar South America - Latin America’s largest exhibition and conference for the solar industry: Solar Promotion International GmbH, Pforzheim, Freiburg Management and Marketing International GmbH (FMMI) and Aranda Eventos & Congressos Ltda, São Paulo as co-organizer.
25 August 2021
Join us to hear directly from the CTOs and heads-of-research from the top-20 cell/wafer producers to the PV industry today. The event will focus on predicting the key metrics underpinning the next big shift to n-type with answers to the key questions: When will the transition to n-type happen? Which companies will be first to 10 GW capacity and production? Who will be the key equipment suppliers for the new production lines? Which n-type process flow/architecture will emerge as the front-runner? What will polysilicon purity and wafer thickness levels look like for optimized n-type manufacturing? What will the upstream poly/wafer supply-chain look like in 5 years from now?
26 August 2021
In this webinar, JA Solar will present its product portfolio based on the latest technologies to improve your PV projects, ensuring maximum reliability and performance. During the webinar we will receive insight from JA Solar about its solar technology roadmap and how the manufacturer is providing customers with innovative solutions to suit their needs, while we will also analyse how to determine the best product solution for each solar project.
6 September 2021
The 38th European Photovoltaic Solar Energy Conference and Exhibition will be held online from 6 - 10 September 2021, allowing PV experts from all around the globe to participate with just one click! The EU PVSEC is the world's leading forum for PV Research and Development and the biggest Conference on PV Solar Energy worldwide. That is why PV experts from all around the globe are keen on gathering together each year to be part of this specialist’s event, to present and discuss the latest developments in Photovoltaics, to network and to conduct business.

Read Next

PV Tech Premium
July 30, 2021
Not only will solar be the dominant source of new power generation in Europe by 2025, cementing its position as the third largest market for solar globally, but the continent has placed the asset class at the very heart of its COVID-19 recovery strategy. As part of a week-long special report on PV Tech Premium, Liam Stoker, Edith Hancock and Jules Scully explore the drivers for solar in Europe, the key markets and the challenges that remain.
July 30, 2021
First Solar has unveiled plans to construct a 3.3GWdc module assembly facility in India, bolstering its manufacturing footprint outside of the US.
July 30, 2021
Anglo-Australian mining company BHP, in partnership with Canada’s TransAlta Renewables, is to build two solar farms and a battery storage system to help power its Mt Keith and Leinster nickel mines in Western Australia
July 30, 2021
German energy giant RWE has upgraded its earnings forecast for 2021 after “exceptionally positive” earnings trend
July 29, 2021
Tracker and racking provider Arctech has delivered SkySmart II tracking system to a 575MW agriculture-sharing solar project located in Nangong City, Hebei Province, China.
July 29, 2021
Unigreen Energy, owned by Hevel majority shareholder Ream Management LLC, has broken ground on a wafer and cell manufacturing plant that will produce 1.3GW of silicon n-type monocrystalline ingots and wafers as well as 1GW of heterojunction technology (HJT) solar cells.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
August 19, 2021
At 9am (PT) | 6pm (CEST)
Solar Media Events
August 25, 2021
Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021