Solar investors will have a lot to be excited about should we see a “Blue Wave” this fall, notes analyst Angelo Zino in CFRA Research's flagship newsletter, The Outlook.
While all solar providers could benefit, we see the biggest winners as U.S.-based SunPower (SPWR), SolarEdge Technologies (SEDG), and First Solar (FSLR).
For starters, Biden has proposed a plan to leverage $2 trillion in subsidies for renewable projects, which would help enable the realization of a 100% clean electricity standard by 2035.
If enacted, it is a very ambitious plan that could boost annual solar demand by nearly five-fold from current levels over the next eight years.
In fact, our base case assumes that the run rate of solar installations would be more than 2.5x by the end of Biden’s first term compared to where solar demand would be in the U.S. should Trump be re-elected for a second term.
We think Democrats — if they win — are likely to extend the Investment Tax Credit (ITC). We view the ITC as the lifeblood for solar demand in the U.S. At the federal level, the ITC has gone through several cycles of enactment and expiration over the last 30 years.
Separately, Biden is looking to increase the corporate tax rate back to 28% from 21%, which would increase the value of solar tax credits and likely increase the pool of the tax equity financing market.
While the timing of Biden's tax objectives remains an unknown, we think it would likely come within the first two years of his potential presidency.
Finally, we expect Biden will put the U.S. back into the Paris Climate Accord. The Obama-Biden Administration was very effective, in our view, in supporting new renewable initiatives and placing limitations on carbon pollution.
We see a potential Biden administration reentering the Paris Climate Accord on day one of the new regime. Risks to the analysis and recommendations in this report include a potential Trump reelection or inability for Democrats to take control of Congress.
