Coronavirus Challenges Supply Chain and Tax Credit Strategies
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Coronavirus Challenges Supply Chain and Tax Credit Strategies

At MEI, we elected in most cases not to safe harbor projects. This had more to do with the carrying costs, financing costs, absurd legal costs (what else is new) and expectation of price declines related to modules. We certainly didn’t anticipate a pandemic to be the reason we were thankful not to utilize a safe harbor strategy.Solar developers working in the U.S. have spent years refining their plans to secure the federal Investment Tax Credit for as much of their pipeline as possible by “safe-harboring” projects in advance of the step-down taking place. As long as developers meet certain criteria, projects brought online after the step-down begins can still secure a 30 percent tax credit. But even the most carefully laid plans didn't account for COVID-19. The disease’s spread has squeezed the global economy and brought disruptions to supply chains, including for the solar industry. As of March 10, most cases of the virus have been reported in China, the epicenter of solar manufacturing. Extended factory shutdowns in February had the solar industry bracing for possible impact. For many U.S. solar developers, spending 5 percent of a project’s total cost on modules and other equipment became the preferred safe-harbor method. Now, some industry watchers worry that delays caused by COVID-19 may force companies to choose between running down their module supply stowed in warehouses or making force majeure claims on some projects. via Greentechmedia