PV Tech Premium sat down with Anne Loomis, partner at Troutman Pepper Locke, to discuss the safe harbour deadline for US solar developers.
Why it matters: US developers over-ordering to hit tax deadlines creates a massive secondary market of discounted Tier 1 components for European projects.
The Ghost of Warehouses Past
While US developers are busy playing accounting gymnastics with the '5% rule' to lock in Investment Tax Credits (ITC), European installers need to be watching the ports, not the tax code. The 'safe harbour' rush is a classic exercise in financial engineering that usually results in massive inventory overhangs. When a developer in Texas drops millions on modules just to satisfy a deadline, they aren't buying for project optimization; they're buying for the IRS. This creates a bullwhip effect that eventually cracks across the back of the European market.
Why You Should Care About US Tax Deadlines
We’ve seen this movie before. In 2019 and 2021, similar rushes led to US warehouses being stuffed with tech that became obsolete within 18 months. When those US projects stall due to permitting or interconnection queues—which are currently a nightmare in PJM and ERCOT—that 'safe harboured' equipment doesn't just sit there. It gets liquidated. We are currently seeing a shift from PERC to TOPCon and HJT; if US developers realize they've locked in billions in older p-type modules that no longer make sense for their LCOE, expect a flood of 'distressed' inventory to hit the secondary European markets at prices that will make your current supplier look like a highway robber.
The Domestic Content Trap
The real risk for the US—and the opportunity for us—is the complexity of the Inflation Reduction Act (IRA) domestic content bonuses. As Loomis likely pointed out, navigating these requirements is a legal minefield. If a US project loses its 10% domestic content kicker, the math often collapses. For a 50MW project in Spain or Poland, this means access to high-quality Tier 1 gear (think Jinko or Trina) that was originally destined for a US site but failed the 'Made in America' litmus test. Keep your procurement teams lean and your balance sheets liquid; the next 12 months will offer 'safe harbour' fire sales for those who didn't over-leverage early.