As the financial fallout of the coronavirus pandemic continues to spread, America's solar power suppliers are calling on Congress to help them avoid a wave of pink slips by pumping cash into new project installations just as the federal government did during the global recession of 2008-2009.

The U.S. solar industry, which employed 250,000 people entering 2020, "could lose up to half its workforce as a direct result of COVID-19," Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, or SEIA, said in a March 23 statement.

In a letter to Congress sent the same day, more than 550 members of SEIA urged U.S. lawmakers to allow developers whose solar projects qualify for federal investment tax incentives to receive direct cash payments.

"As the stock market tanks, tax equity markets are drying up, making it even harder for solar companies to utilize tools like the solar investment tax credit," Hopper said.

The solar industry's plea echoes the pain affecting all corners of the crippled American economy as the U.S. Senate continues to work on a massive stimulus package, with Democrats demanding more assistance for workers.

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SEIA also asked Congress to pass a multiyear extension of the investment tax credit that would give developers the option to take cash grants. The tax incentive, which dropped to 26% in 2020 from 30% in 2019, is set to fall to 22% in 2021 and to 10% for businesses in 2022, while zeroing out for individual tax filers.

Advanced Energy Economy, another trade group, made similar requests in a March 19 letter to congressional leaders.

Powerful precedent

The American Recovery and Reinvestment Tax Act of 2009 established short-term cash payouts to support renewable energy projects hammered by the global financial crisis.

The Obama administration program, administered by the U.S. Treasury Department, issued $26.2 billion in funds for wind, solar, biomass, geothermal and other renewable energy projects and supported 34,600 MW of installed capacity. Of that, the solar industry used roughly $10.3 billion to install more than 107,800 systems with a combined 9,588 MW of generating capacity.

The program was a "very effective way of having the Treasury act as a tax equity investor of last resort where the tax equity market [had] shut down," said Keith Martin, partner and co-head of U.S. projects at law firm Norton Rose Fulbright. Providing cash payments instead of tax incentives poses "no net cost to the government," he added.

The tax equity market has already softened in the current crisis, according to Martin, while renewable energy companies also face supply chain disruptions and other challenges to meet deadlines to qualify for tax credits. "It's really hard to do business in a market where you can't quite see the future," he said.

A similar program today "would facilitate critical liquidity for the solar industry, but would not address the challenges of consumer confidence and interest in solar during a potentially severe downturn," Colin Rusch, a senior research analyst at Oppenheimer & Co. Inc., said in a March 23 email.

Liquidity, solvency concerns

Efforts aimed at limiting the spread of the coronavirus, including stay-at-home orders affecting some of the country's largest solar markets, are putting enormous pressure on the industry, especially on home solar installers. Residential solar cancellations are up 30% in some markets and "could reach 50% in many places," SEIA said in its letter to Congress.

"Companies are deeply concerned about liquidity issues and keeping their companies solvent during a protracted period of dramatically fewer projects," the letter added.

Despite the trade group's dire assessment, some companies say they are so far feeling little impact.

"There might be some slowing on the schedule on some projects just due to labor [but] we aren't seeing [delays] yet," said Dan Shugar, founder and CEO of Silicon Valley-based solar tracking specialist NEXTracker Inc., a major solar industry supplier and subsidiary of Flex Ltd. "It hasn't impacted NexTracker's ability to produce or deliver."

Shugar, a SEIA board member and former president of SunPower Corp., views the virus as the latest in a long line of challenges that the solar industry has overcome, including trade tariffs and tax-policy uncertainties.

"In terms of the intrinsic demand for utility-scale [solar], we're not seeing abatement on that," the CEO said. "People still need energy and renewables are just so much lower cost than other options at this point."