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Speaker 1: This is Dana Perkins and you're listening to Switched on

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Speaker 1: the B and EF podcast. So, solar module prices are

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Speaker 1: at record lows and oversupply is one of many factors

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Speaker 1: driving this. So what does this mean for the industry overall?

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Speaker 1: In a time of tariffs and protectionism. These record breaking

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Speaker 1: prices are found in Asia, but for manufacturers outside of

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Speaker 1: Asia it is a different story. The US government previously

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Speaker 1: placed tariffs on China and recently extended these to parts

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Speaker 1: of Southeast Asia where Chinese manufacturers had been setting up.

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Speaker 1: This might have the potential to foster a US based

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Speaker 1: solar manufacturing industry, but it also has the potential to

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Speaker 1: slow down solar adoption in the US, where prices really

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Speaker 1: are very different. To explain what's happening on today's show,

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Speaker 1: we are joined by Poul Askano from bn EF's Solar Team.

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Speaker 1: I am also joined today by a co host, Tom

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Speaker 1: Rowlands Reese. Now, if you like this show, make sure

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Speaker 1: to subscribe or consider giving us a review. Right now,

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Speaker 1: Tom and I though get to speak with Pole. So

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Speaker 1: today we've got a guest and a co host, and

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Speaker 1: I'm going to start off with my co host, So

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Speaker 1: Tom rollins three say.

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Speaker 2: Hello, Hi.

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Speaker 1: That Dana, I promise not to call you by your

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Speaker 1: full name the entire time. You're Tom from here on out.

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Speaker 2: That that makes me a lot more comfortable.

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Speaker 1: And Paul, welcome to the show today.

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Speaker 3: Thank you, Dana.

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Speaker 1: So Tom and Paul we have you both joining us

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Speaker 1: from the US, and that's really apt given this conversation

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Speaker 1: is about solar, which is a truly global market in

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Speaker 1: many respects kind of you know, the workhorse of the

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Speaker 1: renewable energy part of the energy transition with such wide

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Speaker 1: scale adoption. But today we're talking about really kind of

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Speaker 1: a big change on free market economics here and how

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Speaker 1: the US has intervened in this space with tariffs. Now

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Speaker 1: we know that China has led to incredibly low prices

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Speaker 1: for solar modules all over the world, and the US

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Speaker 1: has set up a different scenario for themselves. So can

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Speaker 1: you just give everyone an understanding of what the current

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Speaker 1: situation is with US prices versus Chinese prices? And then additionally,

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Speaker 1: you know what that tariff structure, how as it currently stands,

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Speaker 1: looks like sure?

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Speaker 4: Yeah, In general, I guess the easy way to understand

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Speaker 4: this is to understand the situation between what US developers

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Speaker 4: pay for modules versus what everyone else pays elsewhere in

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Speaker 4: the world. Is that there's plenty of factories in China

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Speaker 4: that are supplying pretty much most.

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Speaker 3: Of the world except the US in India.

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Speaker 4: And typically supply of panels is exceeded demand, despite the

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Speaker 4: fact that most of these countries have been growing their

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Speaker 4: sole installations quite rapidly. But the US doesn't really have

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Speaker 4: access to all of those factories in China because since

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Speaker 4: twenty twelve they started imposing a different set of tariffs

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Speaker 4: that essentially has forced module buyers in the US to

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Speaker 4: pick from a more limited amount of factories outside of China,

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Speaker 4: mostly in Southeast Asian countries. So what happened is, as

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Speaker 4: developers said, less less factories and less less amount of

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Speaker 4: modules to pick from, manufacturers logically had a little bit

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Speaker 4: more room to play in terms of charging higher margins

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Speaker 4: and production costs were slightly higher than than in China

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Speaker 4: across some of those countries. So it ultimately happens as

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Speaker 4: of today, developers would pay about three times more the

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Speaker 4: modules in the US and what a developer in Europe

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Speaker 4: would pay for for instance.

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Speaker 2: So that's a pretty hefty impact I presume on the

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Speaker 2: cost of developing sola in the US. I suppose a

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Speaker 2: couple of just things to clarify there is for thinking

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Speaker 2: about utility scale solar how much is the module actually

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Speaker 2: part of the cost of the project. I'm assuming that

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Speaker 2: as modules get cheaper and cheaper, a multiple on the

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Speaker 2: cost of modules starts to matter less and less. So

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Speaker 2: is it really like a game change of that amount

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Speaker 2: of money? And then what is the US government doing

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Speaker 2: to sort of offset that?

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Speaker 4: So, to use round numbers, it costs for utility scale

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Speaker 4: it costs about a dollar or what to build a

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Speaker 4: utility skill solar farm in the US slightly over, but

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Speaker 4: just to use PRG numbers, let's just say one dollar

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Speaker 4: what and modules, as I said, costs about thirty cents

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Speaker 4: a what for those projects, so very easily, about thirty

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Speaker 4: percent of the upfront cost of building a utility skill

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Speaker 4: solar farm goes into into buying those modules. And the

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Speaker 4: reason why the really high module prices haven't had a

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Speaker 4: dramatic impact on solar deployments because the US for a

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Speaker 4: long time has been paying back in the form of

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Speaker 4: tax credits about thirty percent of those upfront costs to

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Speaker 4: the project owners, which essentially upsets some of those higher

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Speaker 4: prices that developers.

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Speaker 3: Have to pay for modules.

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Speaker 4: So if you think about it from a more first

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Speaker 4: principles basis, it's US tax credits subsidizing in a way

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Speaker 4: these higher module prices that developers in the US have

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Speaker 4: to have to pay for.

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Speaker 2: So this is costing the US money.

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Speaker 4: Technically, I mean, tax credits is not it's not a

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Speaker 4: direct subsidy, it's not a grant. So their tax credits

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Speaker 4: are only subsidies that get materialize if the think gets built,

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Speaker 4: if the project gets built. So you could also argue

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Speaker 4: in the absence of those tax credits, those projects would

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Speaker 4: not get built in the first place. So what you're

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Speaker 4: essentially doing is you're reducing some of that expected tax

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Speaker 4: collection from this activity that you're incentivizing.

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Speaker 1: So the regulation here largely tariffs are really focused on

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Speaker 1: these foreign entities of concern. Can you help define what

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Speaker 1: that is and what's really included there.

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Speaker 4: Yeah, so foreign entities of concern is a slightly different

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Speaker 4: term than what we would be using in this case

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Speaker 4: because the foreign Entities of concern list has a different

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Speaker 4: trade implications for the US. What these tariffs are doing

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Speaker 4: is broadly targeting solar factories mostly owned by Chinese companies

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Speaker 4: in Southeast Asia and historically also in China with the

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Speaker 4: first set of tariffs.

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Speaker 2: So these tariffs, logically one would expect that both the

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Speaker 2: intention and impact would be to benefit US solar manufacturers.

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Speaker 2: So is this what we're seeing?

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Speaker 4: Partly and there's quite new once that I will try

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Speaker 4: to keep as simple as possible. But making solar panels

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Speaker 4: in the US and solar sales is very expensive, and

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Speaker 4: even with some of those tariffs, it's still cheaper to

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Speaker 4: buy modules from abroad than using modules made in the US. However,

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Speaker 4: if the terrors end up exceeding that fifty percent up

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Speaker 4: arranged at US in the industry more or lesser expecting,

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Speaker 4: then manufacturing sales and modules in the US can be

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Speaker 4: quite profitable. And by quite profitable, I mean there's the

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Speaker 4: potential to earn more than forty percent in gross margins

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Speaker 4: for every single module you sell in the US with

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Speaker 4: a US made sell, not only because the market price

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Speaker 4: is higher for imported product because of the tariffs, but

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Speaker 4: also because the Inflation Reduction Act pays you a lot

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Speaker 4: of money to produce in the US. If you're making

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Speaker 4: sales and modules, it's going to pay you about eleven

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Speaker 4: cents a while, which is already more than what it

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Speaker 4: costs to buy a whole module from China, to put

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Speaker 4: it into perspective. And then on top of that, if

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Speaker 4: you are making sales in the US, there is a

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Speaker 4: potential that you're also going to be able to charge

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Speaker 4: a premium to the developer or whoever is the end buyer,

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Speaker 4: because the project might be able to claim a very

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Speaker 4: lucrative domestic content subsidy of a ten percent extra on

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Speaker 4: top of the subsidy that you're already getting from the IRA.

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Speaker 4: And what you're doing with that price premium is essentially

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Speaker 4: share that benefit between the project.

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Speaker 3: And the developer and U as the manufacturer.

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Speaker 4: So the combination of production subsidies that lower your overall

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Speaker 4: production costs and essentially give you the window to earn

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Speaker 4: really high margins, the extra premium that you can charge

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Speaker 4: and the fact that prices are structurally high because of

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Speaker 4: the tariffs can make US manufacturing very lucrative. However, a

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Speaker 4: lot of the plan factories are still struggling to raise

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Speaker 4: financing because of production cost declines in Southeast Asia are continuing,

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Speaker 4: and they're probably going to continue, and even if tariffs

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Speaker 4: are in the fifteen to fifty percent range of the

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Speaker 4: industry respects. This is now going to be a a

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Speaker 4: deal breaker for product from Southeast Asia to come into

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Speaker 4: the US. And at the same time, it's really really

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Speaker 4: complicated to build stuff in the US, to build factories

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Speaker 4: in the US. And when it comes to building that factory,

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Speaker 4: even if the on paper are on an Excel spreadsheet,

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Speaker 4: the economics might look good and you can expect to

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Speaker 4: make quite high margins, it takes many years to build

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Speaker 4: a cell factory in the US and it's very complicated.

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Speaker 4: The permiting tanks a long time, and getting the factory

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Speaker 4: connected to the grid can be a serious bottleneck. So

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Speaker 4: despite the fact that on paper, as I said, the

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Speaker 4: economics might look good, it's still going to take some

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Speaker 4: time to build those factories. And who knows what happens

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Speaker 4: during the years that you're trying to build your cell

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Speaker 4: factory abroad. Who knows where prices are going to go.

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Speaker 4: So the risk is quite high. The market risk is

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Speaker 4: quite high, so which is why a lot of investors

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Speaker 4: have not really been willing to back those factories and

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Speaker 4: provide financing. And the only companies that have really been

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Speaker 4: able to materialize those investments are companies that have quite

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Speaker 4: big balance sheets and have the money to invest themselves.

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Speaker 1: So how deep into the supply chain is go? I mean,

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Speaker 1: is it the manufacturing facilities that create the finished modules?

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Speaker 1: Are we going all the way down to the silicon?

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Speaker 4: So technically we most of the tears are applied at

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Speaker 4: the cell level, But there's a set of rules in

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Speaker 4: some of the terraffs that essentially indirectly targeted Chinese wafers,

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Speaker 4: which is this key component to make the silicon cells.

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Speaker 4: And it doesn't specifically set a TeV on the waiver.

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Speaker 4: What does is essentially telling these factories in Southeast Asia

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Speaker 4: or outside of China that if they don't want to

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Speaker 4: be subject to some of those tariffs, they will need

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Speaker 4: to buy wafers silicon wafers from outside of China.

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Speaker 2: Can I just pick up on something you said previously?

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Speaker 2: You just mentioned that a lot of these companies in

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Speaker 2: Southeast Asia are Chinese owned. So should that mean that

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Speaker 2: if the intention is to compete with China and ultimately

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Speaker 2: Chinese companies are getting higher margins subsidized by US taxpayers.

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Speaker 2: There's a very cynical take, is that what's happened here

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Speaker 2: or is there you know, is it working on some

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Speaker 2: level in achieving its subjective.

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Speaker 4: Honestly, I don't really know what the end goal is here. Well, technically,

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Speaker 4: it's let's bring back US solar manufacturing, and let's incentivize

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Speaker 4: a ton of jobs in the US putting panels together

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Speaker 4: and making sales and quote unquote making this very sophisticated

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Speaker 4: technology that we're going to need to power the energy transition.

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Speaker 4: This is the official language. The ultimate goal. I really

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Speaker 4: don't understand, because ultimately what's happening is that we're pay

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Speaker 4: more for components that are ridiculously cheap everywhere else in

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Speaker 4: the world. And then the side effect, which I don't

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Speaker 4: know to what extent the US has been aware, is that,

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Speaker 4: as you said, Chinese manufacturers have been able to earn

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Speaker 4: a lot of margins because they were the ones who

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Speaker 4: had the capital to set up all these factors outside

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Speaker 4: of China and then become the main supplier to the

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Speaker 4: US from just a different part of the world.

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Speaker 3: And because the usolar.

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Speaker 4: Demand has been growing quite quickly, the Chinese solo manufacturers

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Speaker 4: have been able to benefit from that growth, and they've

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Speaker 4: also had a much higher market power selling to the US,

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Speaker 4: and they have selling everywhere else in the world while

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Speaker 4: they are essentially competing with every other factory across the

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Speaker 4: street from weather based in China.

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Speaker 1: Chinese manufacturers have been very nimble and willing to work

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Speaker 1: in other parts of the world. So I'm thinking of

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Speaker 1: Mexico and actually for this conversation, really Southeast Asia. So

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Speaker 1: can you talk a little bit about the effectiveness of

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Speaker 1: these tariffs? And I'm actually thinking, I mean that is

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Speaker 1: a follow on to what Tom essentially asked, in that

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Speaker 1: we know that it's driving prices up, but is it

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Speaker 1: essentially also stopping imports of Chinese goods or has that

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Speaker 1: been a difficult thing to actually do and is it

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Speaker 1: more or less a you know, an unwinnable game of

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Speaker 1: whack a mole. And I think, to some extent also

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Speaker 1: a parallel here is when I think about sanctions and

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Speaker 1: about how difficult it has been to provide sanctions to

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Speaker 1: various countries. You know, the implementation of changing the way

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Speaker 1: global trade and supply chain's work is actually very difficult

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Speaker 1: for a government to achieve.

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Speaker 4: Yeah, and it's a very complicated puzzle, but ultimately what

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Speaker 4: the terrors, if accomplished, is for these Chinese companies to

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Speaker 4: just re route the supply chains through Southeast Asia, so

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Speaker 4: instead of just selling from their factories in some of

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Speaker 4: the Chinese provinces, they're just selling from Vietnam, Malaysia, Thailand

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Speaker 4: or Cambodia. So same ownership, same structure, just factory in

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Speaker 4: a different location. And so far, every time there's been

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Speaker 4: a new set of terriffs, these companies have been able

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Speaker 4: to quite quickly adjust and build the necessary facilities outside

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Speaker 4: of China to be able to comply with the new

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Speaker 4: tear rules. So initially what they built was where a

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Speaker 4: lot of sell and module factories in the countries that

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Speaker 4: I listed, and then with a new set of terrors

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Speaker 4: that are expected to come now into effect in June

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Speaker 4: twenty twenty four, manufacturers were actually quite impressive in building

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Speaker 4: wafer facilities in Southeast Asia as well in order to

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Speaker 4: comply with with this new tariffs. So you could argue

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Speaker 4: that the US has sup forced some of these Chinese

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Speaker 4: companies to make really capix intensive investments outside of China

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Speaker 4: and by that also spurring the local economies in Southeast Asia.

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Speaker 4: But at the end of the day, we're still talking

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Speaker 4: about the same suppliers, and surely because prices are slightly higher,

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Speaker 4: this has left some room for non Chinese manufacturers to

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Speaker 4: also sell into the US market. But those non Chinese

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Speaker 4: manufacturers from South Korea, or from some of the Southeast

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Speaker 4: Asian countries, or even from the US have historically struggled

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Speaker 4: despite the fact that module prices work quite high, just

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Speaker 4: because of how quickly the factories in Southeast Asia were

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Speaker 4: able to improve and lower costs.

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Speaker 2: See what I'm hearing here is that the tariffs are

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Speaker 2: not necessarily working exactly as intended. Maybe they are still

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Speaker 2: accomplishing some of their objectives, but it leads me to

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Speaker 2: this really fundamental question, which is what actually is the

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Speaker 2: point of all of this. If we're using the language

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Speaker 2: of war and this is a trade war, it's like

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Speaker 2: there's this battle being fought over a piece of scrubland

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Speaker 2: that is of no use to anyone, And you could

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Speaker 2: argue it's kind of useful for the for the US

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Speaker 2: to let China just own sol it. Like you know,

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Speaker 2: if it's about electric vehicles, you know, there's the automotive industry.

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Speaker 2: It's such a huge industry globally. I get it why

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Speaker 2: you would want to fight over that and you know,

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Speaker 2: retain those healthy margins. But for all the time I've

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Speaker 2: been at BNAF, our colleague Jenny Chase has always been

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Speaker 2: talking about how nobody makes money manufacturing solar and all

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Speaker 2: these Chinese companies, you know, lose money, and you know,

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Speaker 2: but they still scale up. So surely this is like

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Speaker 2: the worst industry to be fighting over. And in a way,

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Speaker 2: letting Chinese modules into the country is just letting the

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Speaker 2: Chinese government subsidize the US energy transition as opposed to

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Speaker 2: what we have here now, which is the US government

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Speaker 2: is subsidizing Chinese companies. So that's just my a take

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Speaker 2: that I have, and I kind of put it to you,

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Speaker 2: like fight me, like tell me what the point of

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Speaker 2: this is, because this seems like the most pointless battle

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Speaker 2: I can imagine.

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Speaker 4: Well as a long term analyst working under Jenny Chase,

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Speaker 4: obviously her influence has dictated a lot of my takes too,

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Speaker 4: so I'm not going to disagree with her. I'm just

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Speaker 4: gonna lay out some of the arguments in favor.

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Speaker 3: Of those tariffs that I've heard and read.

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Speaker 4: The first one is, it's quite an uncomfortable truth when

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Speaker 4: you think about it, to say to the general public

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Speaker 4: that let's say solar turns to be turns to generate

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Speaker 4: about thirty percent of all electricity in the US by

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Speaker 4: twenty thirty. It's quite an uncomfortable truth to think that

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Speaker 4: most of that thirty percent of annual generation in the

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Speaker 4: US comes from a component made in China. If you

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Speaker 4: think about gas plants, nuclear there are usually some like

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Speaker 4: a strong attachment to a US company owning that plant,

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Speaker 4: operating and plant creating the components. So it's quite uncomfortable

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Speaker 4: for policymakers and guests think about the fact that in

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Speaker 4: a few years from now a lot of our electricity

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Speaker 4: will come from things stuff made in China.

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Speaker 3: So that's one.

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Speaker 4: And then the other argument that I've heard is industrial capacity.

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Speaker 4: So the US, the whole reindustrialization push right now that's

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Speaker 4: taking place in the US not only is trying to

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Speaker 4: compete against China and create jobs in the US, but

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Speaker 4: also it's trying to revitalize the industrial capacity in the

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Speaker 4: US in case there was a war, meaning we can

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Speaker 4: now again build a bunch of airplanes and a bunch

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Speaker 4: of ammunition. The tricky part with this argument is module

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Speaker 4: assembly factories are just a big warehouse where you put

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Speaker 4: a bunch of assembly lines and you put them madge together.

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Speaker 4: So really, I don't know exactly how you would repurpose

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Speaker 4: those factories for some military needs, but it's quite a

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Speaker 4: simple process, so I don't know what the actual values

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Speaker 4: of having all of those assembly lines in the US.

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Speaker 4: The second part is a lot of the investments, a

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Speaker 4: lot of the sole investments and manufacturers have made in

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Speaker 4: the US have come from the same Chinese companies, and

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Speaker 4: some of those Chinese companies are heavily involved with some

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Speaker 4: of the biggest US developers, So some of the biggest

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Speaker 4: US developers rely critically on supply from these manufacturers. So yes,

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Speaker 4: there's exceptions like First Solars, probably the most ambitious US

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Speaker 4: based manufacturer that has very big ambissions in the US

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Speaker 4: and has actually pursued those investments in this scaling up production.

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Speaker 4: But a lot of the big announcements come from companies

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Speaker 4: that are directly or indirectly owned by Chinese firms.

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Speaker 2: I just wanted to follow on while we're on this topic,

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Speaker 2: and I'm going to tell you a very short anecdote,

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Speaker 2: and I'm going to try and keep it brief because

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Speaker 2: what you're saying makes me think of something that happened recently.

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Speaker 2: I went to Charleston, South Carolina, me and my wife.

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Speaker 2: We're from the UK. We're exploring the US men to Charleston,

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Speaker 2: South Carolina. And near Charleston, South Carolina is the North

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Speaker 2: America's only tea farm. And we went on a tour

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Speaker 2: of the tea farm. And the story of that tea

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Speaker 2: farm is it was set up in the sixties by

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Speaker 2: Lipton because they looked there. It was the Cold War

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Speaker 2: and they were looking at global supply chains and they

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Speaker 2: were like, if things go bad, you know, we're not

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Speaker 2: going to have any tea in America, so we need

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Speaker 2: to set up a tea guard and they invested heavily

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Speaker 2: in it. Cold War ended, Lipton was like, Okay, that

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Speaker 2: doesn't matter anymore. They weren't interested, so they sold it

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Speaker 2: to someone who is more of a te enthusiast. So

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Speaker 2: now America has this one little tea garden, this one

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Speaker 2: little tea farm. But the point is is that if

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Speaker 2: supply chain, you know, if there is a global meltdown,

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Speaker 2: America still has a way of getting tea that has

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Speaker 2: something to scale from. So is the end goal here

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Speaker 2: not that we have this super scale US solar industry.

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Speaker 2: But we have something a little bit like the Charleston

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Speaker 2: tea garden, something that is like a seed from which

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Speaker 2: there is a starting point if things go really bad.

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Speaker 2: Is that how you see this? Very I would say

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Speaker 2: aggressive and expensive strategy ultimately is to make the Charleston

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Speaker 2: tea gardens of solar.

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Speaker 3: That's an interesting analogy.

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Speaker 4: And I guess my first question would always be like

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Speaker 4: how much more expensive or how was that t was

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Speaker 4: that tea of better?

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Speaker 3: Was that tea more expensive?

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Speaker 5: It was really nice, award winning I mean, Tom, your

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Speaker 5: country and my country have a long history when it

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Speaker 5: comes to tea in international disputes, and I would say

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Speaker 5: you might be overestimating how much Americans care about tea

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Speaker 5: these days.

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Speaker 2: Well, well, Lypton definitely cared about tea, you know, I

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Speaker 2: certainly did well.

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Speaker 1: But actually, then thinking about so the companies that are

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Speaker 1: actually involved here, I want to think about actually the

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Speaker 1: US solar manufacturers who are playing by the rules and

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Speaker 1: essentially are not circumventing the different trade rules that have

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Speaker 1: been set up. They have started a new petition for

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Speaker 1: some additional tariffs. Can you get into that. I think

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Speaker 1: it's going to be tied very much. Paul by the way,

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Speaker 1: with the title of your recent research note, which is

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Speaker 1: US solar manufacturer's call for more expensive modules.

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Speaker 4: So this is just yet another the solar coaster, as

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Speaker 4: they call it here in the US, just becoming more

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Speaker 4: and more complicated. So I hope I can explain this

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Speaker 4: in simple terms, because it's even confusing for those of

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Speaker 4: us who do this for a living and look at those.

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Speaker 3: Terrafts full time.

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Speaker 4: So what happened is there's a new set of tariffs

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Speaker 4: that were already approved that are like the circumvention tariffs

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Speaker 4: that you mentioned, that will come into effect in June

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Speaker 4: of twenty twenty four. What happened because of this deadline

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Speaker 4: that was set by the Department of Commerce and then

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Speaker 4: extended by two years by the Biden administration. What happened

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Speaker 4: is a lot of the factories in Southeast Asia many more, honestly,

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Speaker 4: a lot of factories just came out of nowhere, A

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Speaker 4: lot of supply pretty much came out of nowhere and

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Speaker 4: just started shipping modules to the US that we're going

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Speaker 4: to be subject to this new tariffs that we know

401
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Speaker 4: are coming next month. So what happened is there was

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Speaker 4: a supply clood in the US as these manufacturers were

403
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Speaker 4: trying to get rid of their product that was going

404
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Speaker 4: to be essentially obsolete once the tariffs kicked in. So

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Speaker 4: obviously the dynamics despite of quite a fast growing market

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Speaker 4: in the US and the US solar market has been

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Speaker 4: growing quite quite rapidly, but supply has supplied the past

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Speaker 4: twelve eighteen months has far exceeded installations. So this imbalance

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Speaker 4: essentially sent prices plummeting to as low as ten twelve

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Speaker 4: fifteen cents awad for very for small budget batches of

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Speaker 4: old product that these manufacturers trying to get rid of

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Speaker 4: and that was going to be soon obsolete because of

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Speaker 4: the tariffs. So that really posts serious difficulties to some

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Speaker 4: of the existing manufacturers in the US that already have

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Speaker 4: production and I already trying to sell into the US market,

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Speaker 4: because now suddenly that we're competing against modules that cost

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Speaker 4: ten to fifteen twenty twenty five cents down from about

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Speaker 4: forty or more than forty cents.

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Speaker 3: Just over a year ago.

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Speaker 4: So that essentially put a lot of pressure on the

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Speaker 4: financials of these like the few manufacturers in the US

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Speaker 4: that are actually producing and selling modules. So now these manufacturers,

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Speaker 4: which include Handwok q sales and for Solar have asked

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Speaker 4: the Commerce Department to impose yet another set of terrors.

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Speaker 4: These ones dedicated to some to the four Southeast Asian

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Speaker 4: countries that sent about seventy five to eighty percent of

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Speaker 4: the modules that the US uses to impose new anti

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Speaker 4: dumping and kindavailing duties on these countries because they're arguing

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Speaker 4: that they're selling modules at a loss essentially in the

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Speaker 4: US and that's really making them struggle financially.

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Speaker 1: Now I foreshadowed this at the beginning India. We essentially

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Speaker 1: are talking about three different solar markets. So you've got

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Speaker 1: the US, You've got India, and then you've got everywhere else,

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Speaker 1: which essentially is well the Chinese market. Can you talk

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Speaker 1: about India and how it may be is the same

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Speaker 1: or different from what's happening in the US.

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Speaker 4: Yeah, India has been quite an interesting benefactor of the

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Speaker 4: different set of US tariffs. So India is probably the

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Speaker 4: only country outside of the US that also has a

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Speaker 4: let's call it mildly prohibitive amount of tariffs on Chinese

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Speaker 4: solar components. So what happened is because of the high

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00:23:09,240 --> 00:23:12,440
Speaker 4: prices in the US, a lot of those Indian manufacturers.

443
00:23:12,480 --> 00:23:14,840
Speaker 4: A lot of the Indian module assembly factories that have

444
00:23:15,000 --> 00:23:18,399
Speaker 4: a higher production structure than in China were able to

445
00:23:18,440 --> 00:23:21,520
Speaker 4: sell to the US AD quite a good profit, and

446
00:23:21,920 --> 00:23:24,520
Speaker 4: not only because of the tariffs, but also because the

447
00:23:24,680 --> 00:23:29,320
Speaker 4: US has essentially banned polasilicon. The key silicon input to

448
00:23:29,359 --> 00:23:33,120
Speaker 4: make solar silicon panels from the Chinese region are Sunxiang.

449
00:23:33,280 --> 00:23:36,800
Speaker 4: A lot of the border agents in the US started

450
00:23:37,240 --> 00:23:43,240
Speaker 4: very carefully reviewing and detaining modules from Southeast Asia that

451
00:23:43,600 --> 00:23:46,399
Speaker 4: had essentially a stamp on them saying those modules were

452
00:23:46,400 --> 00:23:49,399
Speaker 4: made by a big Chinese manufacturer. So what happened during

453
00:23:49,440 --> 00:23:52,240
Speaker 4: that time where porter agents were detaining a lot of

454
00:23:52,280 --> 00:23:55,680
Speaker 4: these modules from Chinese companies is the Indian manufacturers were

455
00:23:55,720 --> 00:23:59,720
Speaker 4: able to appeal to module buyers in the US because

456
00:23:59,760 --> 00:24:02,760
Speaker 4: the risk just because of the nature of the origin,

457
00:24:03,200 --> 00:24:05,880
Speaker 4: because it's like quote unquote an Indian module, but essentially

458
00:24:05,920 --> 00:24:09,199
Speaker 4: just meant it's an Indian assembled module. A lot of

459
00:24:09,200 --> 00:24:12,640
Speaker 4: the US module buyers were really interested in buying from

460
00:24:12,640 --> 00:24:16,159
Speaker 4: these Indian manufacturers because the risk of getting detained at

461
00:24:16,160 --> 00:24:19,520
Speaker 4: the border was much much smaller just for the nature

462
00:24:19,720 --> 00:24:23,000
Speaker 4: of those modules coming from India. So Indian manufacturers were

463
00:24:23,000 --> 00:24:25,600
Speaker 4: able to sell modules at really high prices in the

464
00:24:25,720 --> 00:24:29,440
Speaker 4: US because the US module buyers were willing to pay

465
00:24:29,480 --> 00:24:31,560
Speaker 4: that price in order to make sure that the modules

466
00:24:31,600 --> 00:24:35,399
Speaker 4: get delivered on time. However, with the new set of

467
00:24:35,480 --> 00:24:40,720
Speaker 4: tariffs that have been petitioned now, Indian module assembly factories

468
00:24:40,920 --> 00:24:45,120
Speaker 4: that buy most of their cells from Southeast Asia would

469
00:24:45,200 --> 00:24:49,520
Speaker 4: also be affected by the new duties because essentially those

470
00:24:49,600 --> 00:24:52,240
Speaker 4: duties are at the cell level, the cell that is

471
00:24:52,280 --> 00:24:55,639
Speaker 4: being made in Southeast Asia. But there's a few Indian

472
00:24:55,680 --> 00:25:00,240
Speaker 4: manufacturers that are quite ambitious, like Ware or Adani, and

473
00:25:00,280 --> 00:25:03,600
Speaker 4: they're also trying to make cells and modules in India

474
00:25:03,600 --> 00:25:07,399
Speaker 4: and they have quite aggressive capacity expansion plans. And those

475
00:25:07,880 --> 00:25:11,640
Speaker 4: manufacturers would really benefit if these new tariffs get approved

476
00:25:11,760 --> 00:25:14,000
Speaker 4: because they would be able to sell to the US

477
00:25:14,440 --> 00:25:18,240
Speaker 4: terror free at quite a high price and make quite

478
00:25:18,440 --> 00:25:19,440
Speaker 4: decent margins.

479
00:25:20,480 --> 00:25:22,760
Speaker 2: And just to add a little bit more context to that,

480
00:25:22,840 --> 00:25:27,200
Speaker 2: because obviously there's this US opportunity for Indian solar companies.

481
00:25:27,400 --> 00:25:30,159
Speaker 2: How big is the Indian solar market itself? So for

482
00:25:30,240 --> 00:25:33,399
Speaker 2: these Indian companies that now have an opportunity to scale

483
00:25:33,680 --> 00:25:35,840
Speaker 2: and they can see an opportunity in the US, how

484
00:25:35,840 --> 00:25:39,000
Speaker 2: big is that opportunity compared to the domestic opportunity that

485
00:25:39,119 --> 00:25:41,880
Speaker 2: obviously has been sort of ring fenced for them by

486
00:25:41,880 --> 00:25:43,040
Speaker 2: the tariffs in India.

487
00:25:43,200 --> 00:25:45,960
Speaker 4: Yeah, I don't have the India solar deployment numbers of

488
00:25:46,040 --> 00:25:48,960
Speaker 4: the top of my head, but there is a concise

489
00:25:49,080 --> 00:25:51,680
Speaker 4: plan by the government and some of these manufacturers to

490
00:25:51,720 --> 00:25:54,879
Speaker 4: supply most of their domestic demand, and some of the

491
00:25:54,880 --> 00:25:57,600
Speaker 4: tariffs that they have on Chinese solar modules and sales

492
00:25:57,640 --> 00:26:00,280
Speaker 4: are quite high and trying to prevent that. But what

493
00:26:00,359 --> 00:26:02,240
Speaker 4: we've seen, what I can say is what we've seen

494
00:26:02,240 --> 00:26:04,560
Speaker 4: over the past couple of years is that the US

495
00:26:04,640 --> 00:26:09,159
Speaker 4: opportunity was more lucrative than the domestic opportunity. So as

496
00:26:09,240 --> 00:26:12,160
Speaker 4: much as they could, some of these Indian manufacturers would

497
00:26:12,200 --> 00:26:14,720
Speaker 4: try to sell to the US because they could sell

498
00:26:14,720 --> 00:26:17,399
Speaker 4: at much higher prices and make more money than just

499
00:26:17,440 --> 00:26:19,280
Speaker 4: selling to local customers.

500
00:26:19,760 --> 00:26:22,640
Speaker 1: The story of solar has been very much defined by

501
00:26:22,760 --> 00:26:26,240
Speaker 1: falling prices, and they've never been lower than they are

502
00:26:26,320 --> 00:26:28,600
Speaker 1: now for other parts of the world. So when it

503
00:26:28,640 --> 00:26:32,520
Speaker 1: comes to these three x more expensive modules in the US,

504
00:26:32,720 --> 00:26:36,040
Speaker 1: what does the future hold for them in terms of prices?

505
00:26:36,119 --> 00:26:37,920
Speaker 1: Is it going to get worse before it gets better

506
00:26:38,200 --> 00:26:40,600
Speaker 1: or are those prices going to start to come down

507
00:26:40,640 --> 00:26:41,440
Speaker 1: over time as well?

508
00:26:41,920 --> 00:26:44,600
Speaker 4: Yeah, Well, our analysis show that if the new set

509
00:26:44,600 --> 00:26:48,560
Speaker 4: of tariffs now are approved, module prices in the US

510
00:26:48,600 --> 00:26:51,480
Speaker 4: will be sustainably high, so around the thirty cent of

511
00:26:51,560 --> 00:26:56,800
Speaker 4: what mark versus prices and free markets just plummeting to

512
00:26:56,880 --> 00:26:59,720
Speaker 4: closer to ten cents a lot, so we'd still see

513
00:26:59,760 --> 00:27:03,280
Speaker 4: that big, big, big gap between what you pay in

514
00:27:03,280 --> 00:27:04,960
Speaker 4: the US versus what you pay in the rest of

515
00:27:05,000 --> 00:27:10,320
Speaker 4: the world. There is some encouraging signs from production in

516
00:27:10,680 --> 00:27:16,040
Speaker 4: Southeast Asia getting cheaper and inputs becoming cheaper, namely polosilicon,

517
00:27:16,359 --> 00:27:19,400
Speaker 4: and that could have set some of that tariff impact

518
00:27:19,640 --> 00:27:23,840
Speaker 4: on prices. But if these new set of tariffs pass,

519
00:27:24,080 --> 00:27:29,040
Speaker 4: we think this is going to essentially make modules consistently

520
00:27:29,119 --> 00:27:31,880
Speaker 4: high in the US compared with the rest of the world,

521
00:27:31,920 --> 00:27:34,640
Speaker 4: where we expect modules to fall eventually to about seven

522
00:27:34,720 --> 00:27:37,160
Speaker 4: cents awat by the end of the decade. I don't

523
00:27:37,200 --> 00:27:39,359
Speaker 4: know if I would call it a missed opportunity, but

524
00:27:39,680 --> 00:27:44,680
Speaker 4: before these new duties were petitioned, we were expecting module

525
00:27:44,720 --> 00:27:48,120
Speaker 4: prices in the US to finally fall quite precipitously as

526
00:27:48,119 --> 00:27:51,600
Speaker 4: production costs in Southeast Asia were falling quite rapidly, and

527
00:27:51,680 --> 00:27:55,080
Speaker 4: those benefits were starting to materialize in the economics of

528
00:27:55,359 --> 00:27:58,879
Speaker 4: solar projects and power purchase agreement prices. And now this

529
00:27:59,040 --> 00:28:01,840
Speaker 4: just came at a blow, so essentially like the US.

530
00:28:01,920 --> 00:28:05,199
Speaker 4: Like the US, some of the US developers started to

531
00:28:05,800 --> 00:28:08,199
Speaker 4: feel what it is to see that the prices of

532
00:28:08,240 --> 00:28:11,240
Speaker 4: modules falling, but just for a few seconds before the

533
00:28:11,320 --> 00:28:14,560
Speaker 4: new set of duties word petitioned. So, I guess if

534
00:28:14,560 --> 00:28:18,360
Speaker 4: you learned something, it's it's just hard to be optimistic

535
00:28:18,400 --> 00:28:21,399
Speaker 4: about paying little for mordules despite what you what you

536
00:28:21,440 --> 00:28:24,280
Speaker 4: see somewhere in their horizon is like, is there a

537
00:28:24,280 --> 00:28:26,959
Speaker 4: new duty that will come online? So I guess US

538
00:28:27,040 --> 00:28:29,320
Speaker 4: developers cannot date dream about low prices.

539
00:28:29,640 --> 00:28:32,480
Speaker 2: So you are the lead author of our Clean US

540
00:28:32,560 --> 00:28:35,560
Speaker 2: Clean Energy Market Outlook, where we have our sort of

541
00:28:35,600 --> 00:28:39,040
Speaker 2: medium term forecast of wind and solar, and we published

542
00:28:39,040 --> 00:28:41,400
Speaker 2: an update that to that this month. With all of

543
00:28:41,440 --> 00:28:44,640
Speaker 2: these developments, did we see it? And with everything you've

544
00:28:44,680 --> 00:28:47,640
Speaker 2: just said, did we see a reduction in our forecast

545
00:28:47,880 --> 00:28:50,920
Speaker 2: for US solar build out in the next few years.

546
00:28:51,120 --> 00:28:54,920
Speaker 4: We haven't fully incorporated the effect of the new duties

547
00:28:55,040 --> 00:28:58,000
Speaker 4: just because they have not been approved and technically, as

548
00:28:58,000 --> 00:29:02,000
Speaker 4: a rule, we don't assume anything forecast that isn't official yet.

549
00:29:02,320 --> 00:29:06,080
Speaker 4: Right now, what we assumed is still that the price

550
00:29:06,120 --> 00:29:09,720
Speaker 4: decline that we were expecting before the new duties were petitioned,

551
00:29:09,800 --> 00:29:12,520
Speaker 4: and I guess we would revise our numbers and do

552
00:29:12,640 --> 00:29:15,520
Speaker 4: our analysis if the new tears get petitioned, and critically,

553
00:29:15,560 --> 00:29:17,800
Speaker 4: when we know how high those tears will be, which

554
00:29:18,080 --> 00:29:20,560
Speaker 4: right now we don't know. We think it's going to

555
00:29:20,600 --> 00:29:24,520
Speaker 4: be somewhere in the range of fifteen to fifty percent

556
00:29:24,600 --> 00:29:27,640
Speaker 4: one five to five zero, but it's like no one knows,

557
00:29:27,720 --> 00:29:31,280
Speaker 4: and whoever tries to guess it is probably going to.

558
00:29:31,160 --> 00:29:33,360
Speaker 3: Be wrong, so we're not even going to try.

559
00:29:33,720 --> 00:29:37,880
Speaker 4: The truth is that the US market has grown quite

560
00:29:37,960 --> 00:29:42,240
Speaker 4: rapidly because of the dynamics that we the dynamics between

561
00:29:42,280 --> 00:29:44,800
Speaker 4: high prices and subsidies that we talked at the beginning.

562
00:29:45,000 --> 00:29:48,320
Speaker 4: If module prices remain in the thirty cent per wad range,

563
00:29:48,560 --> 00:29:51,400
Speaker 4: that's not a deal breaker for the US solar market,

564
00:29:51,880 --> 00:29:55,240
Speaker 4: and developers are still going to continue to build projects.

565
00:29:55,280 --> 00:29:58,280
Speaker 4: And the issues really to grow those solar deployment numbers

566
00:29:58,320 --> 00:30:02,240
Speaker 4: are not really input costs. There the bottlenecks to connect

567
00:30:02,280 --> 00:30:05,680
Speaker 4: those projects to the correct. So there's plenty of people

568
00:30:05,800 --> 00:30:08,800
Speaker 4: out there trying to build solar projects irrespective of what

569
00:30:08,840 --> 00:30:12,680
Speaker 4: those module prices are. Surely those marginle prices now skyrocket

570
00:30:12,800 --> 00:30:15,280
Speaker 4: to forty five cents award or the fifty cents award

571
00:30:15,320 --> 00:30:17,920
Speaker 4: because their tariffs are of two hundred and fifty percent,

572
00:30:18,120 --> 00:30:19,880
Speaker 4: and no one's going to buy modules. No one's going

573
00:30:19,920 --> 00:30:23,640
Speaker 4: to sell modules to the US, and certainly deployments are

574
00:30:23,680 --> 00:30:25,920
Speaker 4: going to be affected. But if mogules remain in that

575
00:30:25,960 --> 00:30:29,080
Speaker 4: thirty cents of ward range, which is more or less

576
00:30:29,160 --> 00:30:32,560
Speaker 4: what could happen in that fifteen to fifty percent range

577
00:30:32,560 --> 00:30:35,720
Speaker 4: that I was referring to, then developers will continue with

578
00:30:35,760 --> 00:30:38,680
Speaker 4: their plans and we're going to pretend nothing happened.

579
00:30:38,520 --> 00:30:38,840
Speaker 3: Got it.

580
00:30:38,880 --> 00:30:43,000
Speaker 2: So what I'm hearing from you is that these tariffs

581
00:30:43,120 --> 00:30:47,120
Speaker 2: affect supply chains more than they do the market itself

582
00:30:47,320 --> 00:30:51,160
Speaker 2: because there are other challenges in the market that are predominant.

583
00:30:51,360 --> 00:30:51,800
Speaker 3: Correct.

584
00:30:52,200 --> 00:30:55,280
Speaker 2: So Paul Dana mentioned the way she framed it was

585
00:30:55,320 --> 00:30:58,760
Speaker 2: quite nice, is that the global solar market is the US,

586
00:30:58,960 --> 00:31:03,400
Speaker 2: India and then everyone else, and China very much is

587
00:31:03,520 --> 00:31:08,280
Speaker 2: the almost exclusive supplier to everyone else. So how big

588
00:31:08,320 --> 00:31:12,520
Speaker 2: a deal is it? For the Chinese solar industry that

589
00:31:12,720 --> 00:31:16,200
Speaker 2: there are these defensive moves keeping them out or at

590
00:31:16,280 --> 00:31:20,440
Speaker 2: least creating hurdles to getting to the US market. Does

591
00:31:20,520 --> 00:31:21,360
Speaker 2: it hurt at all?

592
00:31:22,080 --> 00:31:25,600
Speaker 4: The amount of coverage that the US Trade Drama and

593
00:31:25,640 --> 00:31:28,800
Speaker 4: tear of Drama gets is slightly out of proportion to

594
00:31:28,800 --> 00:31:31,120
Speaker 4: the size of the US solar market compared with the

595
00:31:31,120 --> 00:31:33,120
Speaker 4: rest of the world. The size of the US solar

596
00:31:33,160 --> 00:31:37,719
Speaker 4: market is probably about right now fifteen percent of global

597
00:31:37,720 --> 00:31:42,680
Speaker 4: annual solar demand. China alone builds over half of the

598
00:31:42,720 --> 00:31:46,000
Speaker 4: solar projects every year at this point, so in terms

599
00:31:46,000 --> 00:31:48,720
Speaker 4: of size, the US is not really that big of

600
00:31:48,760 --> 00:31:52,520
Speaker 4: a market. Some of these big Chinese manufacturers typically sell

601
00:31:52,600 --> 00:31:57,080
Speaker 4: between five to ten gigawatts of modules to the US

602
00:31:57,160 --> 00:32:00,080
Speaker 4: every year. Now they're ramping up and they have some

603
00:32:00,120 --> 00:32:02,200
Speaker 4: of them have more ambitious targets, which is a slight

604
00:32:02,280 --> 00:32:05,800
Speaker 4: proportion of like the tens or even hundreds of gig

605
00:32:05,840 --> 00:32:08,720
Speaker 4: what's worth of sales and modules that they produce every year.

606
00:32:08,960 --> 00:32:10,520
Speaker 3: However, it's so overblown.

607
00:32:10,560 --> 00:32:13,960
Speaker 4: It's such a big deal because, as Geny Chase likes

608
00:32:13,960 --> 00:32:17,680
Speaker 4: to say, no one makes money in making solar panels

609
00:32:17,800 --> 00:32:20,960
Speaker 4: and solar components. However, the US has been the long

610
00:32:21,120 --> 00:32:24,480
Speaker 4: lasting exception to that where manufacturers are able to make

611
00:32:24,520 --> 00:32:28,040
Speaker 4: margins that are above twenty percent thirty percent in some cases.

612
00:32:28,200 --> 00:32:31,760
Speaker 4: So it's really the only lucrative market for most of

613
00:32:31,760 --> 00:32:34,360
Speaker 4: these manufacturers or all of these manufacturers to sell into,

614
00:32:34,520 --> 00:32:38,080
Speaker 4: which is why they are so heavily involved and invested

615
00:32:38,200 --> 00:32:41,200
Speaker 4: in the US market and have been able and have

616
00:32:41,360 --> 00:32:45,680
Speaker 4: essentially agreed to pursue all of these topics intensive investments

617
00:32:45,720 --> 00:32:48,080
Speaker 4: outside of China in order to be able to earn

618
00:32:48,120 --> 00:32:49,000
Speaker 4: those high margins.

619
00:32:49,520 --> 00:32:51,520
Speaker 2: It's really funny. It reminds me of like one of

620
00:32:51,560 --> 00:32:56,080
Speaker 2: those Sci Fi opponents. So if the Chinese solar manufacturers

621
00:32:56,120 --> 00:32:59,120
Speaker 2: are like who the US is trying to battle, it's

622
00:32:59,160 --> 00:33:01,360
Speaker 2: like whatever you throw at them, they kind of make

623
00:33:01,440 --> 00:33:04,200
Speaker 2: them even stronger. So you try and put these tariffs

624
00:33:04,200 --> 00:33:07,720
Speaker 2: in place, and these companies that weren't making money anywhere

625
00:33:08,000 --> 00:33:11,440
Speaker 2: suddenly have an opportunity to profit. Another thing that is

626
00:33:12,080 --> 00:33:13,760
Speaker 2: a big deal thing of this is you know we

627
00:33:13,760 --> 00:33:17,320
Speaker 2: can analyze, oh this helps or this doesn't help, or

628
00:33:17,480 --> 00:33:20,440
Speaker 2: you know this is effective or it isn't effective, and

629
00:33:20,520 --> 00:33:22,240
Speaker 2: you know, we can be wrong or we can be right.

630
00:33:22,360 --> 00:33:25,360
Speaker 2: But one thing is for sure is that all of

631
00:33:25,400 --> 00:33:29,200
Speaker 2: this creates uncertainty, and one of the big uncertainties potentially

632
00:33:30,040 --> 00:33:33,280
Speaker 2: is this idea that there might be retroactive tariffs. So

633
00:33:33,320 --> 00:33:35,720
Speaker 2: how does that affect the market, and how does it

634
00:33:35,760 --> 00:33:39,240
Speaker 2: affect adjacent industries like you know, our producer can was

635
00:33:39,280 --> 00:33:43,320
Speaker 2: mentioning Dak that might want to benefit from from solar installations.

636
00:33:43,680 --> 00:33:47,760
Speaker 2: Is that the real challenge here. It sounds like everyone involved,

637
00:33:47,800 --> 00:33:50,640
Speaker 2: both in the US and in China can adapt to

638
00:33:50,720 --> 00:33:54,000
Speaker 2: whatever happens, but they can't adapt to not knowing what

639
00:33:54,160 --> 00:33:54,880
Speaker 2: is going to happen.

640
00:33:55,280 --> 00:34:00,000
Speaker 4: I would just slightly clarify and say, rather than retroactive tariffs,

641
00:34:00,040 --> 00:34:02,120
Speaker 4: which makes it sound like there's another set of tariffs

642
00:34:02,120 --> 00:34:04,080
Speaker 4: from the ones that we're talking about, I would rather

643
00:34:04,120 --> 00:34:08,960
Speaker 4: say these tariffs have potential to be retroactive too. And

644
00:34:09,000 --> 00:34:12,520
Speaker 4: that certainly is the biggest uncertainty when it comes to

645
00:34:12,880 --> 00:34:16,759
Speaker 4: understanding how to price in the potential of tariffs into

646
00:34:17,000 --> 00:34:19,919
Speaker 4: negotiations when you try to buy or sell modules. And

647
00:34:20,320 --> 00:34:23,719
Speaker 4: the risk was quite acute at the beginning of the

648
00:34:23,760 --> 00:34:27,719
Speaker 4: tariff petition that was implemented in twenty twenty two, and

649
00:34:27,719 --> 00:34:29,439
Speaker 4: it's going to come into effect now in June twenty

650
00:34:29,480 --> 00:34:29,960
Speaker 4: twenty four.

651
00:34:30,200 --> 00:34:30,800
Speaker 3: But Biden.

652
00:34:30,920 --> 00:34:34,160
Speaker 4: Essentially, the White House and the Biden's administration gave the

653
00:34:34,200 --> 00:34:38,080
Speaker 4: guarantee to developers that they could buy modules tear free

654
00:34:38,360 --> 00:34:41,440
Speaker 4: until June twenty twenty four and install those panels by

655
00:34:41,440 --> 00:34:45,200
Speaker 4: December twenty twenty four. However, now we know there's potential

656
00:34:45,320 --> 00:34:47,640
Speaker 4: for some of those for the new duties have approved

657
00:34:47,680 --> 00:34:50,480
Speaker 4: to be retroactive. We just don't know for sure how

658
00:34:50,560 --> 00:34:53,400
Speaker 4: far back those tariffs are going to go. So that

659
00:34:53,600 --> 00:34:56,719
Speaker 4: certainly creates a lot of uncertainty because now you not

660
00:34:56,800 --> 00:34:59,960
Speaker 4: only do you have to make guesses or estimate how

661
00:35:00,080 --> 00:35:03,280
Speaker 4: how those tarffs could be, you also have to estimate

662
00:35:03,680 --> 00:35:07,320
Speaker 4: when those tariffs actually will apply and if those tears

663
00:35:07,320 --> 00:35:10,359
Speaker 4: will apply to modules that have already bought or mean as.

664
00:35:10,239 --> 00:35:12,680
Speaker 3: A supplier that I've already shipped to the US.

665
00:35:12,840 --> 00:35:15,680
Speaker 4: So that's creating a lot of uncertainty and how negotiations

666
00:35:15,680 --> 00:35:19,520
Speaker 4: for twenty twenty five module deliveries are happening. Generally, what

667
00:35:19,640 --> 00:35:23,240
Speaker 4: happens quite simply is that suppliers have to raise prices

668
00:35:23,480 --> 00:35:28,239
Speaker 4: and whatever that premium is that they agree on with

669
00:35:28,360 --> 00:35:31,320
Speaker 4: the buyer as to like, how do we price in

670
00:35:31,440 --> 00:35:33,320
Speaker 4: this tear risk? Is that a five cents for what

671
00:35:33,560 --> 00:35:35,560
Speaker 4: premium is that a ten cents a WAT premium? Is

672
00:35:35,560 --> 00:35:38,200
Speaker 4: that what two cents of WAT premium? I guess relies

673
00:35:38,280 --> 00:35:42,040
Speaker 4: on how those individual negotiations go. But as you know,

674
00:35:42,040 --> 00:35:43,800
Speaker 4: I'm sure you can imagine if you're at the table

675
00:35:43,840 --> 00:35:46,719
Speaker 4: trying to figure these things out when actually signing a

676
00:35:46,760 --> 00:35:49,000
Speaker 4: document and for something that you're going to pay a

677
00:35:49,000 --> 00:35:53,160
Speaker 4: lot of money for, then it makes it highly stressful

678
00:35:53,280 --> 00:35:54,319
Speaker 4: and complicated.

679
00:35:55,000 --> 00:35:56,839
Speaker 3: And this shouldn't be that complicated.

680
00:35:56,960 --> 00:35:59,880
Speaker 4: You just buy a component, install on the ground or

681
00:36:00,120 --> 00:36:03,400
Speaker 4: a roof, and now you're creating all of this uncertainty

682
00:36:03,440 --> 00:36:07,239
Speaker 4: around that transaction that makes the whole process much more

683
00:36:07,239 --> 00:36:09,480
Speaker 4: complicated and more expensive because you're going to start to

684
00:36:09,680 --> 00:36:13,640
Speaker 4: suddenly involve lawyers or advisors or accountants to buy a

685
00:36:13,719 --> 00:36:17,719
Speaker 4: component that should be quite straightforward. Imagine now you had

686
00:36:17,760 --> 00:36:20,239
Speaker 4: to always hire a CPA or an accountant to buy

687
00:36:20,280 --> 00:36:22,920
Speaker 4: a new fridge because you don't know if maybe like

688
00:36:23,239 --> 00:36:25,719
Speaker 4: that Siemens or GE is going to charge you like

689
00:36:25,719 --> 00:36:28,600
Speaker 4: twenty percent more or twenty five percent more, and it's

690
00:36:28,640 --> 00:36:30,600
Speaker 4: worth for you to pay like a five thousand dollars

691
00:36:30,760 --> 00:36:32,719
Speaker 4: or like one thousand dollars to an accountant around the

692
00:36:32,760 --> 00:36:34,799
Speaker 4: block to tell you, actually you should tell them to

693
00:36:34,880 --> 00:36:37,120
Speaker 4: charge you only five percent more because the terror risk

694
00:36:37,239 --> 00:36:39,279
Speaker 4: is not as high as they as they're trying to

695
00:36:39,320 --> 00:36:39,840
Speaker 4: convince you.

696
00:36:40,160 --> 00:36:43,800
Speaker 2: So it's it's the complexity it brings that is maybe

697
00:36:43,840 --> 00:36:44,440
Speaker 2: the challenge.

698
00:36:44,719 --> 00:36:49,320
Speaker 1: Correct Solar is certainly an important element of the energy

699
00:36:49,360 --> 00:36:53,640
Speaker 1: transition and creating this renewable energy and an electrified part

700
00:36:53,680 --> 00:36:56,239
Speaker 1: of the energy economy. So I certainly hope that the

701
00:36:56,320 --> 00:36:57,880
Speaker 1: US will be able to figure out a way to

702
00:36:57,960 --> 00:37:01,319
Speaker 1: make this economic and we will see what the future holds. Paul,

703
00:37:01,360 --> 00:37:03,600
Speaker 1: thank you very much for joining today and sharing your views.

704
00:37:03,600 --> 00:37:05,960
Speaker 1: And Tom, it's been great having a co host, so

705
00:37:06,080 --> 00:37:08,799
Speaker 1: I look forward to hopefully you joining me back here

706
00:37:08,880 --> 00:37:21,120
Speaker 1: again sometime soon. Today's episode of Switched On was produced

707
00:37:21,160 --> 00:37:25,160
Speaker 1: by Cam Gray with production assistance from Kamala Shelling. Bloomberg

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00:37:25,280 --> 00:37:28,120
Speaker 1: NIF is a service provided by Bloomberg Finance LP and

709
00:37:28,160 --> 00:37:31,160
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710
00:37:31,160 --> 00:37:35,080
Speaker 1: be construed as investment advice, investment recommendations, or a recommendation

711
00:37:35,239 --> 00:37:38,240
Speaker 1: as to an investment or other strategy. Bloomberg ANIF should

712
00:37:38,239 --> 00:37:41,280
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00:37:41,320 --> 00:37:44,480
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00:37:44,480 --> 00:37:47,719
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00:37:47,760 --> 00:37:51,080
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00:37:51,160 --> 00:37:53,719
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00:37:53,760 --> 00:37:54,880
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