Post-Election Solar Outlook: What’s Next for the Industry Under Trump? | In The Loop With Larry

11/26/24 •

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Following the Republican sweep in the 2022 midterm elections, the solar industry anticipates adjustments to the Investment Tax Credit (ITC), potentially including an earlier phase-out and requirements for domestic content. Despite concerns, the industry is not expecting a complete repeal of the Inflation Reduction Act (IRA) and anticipates continued growth for manufacturers who successfully bring production back to the United States.

ITC Changes

• 00:01:00 The Roth report predicts potential changes to the ITC, including an earlier phase-out and requirements for domestic content, possibly as early as 2027 or 2028. These changes aim to fund Trump's tax cuts and promote energy independence and domestic manufacturing. The report suggests that a full repeal of the IRA is unlikely, but adjustments to its timeline and percentages are possible.

Domestic Content

• 00:04:26 The Trump administration's focus on energy independence and domestic manufacturing is expected to continue, potentially increasing the importance of domestic content for solar projects and manufacturers. The 45X tax credit for manufacturers producing in the US is likely to remain in place, furthering the push for domestic manufacturing and creating a renaissance in US production.

Solar Industry Outlook

• 00:07:24 While the solar industry may experience a slowdown in installations due to potential ITC changes, the long-term outlook remains positive. Manufacturers focusing on domestic production are expected to thrive, and the overall industry is expected to continue growth, although at a potentially slower pace than anticipated under the IRA.

Impact on Manufacturers

• 00:07:24 Solar manufacturers, particularly SolarEdge and Sunnova, have experienced stock price declines following the Republican victory. While these are considered short-term overreactions, the potential adjustments to the ITC could lead to decreased revenue over the next few years. Further, the supply chain challenges related to the shift to domestic manufacturing are impacting manufacturers' ability to generate revenue in the short term.