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How is the solar trade case affecting module procurement and pricing?

The Department of Commerce announced that the 31% tariff on some Chinese module manufacturers may be slashed in half.

Though the debate continues as to how these fluctuations will affect the growth of solar PV, there has been some near-term uncertainty on price. Some EPCs are holding off on purchasing modules in anticipation of a final review on price later this year. However, be warned: there is a good chance that the module market may be picked over by that point. Then, when the most attractive modules are in short supply, a manufacturer that meets their specific construction timeline will have to suffice, regardless of price. We suggest a blended approach.

Despite the hype, we haven’t had any deals erode materially due to the trade “war” – and we expect this is true for many financiers. Even when module procurement timelines got tough last year amid pricing uncertainty, EPCs got creative and shopped around to make deals work. In fact, we’d argue that module procurement today is much simpler than it was six years ago when there were so many more suppliers to choose from. Some concerns over a panel “shortage” at the end of 2014 were linked closer to the urgency of meeting end-of-year deadlines than the Chinese tariffs; research shows that Q4 is the busiest time for installs, and more installs require more panels.

While we don’t intend to understate the impact of the trade war, we see it just as another blip among many that solar will weather in its tremendous year-over-year growth trajectory.

This is an excerpt from our Solar Project Finance Journal, a monthly electronic newsletter analyzing the solar industry’s latest trends based on our unique position in the solar financing space. To view the full Journal or subscribe, please e-mail pr@solsystemscompany.com.

About Sol Systems

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 171MW of distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems has $550 million in assets under management as of December 2014. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. For more information, please visit www.solsystemscompany.com.