The 2024 Election and Solar

Quarterly Report

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6.27.2024

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David Wei and Raaghav Karthikeyan

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Solar's Record-Breaking Growth in 2023

Solar has been on a tear, adding a record-breaking 32.4 GW and holding its place as the incremental market share winner in new installations in 2023. Solar now accounts for 53% of all new electricity generation capacity due to both lower prices and federal incentives. During a fresh presidential cycle, federal incentives, in particular, can become headline news.

Impact of the Inflation Reduction Act

“The Inflation Reduction Act is supercharging solar deployment and having a material impact on our economy, helping America’s solar module manufacturing base grow 89% in 2023. We must protect and optimize the policies that are driving these investments and creating jobs, and the stakes in the upcoming election couldn’t be higher,” said SEIA president and CEO Abigail Ross Hopper in a March 2024 press release.

As of today, the 2024 U.S. presidential election is a toss-up, with former President Donald Trump holding a slight lead over President Joseph Biden. With only a few months until the November election, it is important to lay out what’s at stake for solar under the next administration.

Biden directly supported solar and renewables via the 2022 passing of the Inflation Reduction Act (IRA), which pledged $369 billion in tax breaks and subsidies for promoting clean energy, reducing greenhouse gas emissions, and investing in sustainable infrastructure. Read our extensive article on what the IRA means for solar and how you can benefit.

Trump was largely uninvolved with solar during his time as president, though he did introduce a four-year, 30% tariff on imported solar modules in 2018 to encourage domestic manufacturing. This tariff was extended by the Biden administration in 2021, indicating bipartisan support.

This fall, the lines could be redrawn. What might a change in administration mean for the IRA and tariffs, and how could it affect solar adoption in the U.S.?

Trump’s Stance on the IRA

Though Trump largely left solar unaddressed during his administration, on the campaign trail, he and his supporters have become critics of aspects of the IRA. “Some of the price tags involved with some of these credits seem to be wildly understated,” a senior Trump campaign official told the Financial Times. “We’d be looking to cut a lot of that spending.”

Trump has indicated that he would seek to dismantle many of the policies and programs established under the IRA and cut those budgets significantly if reelected. However, he has primarily attacked tax credits for EVs and batteries as well as wind farms, which he incorrectly claims kill birds and whales. Tom Pyle, a Project 2025 contributor who was on Trump’s Department of Energy transition team, also said the former president is not as opposed to solar energy as he is to wind projects.

Consequently, while the IRA is frequently in the headlines, only certain parts of the bill are hot topic issues. For instance, a second Trump administration could hinder EV growth by rolling back pollution regulations or changing Treasury Department rules around EV tax credit eligibility, but a full repeal of the IRA seems unlikely.

Biden’s Stance and a Brief History of Solar Tariffs

U.S. solar tariffs began in 2012 with duties on Chinese solar cells to counter unfair trade practices. The tariffs expanded in 2015 to include solar modules from China and solar cells from Taiwan. In 2018, the U.S. implemented a 30% tariff on all foreign module imports, decreasing annually at 5% for four years.

By 2021, less than 1% of direct imports of solar cells were from China due to Chinese companies shifting manufacturing to Southeast Asian countries (Cambodia, Malaysia, Thailand, and Vietnam) to circumvent tariffs. Local Southeast Asian companies also set up solar module production to capitalize on a market opportunity, resulting in the majority of U.S. solar modules being sourced from this region at similarly low prices.

The Biden administration has been caught between two conflicting priorities: continue importing cheap solar modules to enable the U.S. solar transition or double down on tariffs to accelerate domestic production. So far, Biden has pursued a delicate balance. After extending the Trump-era tariffs on imported solar modules in 2021, he issued a two-year pause on new tariffs the following year to support adoption of the clean energy source.

Since the pause ended in June 2024, tariffs have risen to 50% for modules from China. Additional tariffs on various Southeast Asian manufacturers are also under consideration as domestic companies continue to compete with a flood of Chinese and Southeast Asian panels in the global market. It is unclear whether Chinese companies that have set up manufacturing in Southeast Asia will incur additional tariffs.

US Solar Module Manufacturing Capacity
Domestic production of solar has skyrocketed, thanks in part to the IRA and tariffs increasing supply of modules in the market and creating new jobs.

The Durability of the IRA

“In the 21 years I’ve been at the company, as we’ve changed administrations and we’ve seen changes in Congress, we’ve never seen a change or a repeal of tax credits, no matter what form they’ve taken,” said John Ketchum, CEO of renewable-focused utility company NextEra Energy, in an earnings call in January 2024.

The IRA is an act of Congress and is law.

To repeal the IRA completely is an uphill battle, as both the House and Senate would need to expend significant political capital to roll it back. Current projections from the Hill show a toss-up between the parties in the House and a likely majority for Republicans in the Senate. But inertia and precedent are powerful tools. Although no Republicans voted for the IRA, many of its provisions have GOP support, as noted by Rep. Andrew Garbarino (R-N.Y.), co-chair of the bipartisan Climate Solutions Caucus. As of now, both parties also have higher-priority topics to address.

Given this electoral uncertainty, it is important to remember the IRA’s merits. Reports indicate that the IRA has catalyzed hundreds of billions of dollars in private investments, potentially creating nearly 200,000 jobs. Notably, Republican states account for 58% of the projects announced under the IRA, Democrat states 32%, and swing states 10%, according to Fidelity.

When looking at congressional districts that have invested the most in solar since the passage of the IRA, eight of the top 10 are Republican, ranging from $721 million to $1.1 billion in estimated actual investments each. Announced investments also mirror this trend. According to Ketchum, much of the investment driven by the IRA has benefited Republican districts, which means unpicking the legislation would risk harming GOP constituencies.

Without full congressional support, and given the aforementioned investment considerations, a change in administration will likely only stymie and delay certain parts of the IRA's implementation through bureaucratic obstacles rather than guarantee a repeal.

Why Now Is the Time to Go Solar

Scrapping the IRA would imperil significant investments and jobs. And Republicans don’t appear particularly opposed to solar tax credits, indicating a nuanced stance on clean energy incentives. Moreover, for solar developers, IRS rules dictate that the credits would remain available for projects that start construction by 2030, reducing the risk of uncertainty.

The IRA has been wildly successful for solar so far — domestic production is skyrocketing, and installations are at an all-time high and accelerating. As we approach the November elections, given the uncertainty around future policy changes, now is the most opportune time to take advantage of current policies, lock in significant cost savings, and boost property values.

Navigating the solar transition can be a daunting process. It involves selecting the ideal location, picking the right vendor, understanding all the tax incentives, and following federal and state-specific regulations. SolarKal has the necessary experience and expertise in the commercial solar energy space to deliver the best returns for our clients and optimize their outcomes. If you’re interested in learning more about how your organization can leverage solar to make progress on its sustainability goals while saving thousands of dollars annually, get in touch with a SolarKal solar advisor today.

Quarterly Quick Hits:

  • Disappointing news from California: The CPUC is not adopting the long-awaited and anticipated community solar program, instead choosing to update legacy programs. This limits options for buildings without on-site load. However, as energy rates continue to skyrocket, PPA/lease hybrid options are still very lucrative if there is on-site load.
  • Pennsylvania moves one step closer to its own community solar program — the bill recently passed the House and is awaiting Senate approval. Something to keep an eye on as the legislation advances!

What We're Looking Out For:

  • Energize Denver reporting is in full effect! If your building is over 25,000 square feet, solar is a key option for reducing fines.
  • In Virginia, Dominion Energy’s community solar program is adding capacity, which is increasing the opportunity for large rooftops in the state!
  • Maryland has created a 1.5x SREC multiplier for rooftops, carports, and brownfields!

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