This Week In Solar: Trump Getting Bullish, RMB Appreciation Implications

Solar stock investors may have a surprising new ally in Washington. This week, President Donald Trump suggested that his proposed border wall with Mexico could pay for itself if the wall were covered with solar panels.

In the past, Trump has repeatedly claimed that Mexico would pay for the border wall, but Mexico has said it will not be paying for the wall. “I’ve said time and again — Mexico won’t pay for any wall,” President Enrique Pena Nieto said earlier this year.

Former Mexican President Vicente Fox Quesada was even more blunt in an interview in January. “Mexico is not going to pay for that [expletive] wall,” he said.

On Solar

Trump’s solar panel comments suggest the president may be backing off on his insistence that Mexico foot the bill for the wall. Unfortunately for solar stock investors, Trump’s solar panel suggestion doesn’t seem too likely either.

“With a total cost to the gov’t of -$27.6 billion on nominal profit of $221 million/year, it would take 125 years. for taxpayers to recoup the outlay; but given the time value of money, w/ a 10 percent discount rate, annual profit, in real terms, would fall to <$1 million by year 58 & taxpayers would never recoup total construction costs,” Axiom analyst Gordon Johnson wrote on Thursday.

“Based on our work, not only does this not work under any scenario, but the gap is strikingly wide; this seems a rather aggressive suggestion.”

Related Link: Why Republicans May Put The Border Wall Debate On Hold For Now

Regardless of the feasibility of a solar panel wall, the willingness of Trump to include solar energy in his plan may show that the president is warming up to the idea of alternative energy. Alternative energy investors have been wary of Trump’s focus on fossil fuel up to this point.

Johnson said PV prices have gotten a boost from a stronger Chinese currency as well. The RMB’s 1.4 percent gain versus the USD since May 24 has accounted for roughly 30 percent of the increase in PV spot price in that time, Johnson said.

Despite the potentially positive recent developments for solar investors, Johnson remains extremely bearish on solar stocks. Axiom maintains Sell ratings on the following U.S.-listed names:

• JA Solar Holdings Co. Ltd. (ADR) JASO
• Yingli Green Energy Holding Co Ltd (ADR) YGE
• Solaredge Technologies Inc SEDG
• Canadian Solar Inc. CSIQ