This is Dana Perkins and you're listening to Switched on the B and EF podcast. So, solar module prices are at record lows and oversupply is one of many factors driving this. So what does this mean for the industry overall? In a time of tariffs and protectionism. These record breaking prices are found in Asia, but for manufacturers outside of
Asia it is a different story. The US government previously placed tariffs on China and recently extended these to parts of Southeast Asia where Chinese manufacturers had been setting up. This might have the potential to foster a US based solar manufacturing industry, but it also has the potential to slow down solar adoption in the US, where prices really are very different. To explain what's happening on today's show, we are joined by Poul Askano from bn EF's Solar Team.
I am also joined today by a co host, Tom Rowlands Reese. Now, if you like this show, make sure to subscribe or consider giving us a review. Right now, Tom and I though get to speak with Pole. So today we've got a guest and a co host, and I'm going to start off with my co host, So Tom rollins three say.
Hello, Hi.
That Dana, I promise not to call you by your full name the entire time. You're Tom from here on out.
That that makes me a lot more comfortable.
And Paul, welcome to the show today.
Thank you, Dana.
So Tom and Paul we have you both joining us from the US, and that's really apt given this conversation is about solar, which is a truly global market in many respects kind of you know, the workhorse of the renewable energy part of the energy transition with such wide scale adoption. But today we're talking about really kind of a big change on free market economics here and how
the US has intervened in this space with tariffs. Now we know that China has led to incredibly low prices for solar modules all over the world, and the US has set up a different scenario for themselves. So can you just give everyone an understanding of what the current situation is with US prices versus Chinese prices? And then additionally, you know what that tariff structure, how as it currently stands, looks like sure?
Yeah, In general, I guess the easy way to understand this is to understand the situation between what US developers pay for modules versus what everyone else pays elsewhere in the world. Is that there's plenty of factories in China that are supplying pretty much most.
Of the world except the US in India.
And typically supply of panels is exceeded demand, despite the fact that most of these countries have been growing their sole installations quite rapidly. But the US doesn't really have access to all of those factories in China because since twenty twelve they started imposing a different set of tariffs that essentially has forced module buyers in the US to pick from a more limited amount of factories outside of China,
mostly in Southeast Asian countries. So what happened is, as developers said, less less factories and less less amount of modules to pick from, manufacturers logically had a little bit more room to play in terms of charging higher margins and production costs were slightly higher than than in China across some of those countries. So it ultimately happens as of today, developers would pay about three times more the modules in the US and what a developer in Europe would pay for for instance.
So that's a pretty hefty impact I presume on the cost of developing sola in the US. I suppose a couple of just things to clarify there is for thinking about utility scale solar how much is the module actually part of the cost of the project. I'm assuming that as modules get cheaper and cheaper, a multiple on the cost of modules starts to matter less and less. So is it really like a game change of that amount of money? And then what is the US government doing to sort of offset that?
So, to use round numbers, it costs for utility scale it costs about a dollar or what to build a utility skill solar farm in the US slightly over, but just to use PRG numbers, let's just say one dollar what and modules, as I said, costs about thirty cents a what for those projects, so very easily, about thirty percent of the upfront cost of building a utility skill
solar farm goes into into buying those modules. And the reason why the really high module prices haven't had a dramatic impact on solar deployments because the US for a long time has been paying back in the form of tax credits about thirty percent of those upfront costs to the project owners, which essentially upsets some of those higher prices that developers.
Have to pay for modules.
So if you think about it from a more first principles basis, it's US tax credits subsidizing in a way these higher module prices that developers in the US have to have to pay for.
So this is costing the US money.
Technically, I mean, tax credits is not it's not a direct subsidy, it's not a grant. So their tax credits are only subsidies that get materialize if the think gets built, if the project gets built. So you could also argue in the absence of those tax credits, those projects would not get built in the first place. So what you're essentially doing is you're reducing some of that expected tax collection from this activity that you're incentivizing.
So the regulation here largely tariffs are really focused on these foreign entities of concern. Can you help define what that is and what's really included there.
Yeah, so foreign entities of concern is a slightly different term than what we would be using in this case because the foreign Entities of concern list has a different trade implications for the US. What these tariffs are doing is broadly targeting solar factories mostly owned by Chinese companies in Southeast Asia and historically also in China with the first set of tariffs.
So these tariffs, logically one would expect that both the intention and impact would be to benefit US solar manufacturers. So is this what we're seeing?
Partly and there's quite new once that I will try to keep as simple as possible. But making solar panels in the US and solar sales is very expensive, and even with some of those tariffs, it's still cheaper to buy modules from abroad than using modules made in the US. However, if the terrors end up exceeding that fifty percent up arranged at US in the industry more or lesser expecting, then manufacturing sales and modules in the US can be
quite profitable. And by quite profitable, I mean there's the potential to earn more than forty percent in gross margins for every single module you sell in the US with a US made sell, not only because the market price is higher for imported product because of the tariffs, but also because the Inflation Reduction Act pays you a lot
of money to produce in the US. If you're making sales and modules, it's going to pay you about eleven cents a while, which is already more than what it costs to buy a whole module from China, to put
it into perspective. And then on top of that, if you are making sales in the US, there is a potential that you're also going to be able to charge a premium to the developer or whoever is the end buyer, because the project might be able to claim a very lucrative domestic content subsidy of a ten percent extra on top of the subsidy that you're already getting from the IRA. And what you're doing with that price premium is essentially share that benefit between the project.
And the developer and U as the manufacturer.
So the combination of production subsidies that lower your overall production costs and essentially give you the window to earn really high margins, the extra premium that you can charge and the fact that prices are structurally high because of
the tariffs can make US manufacturing very lucrative. However, a lot of the plan factories are still struggling to raise financing because of production cost declines in Southeast Asia are continuing, and they're probably going to continue, and even if tariffs are in the fifteen to fifty percent range of the industry respects. This is now going to be a a deal breaker for product from Southeast Asia to come into
the US. And at the same time, it's really really complicated to build stuff in the US, to build factories in the US. And when it comes to building that factory, even if the on paper are on an Excel spreadsheet, the economics might look good and you can expect to make quite high margins, it takes many years to build a cell factory in the US and it's very complicated. The permiting tanks a long time, and getting the factory
connected to the grid can be a serious bottleneck. So despite the fact that on paper, as I said, the economics might look good, it's still going to take some time to build those factories. And who knows what happens during the years that you're trying to build your cell factory abroad. Who knows where prices are going to go. So the risk is quite high. The market risk is quite high, so which is why a lot of investors have not really been willing to back those factories and
provide financing. And the only companies that have really been able to materialize those investments are companies that have quite big balance sheets and have the money to invest themselves.
So how deep into the supply chain is go? I mean, is it the manufacturing facilities that create the finished modules? Are we going all the way down to the silicon?
So technically we most of the tears are applied at the cell level, But there's a set of rules in some of the terraffs that essentially indirectly targeted Chinese wafers, which is this key component to make the silicon cells. And it doesn't specifically set a TeV on the waiver. What does is essentially telling these factories in Southeast Asia or outside of China that if they don't want to be subject to some of those tariffs, they will need to buy wafers silicon wafers from outside of China.
Can I just pick up on something you said previously? You just mentioned that a lot of these companies in Southeast Asia are Chinese owned. So should that mean that if the intention is to compete with China and ultimately Chinese companies are getting higher margins subsidized by US taxpayers. There's a very cynical take, is that what's happened here or is there you know, is it working on some level in achieving its subjective.
Honestly, I don't really know what the end goal is here. Well, technically, it's let's bring back US solar manufacturing, and let's incentivize a ton of jobs in the US putting panels together and making sales and quote unquote making this very sophisticated technology that we're going to need to power the energy transition.
This is the official language. The ultimate goal. I really don't understand, because ultimately what's happening is that we're pay more for components that are ridiculously cheap everywhere else in
the world. And then the side effect, which I don't know to what extent the US has been aware, is that, as you said, Chinese manufacturers have been able to earn a lot of margins because they were the ones who had the capital to set up all these factors outside of China and then become the main supplier to the US from just a different part of the world.
And because the usolar.
Demand has been growing quite quickly, the Chinese solo manufacturers have been able to benefit from that growth, and they've also had a much higher market power selling to the US, and they have selling everywhere else in the world while they are essentially competing with every other factory across the street from weather based in China.
Chinese manufacturers have been very nimble and willing to work in other parts of the world. So I'm thinking of Mexico and actually for this conversation, really Southeast Asia. So can you talk a little bit about the effectiveness of
these tariffs? And I'm actually thinking, I mean that is a follow on to what Tom essentially asked, in that we know that it's driving prices up, but is it essentially also stopping imports of Chinese goods or has that been a difficult thing to actually do and is it more or less a you know, an unwinnable game of whack a mole. And I think, to some extent also a parallel here is when I think about sanctions and about how difficult it has been to provide sanctions to
various countries. You know, the implementation of changing the way global trade and supply chain's work is actually very difficult for a government to achieve.
Yeah, and it's a very complicated puzzle, but ultimately what the terrors, if accomplished, is for these Chinese companies to just re route the supply chains through Southeast Asia, so instead of just selling from their factories in some of the Chinese provinces, they're just selling from Vietnam, Malaysia, Thailand or Cambodia. So same ownership, same structure, just factory in
a different location. And so far, every time there's been a new set of terriffs, these companies have been able to quite quickly adjust and build the necessary facilities outside of China to be able to comply with the new
tear rules. So initially what they built was where a lot of sell and module factories in the countries that I listed, and then with a new set of terrors that are expected to come now into effect in June twenty twenty four, manufacturers were actually quite impressive in building wafer facilities in Southeast Asia as well in order to
comply with with this new tariffs. So you could argue that the US has sup forced some of these Chinese companies to make really capix intensive investments outside of China and by that also spurring the local economies in Southeast Asia. But at the end of the day, we're still talking about the same suppliers, and surely because prices are slightly higher, this has left some room for non Chinese manufacturers to
also sell into the US market. But those non Chinese manufacturers from South Korea, or from some of the Southeast Asian countries, or even from the US have historically struggled despite the fact that module prices work quite high, just because of how quickly the factories in Southeast Asia were able to improve and lower costs.
See what I'm hearing here is that the tariffs are not necessarily working exactly as intended. Maybe they are still accomplishing some of their objectives, but it leads me to this really fundamental question, which is what actually is the point of all of this. If we're using the language of war and this is a trade war, it's like there's this battle being fought over a piece of scrubland that is of no use to anyone, And you could argue it's kind of useful for the for the US
to let China just own sol it. Like you know, if it's about electric vehicles, you know, there's the automotive industry. It's such a huge industry globally. I get it why you would want to fight over that and you know, retain those healthy margins. But for all the time I've been at BNAF, our colleague Jenny Chase has always been talking about how nobody makes money manufacturing solar and all these Chinese companies, you know, lose money, and you know,
but they still scale up. So surely this is like the worst industry to be fighting over. And in a way, letting Chinese modules into the country is just letting the Chinese government subsidize the US energy transition as opposed to what we have here now, which is the US government
is subsidizing Chinese companies. So that's just my a take that I have, and I kind of put it to you, like fight me, like tell me what the point of this is, because this seems like the most pointless battle I can imagine.
Well as a long term analyst working under Jenny Chase, obviously her influence has dictated a lot of my takes too, so I'm not going to disagree with her. I'm just gonna lay out some of the arguments in favor.
Of those tariffs that I've heard and read.
The first one is, it's quite an uncomfortable truth when you think about it, to say to the general public that let's say solar turns to be turns to generate about thirty percent of all electricity in the US by twenty thirty. It's quite an uncomfortable truth to think that most of that thirty percent of annual generation in the US comes from a component made in China. If you think about gas plants, nuclear there are usually some like a strong attachment to a US company owning that plant,
operating and plant creating the components. So it's quite uncomfortable for policymakers and guests think about the fact that in a few years from now a lot of our electricity will come from things stuff made in China.
So that's one.
And then the other argument that I've heard is industrial capacity. So the US, the whole reindustrialization push right now that's taking place in the US not only is trying to compete against China and create jobs in the US, but also it's trying to revitalize the industrial capacity in the US in case there was a war, meaning we can now again build a bunch of airplanes and a bunch
of ammunition. The tricky part with this argument is module assembly factories are just a big warehouse where you put a bunch of assembly lines and you put them madge together. So really, I don't know exactly how you would repurpose those factories for some military needs, but it's quite a simple process, so I don't know what the actual values of having all of those assembly lines in the US.
The second part is a lot of the investments, a lot of the sole investments and manufacturers have made in the US have come from the same Chinese companies, and some of those Chinese companies are heavily involved with some of the biggest US developers, So some of the biggest
US developers rely critically on supply from these manufacturers. So yes, there's exceptions like First Solars, probably the most ambitious US based manufacturer that has very big ambissions in the US and has actually pursued those investments in this scaling up production. But a lot of the big announcements come from companies that are directly or indirectly owned by Chinese firms.
I just wanted to follow on while we're on this topic, and I'm going to tell you a very short anecdote, and I'm going to try and keep it brief because what you're saying makes me think of something that happened recently. I went to Charleston, South Carolina, me and my wife. We're from the UK. We're exploring the US men to Charleston, South Carolina. And near Charleston, South Carolina is the North America's only tea farm. And we went on a tour
of the tea farm. And the story of that tea farm is it was set up in the sixties by Lipton because they looked there. It was the Cold War and they were looking at global supply chains and they were like, if things go bad, you know, we're not going to have any tea in America, so we need to set up a tea guard and they invested heavily in it. Cold War ended, Lipton was like, Okay, that doesn't matter anymore. They weren't interested, so they sold it
to someone who is more of a te enthusiast. So now America has this one little tea garden, this one little tea farm. But the point is is that if supply chain, you know, if there is a global meltdown, America still has a way of getting tea that has something to scale from. So is the end goal here not that we have this super scale US solar industry.
But we have something a little bit like the Charleston tea garden, something that is like a seed from which there is a starting point if things go really bad. Is that how you see this? Very I would say aggressive and expensive strategy ultimately is to make the Charleston tea gardens of solar.
That's an interesting analogy.
And I guess my first question would always be like how much more expensive or how was that t was that tea of better?
Was that tea more expensive?
It was really nice, award winning I mean, Tom, your country and my country have a long history when it comes to tea in international disputes, and I would say you might be overestimating how much Americans care about tea these days.
Well, well, Lypton definitely cared about tea, you know, I certainly did well.
But actually, then thinking about so the companies that are actually involved here, I want to think about actually the US solar manufacturers who are playing by the rules and essentially are not circumventing the different trade rules that have been set up. They have started a new petition for some additional tariffs. Can you get into that. I think
it's going to be tied very much. Paul by the way, with the title of your recent research note, which is US solar manufacturer's call for more expensive modules.
So this is just yet another the solar coaster, as they call it here in the US, just becoming more and more complicated. So I hope I can explain this in simple terms, because it's even confusing for those of us who do this for a living and look at those.
Terrafts full time.
So what happened is there's a new set of tariffs that were already approved that are like the circumvention tariffs that you mentioned, that will come into effect in June of twenty twenty four. What happened because of this deadline that was set by the Department of Commerce and then
extended by two years by the Biden administration. What happened is a lot of the factories in Southeast Asia many more, honestly, a lot of factories just came out of nowhere, A lot of supply pretty much came out of nowhere and just started shipping modules to the US that we're going to be subject to this new tariffs that we know are coming next month. So what happened is there was a supply clood in the US as these manufacturers were trying to get rid of their product that was going
to be essentially obsolete once the tariffs kicked in. So obviously the dynamics despite of quite a fast growing market in the US and the US solar market has been growing quite quite rapidly, but supply has supplied the past
twelve eighteen months has far exceeded installations. So this imbalance essentially sent prices plummeting to as low as ten twelve fifteen cents awad for very for small budget batches of old product that these manufacturers trying to get rid of and that was going to be soon obsolete because of
the tariffs. So that really posts serious difficulties to some of the existing manufacturers in the US that already have production and I already trying to sell into the US market, because now suddenly that we're competing against modules that cost ten to fifteen twenty twenty five cents down from about forty or more than forty cents.
Just over a year ago.
So that essentially put a lot of pressure on the financials of these like the few manufacturers in the US that are actually producing and selling modules. So now these manufacturers, which include Handwok q sales and for Solar have asked the Commerce Department to impose yet another set of terrors.
These ones dedicated to some to the four Southeast Asian countries that sent about seventy five to eighty percent of the modules that the US uses to impose new anti dumping and kindavailing duties on these countries because they're arguing that they're selling modules at a loss essentially in the US and that's really making them struggle financially.
Now I foreshadowed this at the beginning India. We essentially are talking about three different solar markets. So you've got the US, You've got India, and then you've got everywhere else, which essentially is well the Chinese market. Can you talk about India and how it may be is the same or different from what's happening in the US.
Yeah, India has been quite an interesting benefactor of the different set of US tariffs. So India is probably the only country outside of the US that also has a let's call it mildly prohibitive amount of tariffs on Chinese solar components. So what happened is because of the high prices in the US, a lot of those Indian manufacturers.
A lot of the Indian module assembly factories that have a higher production structure than in China were able to sell to the US AD quite a good profit, and not only because of the tariffs, but also because the US has essentially banned polasilicon. The key silicon input to make solar silicon panels from the Chinese region are Sunxiang.
A lot of the border agents in the US started very carefully reviewing and detaining modules from Southeast Asia that had essentially a stamp on them saying those modules were
made by a big Chinese manufacturer. So what happened during that time where porter agents were detaining a lot of these modules from Chinese companies is the Indian manufacturers were able to appeal to module buyers in the US because the risk just because of the nature of the origin, because it's like quote unquote an Indian module, but essentially
just meant it's an Indian assembled module. A lot of the US module buyers were really interested in buying from these Indian manufacturers because the risk of getting detained at the border was much much smaller just for the nature of those modules coming from India. So Indian manufacturers were able to sell modules at really high prices in the US because the US module buyers were willing to pay that price in order to make sure that the modules
get delivered on time. However, with the new set of tariffs that have been petitioned now, Indian module assembly factories that buy most of their cells from Southeast Asia would also be affected by the new duties because essentially those duties are at the cell level, the cell that is being made in Southeast Asia. But there's a few Indian manufacturers that are quite ambitious, like Ware or Adani, and they're also trying to make cells and modules in India
and they have quite aggressive capacity expansion plans. And those manufacturers would really benefit if these new tariffs get approved because they would be able to sell to the US terror free at quite a high price and make quite decent margins.
And just to add a little bit more context to that, because obviously there's this US opportunity for Indian solar companies. How big is the Indian solar market itself? So for these Indian companies that now have an opportunity to scale and they can see an opportunity in the US, how big is that opportunity compared to the domestic opportunity that obviously has been sort of ring fenced for them by the tariffs in India.
Yeah, I don't have the India solar deployment numbers of the top of my head, but there is a concise plan by the government and some of these manufacturers to supply most of their domestic demand, and some of the tariffs that they have on Chinese solar modules and sales are quite high and trying to prevent that. But what we've seen, what I can say is what we've seen over the past couple of years is that the US
opportunity was more lucrative than the domestic opportunity. So as much as they could, some of these Indian manufacturers would try to sell to the US because they could sell at much higher prices and make more money than just selling to local customers.
The story of solar has been very much defined by falling prices, and they've never been lower than they are now for other parts of the world. So when it comes to these three x more expensive modules in the US, what does the future hold for them in terms of prices? Is it going to get worse before it gets better or are those prices going to start to come down over time as well?
Yeah, Well, our analysis show that if the new set of tariffs now are approved, module prices in the US will be sustainably high, so around the thirty cent of what mark versus prices and free markets just plummeting to closer to ten cents a lot, so we'd still see that big, big, big gap between what you pay in the US versus what you pay in the rest of
the world. There is some encouraging signs from production in Southeast Asia getting cheaper and inputs becoming cheaper, namely polosilicon, and that could have set some of that tariff impact on prices. But if these new set of tariffs pass, we think this is going to essentially make modules consistently high in the US compared with the rest of the world, where we expect modules to fall eventually to about seven
cents awat by the end of the decade. I don't know if I would call it a missed opportunity, but before these new duties were petitioned, we were expecting module prices in the US to finally fall quite precipitously as production costs in Southeast Asia were falling quite rapidly, and those benefits were starting to materialize in the economics of solar projects and power purchase agreement prices. And now this just came at a blow, so essentially like the US.
Like the US, some of the US developers started to feel what it is to see that the prices of modules falling, but just for a few seconds before the new set of duties word petitioned. So, I guess if you learned something, it's it's just hard to be optimistic about paying little for mordules despite what you what you see somewhere in their horizon is like, is there a new duty that will come online? So I guess US developers cannot date dream about low prices.
So you are the lead author of our Clean US Clean Energy Market Outlook, where we have our sort of medium term forecast of wind and solar, and we published an update that to that this month. With all of these developments, did we see it? And with everything you've just said, did we see a reduction in our forecast for US solar build out in the next few years.
We haven't fully incorporated the effect of the new duties just because they have not been approved and technically, as a rule, we don't assume anything forecast that isn't official yet. Right now, what we assumed is still that the price decline that we were expecting before the new duties were petitioned, and I guess we would revise our numbers and do our analysis if the new tears get petitioned, and critically, when we know how high those tears will be, which
right now we don't know. We think it's going to be somewhere in the range of fifteen to fifty percent one five to five zero, but it's like no one knows, and whoever tries to guess it is probably going to.
Be wrong, so we're not even going to try.
The truth is that the US market has grown quite rapidly because of the dynamics that we the dynamics between high prices and subsidies that we talked at the beginning. If module prices remain in the thirty cent per wad range, that's not a deal breaker for the US solar market, and developers are still going to continue to build projects. And the issues really to grow those solar deployment numbers are not really input costs. There the bottlenecks to connect
those projects to the correct. So there's plenty of people out there trying to build solar projects irrespective of what those module prices are. Surely those marginle prices now skyrocket to forty five cents award or the fifty cents award because their tariffs are of two hundred and fifty percent, and no one's going to buy modules. No one's going to sell modules to the US, and certainly deployments are
going to be affected. But if mogules remain in that thirty cents of ward range, which is more or less what could happen in that fifteen to fifty percent range that I was referring to, then developers will continue with their plans and we're going to pretend nothing happened.
Got it.
So what I'm hearing from you is that these tariffs affect supply chains more than they do the market itself because there are other challenges in the market that are predominant.
Correct.
So Paul Dana mentioned the way she framed it was quite nice, is that the global solar market is the US, India and then everyone else, and China very much is the almost exclusive supplier to everyone else. So how big a deal is it? For the Chinese solar industry that there are these defensive moves keeping them out or at least creating hurdles to getting to the US market. Does it hurt at all?
The amount of coverage that the US Trade Drama and tear of Drama gets is slightly out of proportion to the size of the US solar market compared with the rest of the world. The size of the US solar market is probably about right now fifteen percent of global annual solar demand. China alone builds over half of the solar projects every year at this point, so in terms of size, the US is not really that big of
a market. Some of these big Chinese manufacturers typically sell between five to ten gigawatts of modules to the US every year. Now they're ramping up and they have some of them have more ambitious targets, which is a slight proportion of like the tens or even hundreds of gig what's worth of sales and modules that they produce every year.
However, it's so overblown.
It's such a big deal because, as Geny Chase likes to say, no one makes money in making solar panels and solar components. However, the US has been the long lasting exception to that where manufacturers are able to make margins that are above twenty percent thirty percent in some cases.
So it's really the only lucrative market for most of these manufacturers or all of these manufacturers to sell into, which is why they are so heavily involved and invested in the US market and have been able and have essentially agreed to pursue all of these topics intensive investments outside of China in order to be able to earn those high margins.
It's really funny. It reminds me of like one of those Sci Fi opponents. So if the Chinese solar manufacturers are like who the US is trying to battle, it's like whatever you throw at them, they kind of make them even stronger. So you try and put these tariffs in place, and these companies that weren't making money anywhere
suddenly have an opportunity to profit. Another thing that is a big deal thing of this is you know we can analyze, oh this helps or this doesn't help, or you know this is effective or it isn't effective, and you know, we can be wrong or we can be right. But one thing is for sure is that all of this creates uncertainty, and one of the big uncertainties potentially
is this idea that there might be retroactive tariffs. So how does that affect the market, and how does it affect adjacent industries like you know, our producer can was mentioning Dak that might want to benefit from from solar installations. Is that the real challenge here. It sounds like everyone involved, both in the US and in China can adapt to whatever happens, but they can't adapt to not knowing what is going to happen.
I would just slightly clarify and say, rather than retroactive tariffs, which makes it sound like there's another set of tariffs from the ones that we're talking about, I would rather say these tariffs have potential to be retroactive too. And that certainly is the biggest uncertainty when it comes to understanding how to price in the potential of tariffs into
negotiations when you try to buy or sell modules. And the risk was quite acute at the beginning of the tariff petition that was implemented in twenty twenty two, and it's going to come into effect now in June twenty twenty four.
But Biden.
Essentially, the White House and the Biden's administration gave the guarantee to developers that they could buy modules tear free until June twenty twenty four and install those panels by December twenty twenty four. However, now we know there's potential for some of those for the new duties have approved to be retroactive. We just don't know for sure how
far back those tariffs are going to go. So that certainly creates a lot of uncertainty because now you not only do you have to make guesses or estimate how how those tarffs could be, you also have to estimate when those tariffs actually will apply and if those tears will apply to modules that have already bought or mean as.
A supplier that I've already shipped to the US.
So that's creating a lot of uncertainty and how negotiations for twenty twenty five module deliveries are happening. Generally, what happens quite simply is that suppliers have to raise prices and whatever that premium is that they agree on with the buyer as to like, how do we price in this tear risk? Is that a five cents for what premium is that a ten cents a WAT premium? Is that what two cents of WAT premium? I guess relies
on how those individual negotiations go. But as you know, I'm sure you can imagine if you're at the table trying to figure these things out when actually signing a document and for something that you're going to pay a lot of money for, then it makes it highly stressful and complicated.
And this shouldn't be that complicated.
You just buy a component, install on the ground or a roof, and now you're creating all of this uncertainty around that transaction that makes the whole process much more complicated and more expensive because you're going to start to suddenly involve lawyers or advisors or accountants to buy a
component that should be quite straightforward. Imagine now you had to always hire a CPA or an accountant to buy a new fridge because you don't know if maybe like that Siemens or GE is going to charge you like twenty percent more or twenty five percent more, and it's worth for you to pay like a five thousand dollars or like one thousand dollars to an accountant around the block to tell you, actually you should tell them to charge you only five percent more because the terror risk
is not as high as they as they're trying to convince you.
So it's it's the complexity it brings that is maybe the challenge.
Correct Solar is certainly an important element of the energy transition and creating this renewable energy and an electrified part of the energy economy. So I certainly hope that the US will be able to figure out a way to make this economic and we will see what the future holds. Paul, thank you very much for joining today and sharing your views. And Tom, it's been great having a co host, so I look forward to hopefully you joining me back here
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