Solar Industry Braces for Potential Trump 2024 Win

TL/DR –

Despite the Republican party’s threats to cut the Inflation Reduction Act (IRA), solar industry CEOs are confident that clean energy investments will continue to receive government support. The IRA, which supports clean electricity generation and storage, has been a major boon for the solar industry, with the largest panel manufacturer in the U.S., First Solar, expecting to receive about $1 billion in tax credits this year. However, there are concerns that a Republican election victory in 2024 could result in the repeal of the IRA to fund tax cuts and address the deficit, though analysts believe the chances of this happening are low.

Solar Industry CEOs Expect Continued Support despite GOP Threats

Solar industry executives anticipate the continued backing of clean energy investments from the government, regardless of who wins the 2024 election. This comes despite Republican intentions to dismantle key parts of the Inflation Reduction Act (IRA). The IRA, praised by the Biden administration as the largest investment in clean energy in U.S. history, aims to facilitate the transition from fossil fuels to renewable energy sources while creating manufacturing jobs. However, the GOP has signaled plans to repeal the clean energy tax credits part of the legislation.

IRA and Clean Energy Investments

The IRA tax credits supporting clean electricity generation and storage, such as wind and solar power, are likely to cost about $200 billion through 2031. One of the significant beneficiaries of these credits is the solar industry. For instance, First Solar, the largest panel manufacturer in the U.S., forecasts receiving approximately $1 billion in tax credits this year for its domestic production. The company’s CEO, Mark Widmar, has expressed confidence that Republicans will not undermine domestic manufacturing, despite their potential intent to repeal some provisions of the IRA.

Solar Industry and Job Creation

First Solar, based in Arizona, operates three factories in Ohio and has plans to open two more in Louisiana and Alabama in the next two years. The company released an economic impact study estimating that its 2023 operations directly and indirectly support more than 16,000 jobs, projected to increase to 30,000 by 2026.

Influence of the IRA

Clean energy investments have surged since the implementation of the IRA in 2022. Utility-scale solar and energy storage project deployment grew by 50% to $53 billion in 2023 compared to the previous year. Congressional districts represented by Republicans have seen disproportionate benefits from these investments. According to a Center for American Progress report, 57% of the 211,000 jobs created across 45 states and Puerto Rico since the IRA’s enactment are in GOP districts.

Risk of IRA Repeal

While the risk of Congress repealing IRA tax credits is low, it is still a possibility, especially if Republicans gain unified control of the government. According to Wolfe Research, there is a 40% chance of the GOP gaining unified control in November, with the Senate falling to them if Trump wins the presidency. In such a scenario, there is a 50% likelihood that Republicans will roll back some of the tax credits to offset budget cut taxes.

Continued Support for Clean Energy Investments

Despite the uncertainties, clean energy industry leaders remain hopeful. Nextracker CEO Dan Shugar believes the tax provisions in the IRA that have most impacted the market are durable. Nextracker’s manufacturing footprint across the U.S. has more than doubled due to the IRA. Shugar also emphasized that many of the factories are spread across the political spectrum, offering jobs in many locations.

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