Uncertainties around tax reform and other policies in the Trump administration have the potential to stall momentum for U.S. renewable projects headed into next year, according to Fitch Ratings in its 2018 outlook report.
"Recently proposed revisions to the U.S. tax code would reduce the value of production tax credits and in turn diminish the value of new renewable energy projects," said Senior Director Gregory Remec. "Separately, the Trump administration's possible import tariff on solar photovoltaic panels is likely to stall the development of new renewable energy projects and may significantly reduce the growth rate of renewable generation capacity."
Despite the broader policy question marks, resource risk is improving for renewables. Driving Fitch's stable outlook for this segment of energy infrastructure are largely contracted power sales agreements that mitigate price volatility. "Improving resource forecasts stand to benefit wind projects over time based on post-completion wind studies," said Remec. Fitch also has a stable outlook in place for North American thermal power projects for 2018 thanks largely to fixed-price power purchase agreements in place that shield them from merchant energy market volatility.
Perhaps not surprisingly, oil & gas projects are advancing at quicker clip under the Trump administration. And though the recent hurricanes in Texas, Florida and Puerto Rico are leading to increased completion delays for some terminals, properly structured construction contracts should sufficiently mitigate their impact.
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