Solar project funding faces disruption due to existing tariffs
In the world of utility-scale solar and storage development, Texas-based OCI Energy is facing a unique set of challenges due to ongoing tariff considerations. According to the company's president, Sabah Bayatli, these tariffs pose a short-term development problem, particularly for OCI's two ongoing projects in Texas: a 700-megawatt-hour battery storage system and a 350-MW solar farm.
Bayatli has revealed a 'shortlist' of potential suppliers for OCI, based on tariff considerations. However, it's important to note that quality and execution are also crucial factors to consider alongside tariff considerations. In the current landscape, some developers are exploring PV manufacturing in regions like the Middle East, including Turkey, Jordan, and Egypt.
OCI Energy is keeping an eye on major suppliers in Vietnam, Malaysia, and Thailand for module supply. Interestingly, the company's solar supply chain is largely independent of China. Despite this independence, OCI's Texas developer arm is feeling the impact of tariffs, as Bayatli predicts delays in the final selection of equipment for projects due to the complexity and moving pieces in the current tariff situation.
Bayatli also mentioned that OCI has not yet sourced equipment for the two projects in Texas when the tariffs came into effect. This lack of equipment sourcing has caused delays in the financing process, as the company is unable to lock in pricing.
In the longer term, Bayatli believes that tariffs aren't generally a major issue for developers. However, in the short term, the uncertainty surrounding tariffs is causing delays and higher energy prices for consumers. Once the market settles and understands the tariffs, everything will be baked into the reported capex, and consumers ultimately pay higher energy prices.
In a proactive move, OCI is currently shopping around for suppliers based on the tariff landscape. Developers need to lock in things like capex, EPC contractors, battery supplies, and budgets as soon as possible to secure financing. Bayatli also predicts that many contracts for equipment won't get finalized until there's more certainty about the tariff situation.
Unfortunately, the search results do not provide information about which countries OCI Energy is currently considering for the production of solar cells and battery storage systems for regional PV manufacturing. As the tariff situation evolves, it will be interesting to see how OCI Energy navigates these challenges and continues to shape the future of solar and storage development in Texas and beyond.
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