Donald Trump’s tax reform proposals may have an indirect but decidedly negative impact on solar development in the U.S., by drying up the pool of capital available to fund new projects.

Though Trump has yet to release specifics of a plan that could face serious headwinds in Congress, “it’s causing disruptive effects on finance,” Solar Energy Industries Association President and CEO Abigail Ross Hopper told Bloomberg last week. “Costs are going up.”

While Trump’s election last fall raised initial concerns about solar and wind tax credits, the industry has seen little negative impact so far. “Deals may be accelerating—at least in solar—as developers and investors rush to get deals done before the corporate rate falls,” Bloomberg notes. “But developers may have to pay more than they would have done before the election.”

That’s partly because “lower corporate tax rates may deplete the supply of tax equity, an esoteric but critical source of financing for wind and solar farms. In such deals, clean energy developers sell a portion of their projects’ tax credits to companies—often banks and some insurance companies—that can apply the federal credits to their own tax bills.”

If corporate tax rates fall below 20 or 25%, the reduced incentive could affect project financing. “I’ve heard of a number of sponsors who’ve had to end deal negotiations this year because the terms would have pushed the project underwater,” said Bloomberg New Energy Finance analyst Daniel Shurey. “They all blame stipulations added by fears of tax reform.”

But in a separate analysis on Renewable Energy World, distributed energy specialist John Farrell of the Institute for Local Self-Reliance sees a bright side in severing the link between solar development and tax equity investors, suggesting that a “perverse reliance” on tax incentives increases the cost of solar projects by at least 20%.

“The crux of the issue is that tax equity partners—the ones needed to secure tax credits—have very high return requirements, compared to a bank or other typical lender,” he writes. Losing the tax credit would increase the cost of electricity from a solar project by about 13%, but free the project developer to look for other ways to take advantage of the tax credit.

“If the tax benefits could be captured by local projects instead of requiring Wall Street partnerships, project costs could fall substantially,” Farrell writes. “If a local project could capture just half the tax credit value, it would approach price parity with a typical tax equity deal.” If the local project captured the whole tax credit, it could reduce per-kilowatt-hour costs by up to one-third.

“Not only would dropping Wall Street lower project costs, but local revenue would increase,” he argues. “On a level playing field, local projects would generate $200,000 to $600,000 more in local revenue over a 25-year project life than a typical tax equity deal. Even if tax equity partners could be persuaded to provide half of project capital, the cost to local investors would be $400,000 less if the same financial benefits could be awarded without requiring a Wall Street partner.”