Watch: Barron’s Senior Energy Writer Laura Sanicola and OPIS Senior Editor of US Solar Colt Shaw discuss what’s ahead for energy this week.

Watch this week’s episode for insights into the state of the global solar market, exploring the influence of US trade policy and potential changes to solar tax credits alongside the resulting uncertainty and shifts in the solar supply chain.

Transcript:

LAURA SANICOLA: Hi, everyone. This is Laura Sanicola, author of Barron’s Energy Insider, and I’m here today with Colt Shaw, senior editor of US Solar at OPIS. Colt, thanks for being with me today.

COLT SHAW: Absolutely. Thanks for having me.

SANICOLA: So we haven’t spoken in a while about the global solar market, and I figured on the back of earnings, it’s a good time to revisit it. It looks like investment in global solar is slowing despite the fact that utility scale solar demand has risen.

And I have to think some of it’s related to the ongoing trade war between the US, China, and tariffs on Southeast Asian companies.

Can you fill me in on on where we stand right now with regards to the impact of tariffs on the solar supply chain?

SHAW: Yeah. So I think we’re in a kind of limbo at the moment, when it comes to kind of the solar supply chain and the module market. We’ve got this ninety-day reciprocal tariff window open now until, I guess, beginning of July.

Add on top of that AD CBD tariffs, and, you know, the supply chain was already kind of in flux and moving out of those four subject countries from Vietnam, Malaysia, Thailand, Cambodia, to Laos and Indonesia, both of which are now facing very high reciprocal tariff rates. So, talking to the module market suppliers and, you know, procurement teams for developers and utilities alike, They’re all just kind of, you know, holding on to their wallet at the moment and kind of waiting to see, what’s, you know, the least risky option. I know a lot of contracts being signed now are, you know, baking in provisions, that, you know, address tariff risk and, you know, big fluctuations in trade policy.

So everyone’s kind of trying to, you know, build these walls around their procurement approach.

And so at this point, it’s, people are just kind of waiting and seeing. I think, people are looking to other countries like Philippines possibly for and, you know, South Korea as maybe short term fixes.

But there’s a chance that all of these AD/CVD tariffs and the reciprocal tariffs on back on, you know, on the back of that end up just kind of, I guess, accelerating the move to the Middle East and North Africa that a lot of these cell plants were already kind of, planning out for the next year or two. It seems like that could just, you know, sort of speed up that process. So, it’s really in flux. And I will say, it seems like, you know, at first blush when these reciprocal tariffs were announced in early April, it seems like someone like First Solar might be, you know, a clear winner, but in their earnings call last week, they said they’re facing “strong economic headwinds” from this, because, you know, they are branded and they are, like, the the only kind of major US supplier of scale, but they have factories in India, Malaysia, Vietnam.

They’re likely going to just start focusing all of their Indian, capacity on the Indian domestic market. And they said there’s possibility that they have to ramp down factories in Malaysia and Vietnam. So they said that might affect their ability to help their customers reach domestic content thresholds since they typically like to, blend imports and domestic made, modules to kind of fit, you know, each project’s unique profile.

So it’s really across the board. I’ve spoken to other domestic, manufacturers and say component pricing is going up because they’re still sourcing cells from these countries.

So it is really a giant question mark beyond July. And I think a lot of people are maybe looking to either just, you know, start making their connections with American module suppliers now, just because, obviously, the tariff impact on a fifteen cent cell is a little bit lower than on a twenty five cent module, say.

But I think a lot of people are also just not buying modules or looking for landed stock, stuff that’s already in the in the in the country and doesn’t have to face, import duties going forward. So it’s, it’s basically just a question mark at this point, and, we’re kinda waiting to see exactly the best you could do is kind of look at each individual country and how they’re approaching negotiations with the US and what supplier you’re hoping to work with, where they are based.

I’ve heard some folks that think Laos and Indonesia.

You know, Laos might have a little bit of a harder time securing preferential treatment. They’re a little bit closer with the the Chinese government as opposed to India or Indonesia, and as opposed to India. So, yeah, it’s a little bit of reading the tea leaves at this point, but, the uncertainty that I thought might be clear by now earlier in the year seems like it’s only kind of, only kinda deepening at this point.

SANICOLA: Adding to that uncertainty, of course, is the state of the ITC, the tax credits that solar companies have been utilizing, basically, their ability to sell their tax credits to third parties to other countries in exchange for hard cash that they can use to develop solar projects.

That’s currently being negotiated in Washington right now. What’s the state of play on that? That’s a really big component of earnings for companies like First Solar.

SHAW: Yeah. I mean, it’s been a huge source of anxiety, since Trump’s win in November, basically.

And it appears finally we might be getting some traction with the budget reconciliation process, which should give us, hopefully, some kind of look into what the, I guess, first plan of attack is. It is clear that they are going to take some sort of swipe or modification to the IRA.

I think speaker Mike Johnson is talking about maybe having a bill to the president by Memorial Day. I think the president’s administration is sort of looking at, like, a July fourth timeline. We had twenty one house Republicans in the last maybe month or two, write a letter, open letter to speaker Johnson, basically calling for him to to not dismantle the IRA and that it’s had great economic benefits for their constituents.

But then just this week, we had a similar letter saying the opposite from thirty eight house Republicans who are saying, no, we plan to fully dismantle the IRA. I think they might have called it the green new scam, which has becomea a kinda lingo word there. But, Yeah. I think if you want a little bit of, like, an indication of how they might go about this, rep Julie Fedorchak of North Dakota in, I mean, early last month, she floated a bill that would basically pare down the IRA by twenty percent, over five years. And part of the kind of underlined portion of that bill was that it would get rid of that direct transfer payment. So which has been a huge, yeah, a huge boom for someone like First Solar.

So there will be changes coming, and I know a lot of, financiers and, developers are kind of holding off on green lighting projects at this point. So it is having a direct, you know, effect on, you know, the amount of solar actually joining the grid, which in effect is, you know, lessening the amount of modules that these American suppliers can sell to the market. So I think there’s a chance we have some clarity around, you know, June or July. But, again, there’s a chance that this gets pushed off as too thorny of an issue until later in the year and next year’s budget.

So, yeah, at this point, I think this week, the Abby Hopper, who’s the CEO of Solar Energy Industries Association, CIIA, which is the biggest trade group, she’s said we basically are looking at a rocky few years ahead. And this time last year, they were basically sounding, you know, the celebrations and and dropping the confetti that we were finally looking at kind of, like, the ramp for the renewable and, you know, electrification transition.

And now they’re they’re facing a very different landscape.

SANICOLA: Alright. Thanks for that update, Colt, and thanks for joining me. We’ll see everybody next week.