Active Solar News

NEWS OF THE MONTH

Active Solar did well in August compared to the negative stock markets.

The positive YTD performance stands out in the heavy correction endured by most stock indexes.

Q2 2022 results and market outlook

The vast majority of Active Solar’s portfolio companies reported higher revenues than expected. This confirmed that demand is very strong and will keep growing. Therefore, our global solar market expectation of 250 GW in 2022, that used to be bullish at the end of 2021, is now highly probable and in line with most research firms. It means a +50% growth in new installations compared to 2021.

In terms of earnings, fewer companies beat expectations because the industry is still dealing with the negative impact of several factors: very high polysilicon prices, high shipping costs and other issues throughout the supply chains. Polysilicon prices should start declining in 2023 as many new production capacities will come online. The other supply chains issues should also eventually be resolved. Consequently, the profit margins should improve in the next 2 years for most of the industry (though naturally not for polysilicon producers).

USA : Inflation Reduction Act - the largest climate package

After the failure to pass the Build Back Better Act, President Biden could claim a major policy victory with the Inflation Reduction Act (IRA): “The Inflation Reduction Act invests USD 369 billion to take the most aggressive action ever in confronting the climate crisis and strengthening our energy security”.

A key component of the IRA is the extension of the Investment Tax Credit (ITC) at 30% for commercial and residential solar systems, including those built this year, for the next decade. Larger projects – those over 1MW – will be granted a standard 6% tax credit unless they conform to certain labour and wage laws, at which point the credit would again rise to 30%. The IRA also contains vital manufacturing credits that have been designed to onshore and build out a US PV manufacturing base.

The IRA will definitely strongly stimulate the growth of the US solar market which could reach over 50 GW per year by 2024. However, the short-term momentum of the US solar market is still being negatively impacted by the Uyghur Forced Labor Prevention Act (UFLPA) due to new import documentation demanded by the US customs.

Reminder: sector and fund update by Pascal Rochat

On July 12, Pascal Rochat hosted a webinar to give an update on the solar market and Active Solar: https://vimeo.com/733262912