Trump’s Win ‘A Disaster’ for Plunging Renewable Energy Sector

Donald Trump’s surprise election victory turned into a bad day for clean energy investors.

U.S. solar panel-maker SunPower Corp. had its worst decline in three months on Wednesday, dropping 14 percent to the lowest since the beginning of 2013. Vestas Wind Systems A/S, the world’s biggest turbine supplier, fell 8.5 percent in Copenhagen. The WilderHill New Energy Global Innovation Index slid by the most in more than four months.

Investors are concerned that once in office, Trump will weaken demand for renewable energy by turning away from President Barack Obama’s shift to a cleaner economy and pulling out of a global climate-change pact. Trump has called climate change a hoax, vowed to withdraw from the Paris agreement on global warming and pledged to increase production of coal, the dirtiest fossil fuel.

Obama’s “Clean Power Plan would have been a strong growth-driver,” Ben Kallo, an analyst at Robert W. Baird & Co., said in a research note Wednesday. “We expect a significant overhang on solar stocks due to negative sentiment trades and oversupply in the industry.”

China’s solar manufacturers were not immune from the election shock waves. Shangrao, China-based JinkoSolar Holding Co. plunged as much as 12 percent. Guelph, Ontario-based Canadian Solar Inc., which manufactures modules in China, fell as much as 23 percent.

“It’s a disaster,” Rhone Resch, former chief executive officer of the Washington-based Solar Energy Industries Association, said in an interview. “We’ll need to educate Trump that solar energy is a business and not a political issue.”

Fifth Loss

SunPower added fuel to the collapse after reporting its fifth-straight quarterly loss, with CEO Tom Werner announcing a cost-cutting program and the company withdrawing its previously announced earnings guidance for next year. SolarCity Corp., meanwhile, reported its first quarterly net income this year as it prepares for a Nov. 17 shareholder vote to be bought by Tesla Motors Inc.

Asked on a conference call Wednesday whether utility-scale solar development would slow if Trump revokes President Obama’s Clean Power Plan, Werner said: “The short answer is ‘yes.’ The question is how much.” He doubted the slowdown would be significant, given solar costs are increasingly comparable to other fuel sources.

While Trump’s victory is unlikely to cause an immediate cut in U.S. demand for clean energy, it may lead to an overhaul of the U.S. tax system that could threaten key incentives for solar and wind energy projects in coming years, said Jeffrey Osborne, an analyst at Cowen & Co.

“We certainly see negative headline risk from Trump’s surprise victory,” Osborne said in a note Wednesday. “The longer-term picture for clean technology is negative.”

Still, state policies, company interest in greener operations, and lower-cost renewables will continue to drive demand in the U.S. no matter what the federal government does, said Mindy Lubber, president of CERES, a corporate clean energy non-profit.

“Tackling climate change is one of the greatest opportunities of the 21st century,” Lubber said in an interview. “The solar energy industry is now competitive with fossil fuels.”

©2016 Bloomberg News

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