Solar project funding faces challenges due to imposed tariffs
In the heart of Texas, OCI Energy, a utility-scale developer of solar and storage projects, is currently navigating a challenging financing landscape. Two of the company's projects are at the financing stage, one being a 700-megawatt-hour battery storage system, and the other a 350-MW solar farm.
However, these projects face delays due to tariffs, a concern shared by developers like OCI Energy. The unpredictability of tariffs is causing complications in the financing process, with many contracts yet to be finalized until there's more clarity on the matter.
Sabah Bayatli, president of OCI Energy, acknowledges that tariffs pose a short-term development problem. In the longer term, he believes tariffs aren't generally a major issue for developers. However, he is also considering the potential impact of tariffs going back into effect after the 90-day pause.
To mitigate these challenges, OCI Energy is strategically sourcing its solar panel polysilicon from subsidiaries operating in Malaysia and Korea, ensuring its solar supply chain remains largely independent of China. The company's San Antonio-based subsidiary, Mission Solar, manufactures solar panels.
In the search for suppliers for its ongoing projects, OCI Energy is keeping an eye on major suppliers in countries like Vietnam, Malaysia, and Thailand. Some suppliers in certain countries could be at a 10% tariff level, making them potentially attractive options.
Bayatli also mentioned that countries like Turkey, Jordan, and Egypt are being considered for PV manufacturing. The company is creating a shortlist of potential suppliers based on the tariffs they may be exposed to.
However, the search for suppliers doesn't end there. OCI Energy is currently shopping around for suppliers for its two ongoing projects, and the company expects delays in the final selection of equipment due to the complex and moving pieces involved.
In addition to tariffs, Bayatli emphasises that there are questions about quality and execution to consider. Ultimately, consumers may pay higher energy prices due to tariffs, a concern that OCI Energy is working diligently to minimise.
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