I have had conversation after conversation over the past weeks indicating that the policy renewal is increasingly the biggest topic of concern.
M&A deals are getting held up waiting to see the impact on valuations
Sales teams have added the "fear factor" of a renewal failure to their pitch
Analysts and executives are trying to figure out whether the expiration is pulling revenues forward, or delaying them, and forecasting next year's revenues accordingly
This attention to policy makes sense, of course, since a large portion of project cashflows, in many cases up to one third for wind and well north of half for solar, can be driven by the subsidies. Of course, the flip side of the coin is that the half of the industry that is NOT in a wait and see mode is hurrying to get business in before the year end uncertainty arrives.
There is an excellent article from the AWEA discussing what happened in the wind industry with previous lapses in the PTC. "At previous times when the credit has lapsed (1999, 2001 and 2003), installations have dropped by as much as 93% in the following year".
These are only US subsidies, the global industry is certainly less affected. But the impact is fascinating to follow.
Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET's Green Tech blog.