Standard Solar CEO says Auxin tariff threat may accelerate project M&A

With the threat of major tariffs on Chinese solar panels, developers across the board are finding panel sourcing and pricing difficult to parse. And while Standard Solar has not been immune for this, CEO Scott Wiater says we could see a boom market for project-level M&A come out of this.

In an interview with NPM, Wiater said like many other US developers, Standard Solar is being forced to pay premiums for solar panels due to “tariff risk” being imposed by suppliers. However, a lower supply of panels overall has resulted in developers like Standard Solar having to move quickly to purchase panels now or get left behind.

“You’ve got about three days between getting a quote, putting in a deposit, and executing on a purchase order, or those panels are gone,” Wiater said. “So, we’re moving very quickly on opportunities.”

Wiater says Standard Solar is benefitted by its in-house engineering apartment that can quickly factor in project design changes, allowing them to be “flexible on which panels we use.” As a result, Wiater says Standard Solar has managed to fill out its panel quota for the remainder of the year for its expected 100 MW pipeline. Additionally, he says the C&I market is in the best position to weather the tariff issue since its smaller scope makes it less sensitive to price variations.

Whether the tariffs are imposed, Wiater says he does expect the current situation to persist to next year but says that impact could go in a number of different directions. Wiater is realistically considering a scenario where the Auxin tariffs do get imposed, which he says would result in these higher development costs becoming permanent. In fact, he says they may be permanent already.

“Unfortunately, in this industry these types of events tend to walk up pricing and it’s very hard to walk them back down without an oversupply situation,” Wiater said. “Manufacturers use these disruption periods to walk up their prices.”

In this scenario, Wiater says PPA prices will continue to balloon, which will ultimately result in higher costs for the power consumer.

“The end user will feel the biggest impact because we’re going to push it down to them in some form or fashion,” Wiater said.

On the other hand, Wiater says if the tariffs are not imposed, it “could result in an oversupply situation where prices come down dramatically because people are still hungry for projects.” However, he says for this to happen, a lot of projects would need to get abandoned or shelved in the short-term, something he says he is seeing across the market.

“We’re not doing it, but we’re hearing about a lot of projects where people are pushing the pause button or even trying to sell them or otherwise get out of them any way they can,” Wiater said.

This exodus is leading to a boom in the project-level M&A market, which Standard Solar has already been heavily involved in this year even before the threat of the Auxin tariffs was realized. The firm acquired four projects in January and February, and Wiater says we can expect additional acquisitions over the next year.

“I think this will create a lot of M&A opportunity, but we’re selective on what we acquire,” Wiater said. “If all the value has been sucked out, we are not interested; we look for projects where we can add some value. We prefer to be involved in the project early so we can influence the projects.”

In the midst of all of this, Wiater says Standard Solar is still trying to work through the many project hurdles highlighted last year like filled interconnection queues and community solar programs. He says Standard Solar’s strategy has been to build up their pipeline so they can “pull another project off the shelf” in the event one gets delayed.

As development in the Northeast, where most of Standard Solar’s activity has been traditionally focused, has been the most difficult as of late, Wiater says he is now looking at states like Ohio and New Mexico as potential next frontiers, though he says even they have their issues. Ohio has yet to implement a program and while New Mexico’s is off the ground, the state’s lack of offtakers creates a different challenge.

“New Mexico’s program looks good, but the problem there is a lack of high quality offtakers, which makes matching offtakers with solar a challenge” Wiater said.

Wiater says he is also still hopeful about the launch of a program in Pennsylvania, though he admits he has been waiting on that for over three years now.

“We are spending a lot of effort trying to influence policy in Pennsylvania, so we are hopeful that will finally materialize this year or next,” Wiater said.

*This story was originally published exclusively for NPM subscribers last month.


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