Solar CEO is relieved that next president isn’t a climate denier

Biden is expected to appoint climate-focused policymakers to lead the energy department, the EPA and other critical agencies.

“It can make a huge difference,” said Werner, who added that he had had talks with Biden’s political advisers.

“The mood in the solar industry is great and growing,” said Werner.

What is happening to the “cornerstone” of the solar industry?

Still, leaders and solar investors are optimistic about Washington’s tone.

“The prospects for greater political support for a pro-renewable energy program from DC are greatly improved under a Democratic administration,” Brian Lee, analyst at Goldman Sachs, wrote in a client note this week.

Despite the surge in solar stocks, the potential for better policy and increased solar volume “does not appear to be fully built into the stocks,” Lee wrote. “We believe clean energy stocks – particularly solar stocks – should continue to outperform.”

Biden’s pledge to immediately bring the United States back to the Paris climate agreement sparks much optimism, as does the move that would mark Washington’s commitment to tackle the climate crisis head-on.

The same goes for a Biden climate task force’s ambitious goal of installing eight million solar roofs by reducing regulations and speeding up approvals.

But the focus is on the fate of the federal energy investment tax credit (ITC), which is expected to be phased out by 2022. Biden’s tax plan calls on Congress to expand the ITC, which is a huge incentive for owners and businesses. who buy or finance rooftop solar installations.

“We see ITC as the lifeblood of solar demand in the United States,” wrote Angelo Zino, senior equity analyst at CFRA Research, in a recent note to clients.

Despite the expected persistent deadlock in Washington, SunPower is optimistic about another tax credit extension.

“The ITC is by far the most important thing,” said Werner. “These are # 1, 2 and 3.”

‘You can’t just build a new glass factory’

Beyond climate denial, the Trump era ushered in a wave of tariffs and other trade threats. In January 2018, Trump imposed a 30% tariff on silicon solar cells and modules made abroad. These tariffs are expected to be phased out in February 2022.

Werner said there was bipartisan support for Trump’s crackdown on China, but he believes the trade strategy created “significant friction” for SunPower in the form of distractions and higher costs.

“Tariffs can be implemented faster than companies like SunPower can adapt,” he said. “Instead of running my business, I spent time learning about trade policy and how to get my opinion.”

Prior to renegotiating NAFTA, Trump repeatedly threatened to impose tariffs in Mexico, where SunPower had factories.

“We had to create a whole strategy of assumptions,” Werner said. “If there is a tariff, do we shut down the factories? Do we move them? These are hard things to pick up on quickly. You can’t just build a new glass factory in Portland.”

Even with a change in the White House, these trade tensions will not simply go away.

Zino, the CFRA analyst, predicted that the next administration will impose a new round of solar tariffs.

“Biden will probably be as tough on China as Trump was,” Zino said.

The Covid bump

The pandemic has spurred a number of economic and cultural trends that have been for the most part optimistic for solar companies.

Another hot area: SunPower sells solar panels to large data centers, which are growing rapidly due to the growing importance of cloud computing. “This business is booming,” Werner said.

But the biggest game-changer has been the work-from-home movement, which has encouraged many Americans to modernize their homes, including building resilience. West Coast homeowners are installing solar panels on rooftops in part to offset the power outages that have hit California.

“It’s actually been a boost because a lot of people work from home,” Werner said. “If you’re losing energy … you can’t work.”