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Commerce investigation spooks solar lenders

Illustration of a solar panel coming out of the dome of the US Capitol building.

Illustration: Gabriella Turrisi/Axios

Banks are stepping back from financing major solar projects amid the uncertainty surrounding the Commerce Department's investigation into whether some solar panel manufacturers sidestepped U.S. tariffs.

Why it matters: Large-scale solar projects, paired with long-term energy storage, are critical to the energy transition but are now among an investor's riskier bets.

Context: The U.S. Department of Commerce is investigating if a handful of solar panel suppliers in Asia violated U.S. tariffs on Chinese goods.

  • The investigation may determine whether Chinese manufacturers are going around U.S. tariffs on Chinese solar imports by funneling Chinese-made components through other affiliates.
  • Panel exports from manufacturers in Malaysia, Thailand, Cambodia and Vietnam have been on hold pending the investigation.

What's happening: With the industry at a standstill, banks are increasingly hesitant to finance power purchase agreements (PPAs) on uncompleted projects, says Kenny Young, CEO of Babcock & Wilcox, an Ohio-based energy and renewables company.

  • "Banks are just not willing to take the risk with PPAs and milestone deals knowing they can't rely on getting the panels to complete the project," Young tells Axios.

The intrigue: Young, whose company recently acquired a community solar company, says that more investment is going into smaller scale community solar projects that rely on solar installations that already exist versus building entirely new facilities.

  • Young maintains that the ongoing investment, even in smaller projects, indicates that the industry believes the investigation will only have a short-term impact and large-scale projects will resume.
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