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Energy players see opportunities despite Trump’s stance

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Property Assessed Clean Energy (PACE) and solar energy market participants are not giving up on potential benefits of a Donald Trump presidency on the sector, despite the president-elect’s controversial opinions on clean energy and climate change.

As part of his campaign, Trump indicated that he would remove or significantly curtail energy regulations, reviving the the coal industry as an engine of job creation. He also said that he intends to open up federal lands and offshore areas for oil and gas exploration, in addition to reversing Obama's climate change initiative, including the Clean Power Plan and ending US participation in the 2015 Paris Agreement.

Although the shock Trump victory on November 8 pointed to radical changes in store for US clean energy policies, market players speaking with GlobalCapital on Wednesday were adamant that PACE and solar energy could still thrive under a Trump presidency.

“I’ve been taking Trump’s comments lightly as his campaign was mostly centred on creating jobs. PACE has always had bipartisan support at the state level and job creation is one of PACE’s biggest mandates,” said Michael Chan, CFO of California-based PACE issuer Ygrene Energy Fund, adding that PACE in the ABS markets would continue to be welcomed by investors given the asset class’s socially responsible investment (SRI) component, and because yields on PACE bonds are attractive.

“On the ABS side, we may get some questions from investors but we can easily field those questions — it’s the same rationale that PACE improves the environment and the proof is out there. We will continue to be a programmatic issuer in the securitization market,” Chan added.

Solar energy finance players have echoed this sentiment, with one energy finance adviser stating that Trump’s stance on energy and climate change was “election rhetoric”, rather than a concrete policy stance.

“Clearly, every piece of Trump’s view on energy was aimed at energising his voter base,” the adviser said, adding that some energy players are actually looking favourably at the possibility Trump ends tax subsidies for renewable energy investments.

“Indirectly, Trump could repeal the solar investment tax credit, and while that would obviously hurt the supply of capital for the market now, it wouldn’t be the worst thing in the long term for solar to lose it because then they would have to tap more established capital markets mechanisms for broader growth,” he said. 

“Tax equity is a very constrained market — there are only a few players there, while there are thousands of project finance and equity providers via the capital markets that would love to be in these assets," the adviser said. The challenge, he said, will be for the market to mature further, enabling it to tap the capital markets for funding and increasing transparency and liquidity in the asset class.   

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