Assessing Solar’s 2018: Tariffs and Tax Reform? No Problem

20 Dec 2018

For seven years and counting, The Sol SOURCE has covered the news surrounding the solar industry, utilizing our unique perspective into the worlds of Solar Renewable Energy Credits (SRECs), project finance, tax equity, and policy. As we reach our twelfth publication of 2018, we look back at another ride on the solar coaster. If 2017 was known for being plagued by the uncertainty created by the 201 tariffs and tax reform, 2018 will be known as the year that provided 2017’s questions with many of its answers. To help paint that picture, we reflect on our most-read articles of the year.

  1. Tax Equity in 2018: What to Watch For

As displayed by our most-read article, readers were looking to make sense of newly-passed tax reform and what it meant for solar investment, which requires investors with the tax appetite to utilize the federal Investment Tax Credit (ITC). Chief among concerns was the reduction of the corporate tax rate from 35 to 21 percent, marking an immediate and measurable decrease in available tax appetite in the market.

As predicted, tax reform has affected the market, but the mature solar investment landscape has adapted in different ways, such as bridging the new gap in tax appetite with debt. For more on how the market shaped up this year, check out our market updates from May and July.

  1. A Clearer Look at the Solar Module Market

January 2018 provided finality to the 201 trade case, as the President announced 30 percent tariffs on imported PV modules, far from a nightmare scenario. In April, after the market had begun to settle into the tariffs, we looked at where module prices were landing. At that point, pricing was falling in the mid 40’s (cents-per-watt), and pricing was looking to restart its steady decline, albeit from a higher point.

What we didn’t predict was the abrupt end to China’s feed-in tariff program in May, eliminating a large portion of Chinese demand and creating an immediate oversupply of Chinese modules. When we reassessed the module market in September, imported modules had already returned to prices in the mid-30’s, what we were seeing before the tariffs. We expect module prices to drop below 30 cents-per-watt in 2019.

  1. How Is Solar Preparing for the ITC Step-Down?

Looking ahead to 2019, one of the top storylines revolves around the final year of solar’s 30 percent federal Investment Tax Credit (ITC), which will gradually step down to 10 percent by 2022.  In 2020, it will be 26%, and drop to 22% in 2021. Just as we saw in Q4 2015, when we thought the ITC was about to drop to 10%, we expect a rush of projects to commence construction by the end of 2019.

Since the 2015 solar ITC extension at Congress, solar has continued to scale, prices have declined, and financing vehicles have matured. Still, when the ITC does begin to step down, states without incentives, such as Oklahoma, Wyoming and Kentucky, will be the hardest hit, and they will be a useful gauge of the effect the stepdown has on financing structures.

That’s all for 2018. For perspective, take a look at our top articles from 2017, 2016 and 2015.

This is an excerpt from the December 2018 edition of The SOL SOURCE, a monthly electronic newsletter analyzing the latest trends in renewable energy based on our unique position in the solar industry. To receive future editions of the journal, please subscribe.


Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last ten years, Sol Systems has delivered 800 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit

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William Patterson

William Patterson