The best clean energy plays as Biden's China tariffs set in

President Joe Biden raised tariffs on Chinese imports into the US, a move that will raise steep duties on solar panels, in a bid to keep China from undercutting US industry. How can investors look to capitalize on the administration's latest trade policy?

Cohen & Steers Portfolio Manager for Global Listed Infrastructure Tyler Rosenlich and Mizuho Americas Director of Clean Energy Equity Research Maheep Mandloi join Market Domination to discuss the best ways to play the clean energy sector as tariffs against Chinese imports begin to set in.

Mandoli mentions First Solar (FLSR) as a company that has done well despite challenges: "You can probably separate the companies who already had manufacturing capacity here, who did not have any China content. So First Solar is a good example. They have done phenomenally well in the last two years. The rest of the space has somewhat, got delayed, I guess, in the sense that all the IRA benefits haven't yet trickled down into actual legalese from the Treasury."

Rosenlich points out it may take some time to see solar take off: "I think the reality is a lot of people have talked about this energy transition and they've said, 'hey, we're going to get rid of old forms of energy and replace it with new.' And we think we're in this energy addition world and we're going to need to rely on traditional forms of energy for a really long time. They provide great base load power. We have the infrastructure in place and it's going to be a huge growth opportunity to build solar, build alternatives, build wind, build nuclear. But it's going to take a really long time."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Nicholas Jacobino

Video Transcript

President Biden.

Raising tariff rates on strategic sectors such as EVs and Solar are the latest bid to keep China from undercutting US companies is coming as the Biden administration has already catalysed billions in business investments towards industries like clean energy.

We're looking at how to navigate the big picture with the Yahoo finance playbook and joining us now here in Studio to discuss is Tyler Rosen, Licht Cohen and Steer's portfolio manager for global listed infrastructure, along with He Mande Mizuho, America's director of clean Energy Equity research.

Guys, welcome to the show.

Both of you.

Thank you.

And Tyler, maybe I'll start with you.

You know, President bn spoke with ya Finance yesterday talked us through sort of the reasons behind these new tariffs on China.

I'm interested, Tyler.

Just get your general big picture thoughts on those new tariffs.

And And what does it mean, Tyler, for the sectors the companies you cover?

Yeah, well, thanks for having me.

I guess.

You know, we think the tariff thumbs elves are important, but it's more the symbology and the symbolism of what they mean.

You know, we think the global demand for energy is gonna rise a lot in the next few decades.

Um, there is a voracious appetite to satisfy demand needs from urbanisation from the rising middle class globally from a I data centres and so forth.

And now people are realising to satisfy this demand, we need to be able to produce a lot of energy.

We need to produce traditional forms of energy and we need to make sure we have all the tools in place to satisfy growth in solar and wind and so forth.

And so for us, it's about we don't want to rely on trade partners that we don't trust or that we don't necessarily feel confident that we'll be able to get what we need into the future.

So let's make sure that we support our domestic industry.

We need all of the energy we can possibly muster.

And let's make sure we have the manufacturing base and the resource base to satisfy that demand growth.

Because, um, there's huge objection with a I and so forth, and we need to make sure that we can power it all.

I want to ask you specifically about the solar industry.

When it comes to these tariffs, is it too little too late in terms of giving a leg up to the domestic solar industry because they have already been undercut by cheaper Chinese solar panels.

That's a great question, and I think the section 301 which Biden administration announced that's probably more directed towards China.

We already have 5070 80% tariffs on Chinese solar products, so I think most of the companies have moved to Southeast Asia and what some of the domestic manufacturers have done.

They have petitioned to impose tariffs on Southeast Asian imports now, so I think any imports definitely so.

Any tariffs definitely help sustain the domestic manufacturing industry.

It's been almost two years since we had the Inflation Reduction Act.

We saw a lot of announcements of new capacity.

We gonna add it over here.

We haven't seen them fully built yet, and part of the reason is all this over supply.

So we definitely need some of these.

And many of the stocks have done terribly what has been.

I mean, if they're getting this leg up, what's been going on, that's a great question, and I would say we can probably separate the companies who already had manufacturing capacity here who did not have any China content.

So, first of all, as a good example, they have done phenomenally well in the last two years.

The rest of the space has somewhat deal, I guess in the sense that all the benefits haven't yet trickled down into actual legalese from the Treasury, there was a delay in understanding the law, which was written within a few weeks.

So that's an issue.

And then you have higher interest rates and some supply chain issues which has been impacting the industry.

And Tyler, I want to bring you back into that same kind of big picture question That question of you think about these new tariffs?

Too little, too late.

How how do you think about that?

You know, um, I think the reality is a lot of people have talked about this energy transition, and they've said, Hey, we're going to get rid of old forms of energy and replace it with new and we think we're in this energy addition world, and we're going to need to rely on traditional forms of energy for a really long time.

They provide great baseload power.

We have the infrastructure in place, and it's gonna be a huge growth opportunity to build solar build alternatives, build wind, build nuclear, but it's going to take a really long time.

And so, um, maybe the starting point is, uh, a little bit late, but this is not like a two or a three year thing.

You know, we are ta talking about energy demands into the next few decades.

And, um, maybe our starting point is a little behind where we wanna be.

But let's get ourselves there.

And let's make sure that we have the domestic, uh, capabilities to do so.

Tyler, it sounds like you've been talking to some of the oil companies because, I mean, you know, I went to Sarah week this year, which is the big oil and gas conference, and that has been their line, which is sort of a new sort of fight back line from them that we're going to need those traditional energy sources for quite some time.

Yeah, I I'll just give you some very high level numbers, which to us we think are really, um, interesting.

So if you assume that energy demand globally increases about 1% a year for the next 20 years, which we think is very realistic.

And you just displace half of current coal consumption.

You need to, uh, generate 45,000 terawatt hours of new energy in the next 20 years.

So, again, some new demand and reduce coal that is the equivalent of the entire global crude oil industry today.

So in the next 20 years, just to get to this world, um, that we're laying out of energy transition by market share, Um, we need to recreate the entire energy industry, the oil that's been here for over 100 years.

So the magnitude of demand growth is huge, and the desire to make it clean is great.

But we will need to rely on traditional forms of energy for a really long time because the grid is unstable.

You know, we don't have infrastructure to satisfy a purely renewables grid today, and we're going to need to utilise it for a long time.

Maybe.

Let's, uh, let's give viewers some ways to invest with this team.

One name next tracker.

I know you like, Why explain to us?

Why is that name a buy here?

Sure.

Uh, so next tracker makes solar trackers.

They basically put the panel on the Tracker and it tracks the sun.

It's as simple as that.

But it is, uh, something which increases the production, and you can, you know, charge a premium for that, uh, technology.

And so, as solar and renewables grow, I think these guys also grow with that.

And on top of that, the tracker penetration rates has been pretty low internationally.

In the US, almost 90% of projects have a tracker.

Internationally, it's only 30%.

So you have growth rate on top of that increased penetration, so you have a massive opportunity for these guys.

On top of that, the management team has done pretty well since they went public last year.

After the spin off from Flex, they have pretty much beat all the expectations in every quarter since then, and even yesterday did it for the same thing for the last quarter, and the street likes them for that reason.

They have a lot of cash.

They don't have any debt is less than one time that, so it's kind of like checks all the boxes for investors in this space would want to stay away from rate exposure and want to look at evaluation.

Still attractive.

I'm still attractive, Tyler.

Thank you, guys.

Both for joining today.

Appreciate it.

Thank you.