Billions in US solar projects shelved after Trump panel tariff

Tariffs on solar panels imported from China — imposed earlier this year by President Trump — has led to widespread freezes in installations across the US. (Reuters)
Updated 07 June 2018
0

Billions in US solar projects shelved after Trump panel tariff

  • Trump announced tariffs on solar panel imports in January
  • The US solar industry employs more than 250,000 people

President Donald Trump’s tariff on imported solar panels has led US renewable energy companies to cancel or freeze investments of more than $2.5 billion in large installation projects, along with thousands of jobs, the developers told Reuters.

That’s more than double the about $1 billion in new spending plans announced by firms building or expanding US solar panel factories to take advantage of the tax on imports.
The tariff’s bifurcated impact on the solar industry underscores how protectionist trade measures almost invariably hurt one or more domestic industries for every one they shield from foreign competition. Trump’s steel and aluminum tariffs, for instance, have hurt manufacturers of US farm equipment made with steel, such as tractors and grain bins, along with the farmers buying them at higher prices.

White House officials did not respond to a request for comment.

Trump announced the tariff in January over protests from most of the solar industry that the move would chill one of America’s fastest-growing sectors.

Solar developers completed utility-scale installations costing a total of $6.8 billion last year, according to the Solar Energy Industries Association. Those investments were driven by US tax incentives and the falling costs of imported panels, mostly from China, which together made solar power competitive with natural gas and coal.

The US solar industry employs more than 250,000 people — about three times more than the coal industry — with about 40 percent of those people in installation and 20 percent in manufacturing, according to the US Energy Information Administration.

“Solar was really on the cusp of being able to completely take off,” said Zoe Hanes, chief executive of Charlotte, North Carolina solar developer Pine Gate Renewables.
GTM Research, a clean energy research firm, recently lowered its 2019 and 2020 utility-scale solar installation forecasts in the US by 20 percent and 17 percent, respectively, citing the levies.

Officials at Suniva — a Chinese-owned, US-based solar panel manufacturer whose bankruptcy prompted the Trump administration to consider a tariff — did not respond to requests for comment.

Companies with domestic panel factories are divided on the policy. Solar giant SunPower Corp. opposes the tariff that will help its US panel factories because it will also hurt its domestic business, along with its overseas manufacturing operations.

“There could be substantially more employment without a tariff,” said CEO Tom Werner.

The 30 percent tariff is scheduled to last four years, decreasing by 5 percent per year during that time. Solar developers say the levy will initially raise the cost of major installations by 10 percent.

Leading utility-scale developer Cypress Creek Renewables said it had been forced to cancel or freeze $1.5 billion in projects — mostly in the Carolinas, Texas and Colorado — because the tariff raised costs beyond the level where it could compete, spokesman Jeff McKay said.

That amounted to about 150 projects at various stages of development that would have employed three thousand or more workers during installation, he said.

Developer Southern Current has made similar decisions on about $1 billion of projects, mainly in South Carolina, said Bret Sowers, the company’s vice president of development and strategy.

“Either you make the decision to default or you bite the bullet and you make less money,” Sowers said.

Neither Cypress Creek nor Southern Current would disclose exactly which projects they intend to cancel.

Both are among a group of solar developers that have asked trade officials to exclude panels used in their utility-scale projects from the tariffs. The office of the US Trade Representative said it is still evaluating the requests.

Other companies are having similar problems.

Scott Canada, senior vice president of renewable energy at solar project builder McCarthy Building Companies, said his company had planned to employ about 1,200 people on solar projects this year but slashed that number by half because of the tariff.

Pine Gate, meanwhile, will complete about half of the 400 megawatts of solar installations it had planned this year and has ditched plans to hire 30 permanent employees, Hanes said.

The company also withdrew an 80-megawatt project that would have cost up to $150 million from consideration in a bidding process held by Southern Co. utility Georgia Power. It pulled the proposal late last year when it learned the Trump administration was contemplating the tariff.

“It was just not feasible,” Hanes said.

For some developers, the tariff has meant abandoning nascent markets in the American heartland that last year posted the strongest growth in installations. That growth was concentrated in states where voters supported Trump in the 2016 presidential election.

South Bend, Indiana-based developer Inovateus Solar, for example, had decided three years ago to focus on emerging Midwest solar markets such as Indiana and Michigan. But the tariff sparked a shift to Massachusetts, where state renewable energy incentives make it more profitable, chairman T.J. Kanczuzewski said.

Other developers are forging ahead, keen to take advantage of the remaining years of a 30-percent federal tax credit for solar installation that is scheduled to start phasing out in 2020.

Some firms saw the tariff coming and stockpiled panels before Trump’s announcement. 174 Power Global warehoused 190 megawatts of solar panels at the end of last year for a Texas project that broke ground in January.

Intersect Power, a developer that cut a deal last year with Austin Energy to provide low-cost power to the Texas capital city, is also pushing ahead, said CEO Sheldon Kimber. But the tariff is forcing delays in buying solar panels.

The 150-megawatt project is due to start producing power in 2020. Waiting until the last minute to purchase modules will allow the company to take advantage of the tariff’s 5-percent annual reductions, he said.

Trump’s tariff has boosted the domestic manufacturing sector as intended, which over time could significantly raise US panel production and reduce prices.

But jobs in panel manufacturing are also limited due to increasing automation, industry experts said.

Heliene — a Canadian company in the process of opening a US facility capable of producing 150 megawatts worth of panels per year — said it will employ between 130 and 140 workers in Minnesota.

“The factories are highly automated,” said Martin Pochtaruk, president of Heliene. “You don’t employ too many humans. There are a lot of robots.”


Non-Saudi Gulf companies get ready to joint list on Tadawul

Updated 25 April 2019
0

Non-Saudi Gulf companies get ready to joint list on Tadawul

  • Two companies, from UAE and Bahrain, about to submit documentation, bourse CEO tells Arab News
  • Joint listings for other Gulf stocks would be an important step in Tadawul’s ambition to be the dominant stock market in the region

RIYADH: Tadawul, the Saudi Arabian stock exchange, is on the verge of announcing the first ever joint-listings of companies from other Gulf countries in a move that further illustrates the growing regional power of the market.

Khalid Al-Hussan, the exchange’s chief executive, told Arab News on the sidelines of the Financial Sector Conference in Riyadh that two companies — one from the UAE and one from Bahrain — are about to submit the necessary documentation to enable their listing in Riyadh. He declined to identify them.

“Two companies are in advanced discussions and are about to submit their files,” he said. The final decision on their listing rests with the regulator Capital Markets Authority, but Al-Hussan has made no secret of his desire to get non-Saudi companies from the Gulf Cooperation Council listed on the Riyadh market.

“We are an important regional platform and we can complement secure access to capital and the liquidity they lack in their home markets,” Al-Hussan said, adding that Tadawul was speaking to several other corporates in the region to gauge their interest.

Joint listings for other Gulf stocks would be an important step in Tadawul’s ambition to be the dominant stock market in the region. Al-Hussan is also planning Gulf-wide initiatives in other areas of securities trading, like settlement and clearing.

“Tadawul can play an important role in post-trade business, because of its size and liquidity. Running a clearing house is very expensive,” he said. Tadawul is already in talks with the Abu Dhabi Securities Exchange and Bahrain Bourse about the possibility of them using Tadawul for clearance and settlement activities.

“They are assessing whether Saudi infrastructure is right for them,” Al-Hussan said. There have been no talks yet with Dubai.

We are an important regional platform and we can complement secure access to capital and the liquidity they lack in their home markets.

Khalid Al-Hussan

News of Tadawul’s growing regional ambitions comes as the Riyadh market continues to reap benefit from the ongoing upgrades to emerging markets status and inclusion in the main indices.

The next tranche of Saudi stocks get included in the FTSE-Russell index next week, while the first tranche under the MSCI upgrade takes place at the end of next month.

“We’re up 18 percent since the beginning of the year, and I don’t think you’ll find many emerging markets performing better than that,” Al-Hussan said of the Tadawul index’s performance.

He said that an influx of foreign investors was a very important reason for the strength of Saudi markets. “It is not just my feeling, it is the facts. Foreign investment is positive every day. Cash inflows are positive and increasing each week,” Al-Hussan said.

The market is also finessing preparations for the introduction of derivatives trading, which is likely to happen in the second half of the year. Al-Hussan said that all the necessary regulations were in place to allow trading in derivatives — securities based on future values of stocks — and that it was awaiting final regulatory approval.

 

 “We are still waiting on the readiness of market traders to actually trade derivatives, and on the readiness of local investors for them. They have to be well informed,” he said.

The Nasdaq Dubai exchange in the UAE already has a platform for derivatives trading in Saudi equities, but Al-Hussan said: “It is very hard for a regional exchange to compete with the domestic one, especially if it does not have much liquidity.”

In the course of the Financial Sector Conference, tech firm Al Moammar Information Systems Company began trading on Tadawul, and marketing is well underway for the forthcoming initial public offering of Arabian Centers by the Fawaz Alhokair Group.

Tadawul also announced a number of “enhancements” to the fee structure of the bond markets, including reducing commissions and waving others, to enhance the competitiveness of debt instruments on the exchange.

FACTOID

18.5%

Rise in the Tadawul All Share Index so far this year