Our Renewables MMI fell 4% to start the year, even as congress extended the renewable energy tax credit that gives end users of solar panels, wind turbines and other metal products an incentive for purchases through 2022. Our Renewables MMI fell 4% to start the year, even as congress extended the renewable energy tax credit that gives end users of solar panels, wind turbines and other metal products an incentive for purchases through 2022. This is, of course, the latest in a series of all-time lows.
We have previously written about the paradoxical nature of government incentives and metal price increases, particularly for the metals that go into renewable products. The solar tax incentive can cover up to 30% of a system’s installation and cost so it definitely helps adoption, but that offset also keeps base prices from rising as the true cost is so different than what consumers are paying.
The renewal, unsurprisingly, also supplements solar silicon products in a much more effective way than, say, the neodymium or the grain-oriented electrical steel used to construct wind turbines. We should not expect to see renewables prices rise until the level of government subsidy for solar begins to taper off in 2020 or until adoption of the underlying generation technologies skyrockets.
In the meantime, demand is strong, if muted by the subsidy, and the supply of photovoltaic panels available for consumers that want to slap them on their houses to collect the tax credit can only help spur adoption. SolarCity has topped off its PV panel gigafactory in upstate New York and similarly looks forward to selling its panels and passing most of that discount on to consumers.
It will be years before we know if this economic experiment in subsidizing renewables is a success, but all of the ingredients for creating a stronger market in the future are there and paid for.
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