Large-scale Projects Most Affected by U.S. Trade Disputes

With over 3 GW of projects at risk in the U.S. from the recent trade disputes, many industry players, ranging from project developers to module suppliers to financiers, are looking to understand how their specific project portfolio might be impacted.

The graphic below shows the U.S. project pipeline by system size range, highlighting the number of projects and the total capacity that could be affected by the recent U.S. trade investigations. In looking at the pipeline, it is evident that the largest number of projects potentially affected is smaller-scale, with the 1-5 MW and 250-500 kW system size ranges containing 59% of the affected number of projects.

However, most of the potentially affected capacity is in the large-scale ranges, greater than 20 MW. Projects that have a total size greater than 100 MW account for almost 60% of the affected pipeline in terms of overall installed capacity.

Overall, these larger-scale projects are generally more vulnerable to any price increases as a result of component supply issues as many have already signed power purchase agreements (PPAs) at aggressive rates. Therefore, any substantial increase in pricing may cause a project to become unviable from a financial perspective and may need to be renegotiated, delayed, or perhaps even terminated.

Project developers are now quickly coming to terms with the possible impacts of the trade case. Some of the strategies discussed to manage this outcome include delaying/splitting projects, renegotiating other supply contracts or the PPA if possible, or focusing on non-component cost reduction. Some downstream players are even looking at investing in in-house production capacity to secure long-term component supply. Regardless of the specific strategy, downstream players must be aware of current and looming macro-policy trends if they are to continue to grow in the dynamic PV market.

Figure 1: System size range of trade-affected US PV project pipeline

System size range of trade-affected US PV project pipeline

Source: NPD Solarbuzz United States Deal Tracker, August 2014