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Clinton vs. Obama on Renewables

Hillary Clinton’s ambitious plan to grow solar installations dwarfs the goals laid out for renewables in President Obama’s clean energy plan.
August 4, 2015

Renewable energy is having an excellent summer in U.S. politics.

Last week the top-polling Democratic candidate for president, Hillary Clinton, promised to increase solar power installations seven-fold by the end of her first term if she is elected next year. And on Monday President Obama unveiled final limits for power industry carbon emissions through 2030 that, according to White House projections, foresee a 27 percent larger role for renewables than the Environmental Protection Agency had anticipated in its June 2014 proposal.

The White House projects that U.S. power plants will cut carbon emissions by 870 million tons per year by 2030 under Obama’s Clean Power Plan, reducing the industry’s emissions by 32 percent from 2005 levels. Most of the reduction would come from idling coal-fired power plants, whose share of U.S. power generation is projected to slide from 39 percent in 2013 to 27 percent in 2030.

Natural gas, which the EPA had initially projected to be the go-to replacement for coal, is now expected to hold steady at roughly its current level of 27 percent of generation. Instead, renewable energy is to take up the slack left by closing coal plants, surging to provide 28 percent of U.S. power generation in 2030. That is more than double what renewables such as wind, solar, and hydropower delivered in 2013 and well above the 22 percent contribution that the EPA had initially projected for 2030.

There’s a new feature in the final plan to juice demand for renewables: an EPA “Clean Energy Incentive Program” that will offer double credit for states that pursue early installations of wind and solar in 2020 and 2021. The program is a response to industry critics who argued that the EPA’s proposed 2020 compliance deadline for states to start decarbonizing their power sectors could destabilize the grid if there were delays in building out key infrastructure such as natural gas pipelines. So Obama’s final rule delayed the compliance date to 2022, and added the Clean Energy Incentive Program to drive carbon reductions during that two-year delay.

“It’s quite a thoughtful strategy,” according to Francis O’Sullivan, research director for the MIT Energy Initiative. O’Sullivan says the emission credits of up to 300 million tons of carbon dioxide offered by the new program will be attractive for renewable energy developers: “That’s going to represent quite an opportunity. It’s not an insignificant scale,” says O’Sullivan.

It is, however, small change compared to the scale of Hillary Clinton’s proposals, which would push renewables far harder and faster. Her proposal calls for renewable energy to reach 33 percent of the U.S. power supply by 2027, largely by extending tax credits for solar energy to spur a massive early expansion of solar installations.

Her goal is to boost solar installations to 140 gigawatts by the end of 2020, up from about 20 gigawatts at present. That is more solar power than the Abu Dhabi-based International Renewable Energy Agency envisioned the U.S. installing by 2030 in its January 2015 roadmap for U.S. renewables development.

Experts say Clinton’s proposed pace for solar development is on the outer edge of feasible. O’Sullivan, who contributed to MIT’s recent Future of Solar Energy report, says deploying 10 to 15 gigawatts of solar power per year to get to Clinton’s 140-gigawatt goal early in the next decade is “certainly not beyond the realm of possibility” for an industry that installed about seven gigawatts in the U.S. last year.

Managing higher levels of renewable energy would challenge grid operators, but that has known solutions. The real problem, says O’Sullivan, could be that Clinton’s solar surge would flood the power market with low-priced electricity, a dynamic that could undercut solar’s own economics.

Since renewable energy costs nearly nothing to produce once the equipment is installed, it beats out bids from conventional power plants in competitive markets. O’Sullivan says Clinton’s solar surge could shut out the relatively higher-cost natural gas peaking plants that tend to set peak power prices, slashing revenues from power generation such that it undermines the business case for installing new solar generation. “That dynamic would likely begin to happen in some markets at the penetration levels that Hillary Clinton is proposing,” says O’Sullivan.

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