President-elect Donald Trump is a self-declared climate-change denier who, on the campaign trail, criticized solar power as “very, very expensive” and said wind power was bad for the environment because it was “killing all the eagles.” He also vowed to eliminate all federal action on climate change, including the Clean Power Plan, President Obama’s emissions reduction program for the power sector.
So how will renewable-energy businesses fare under the new regime?
Trump’s rhetoric has had renewable-energy stocks gyrating since the election. But the impact could be far less drastic than many worst-case scenarios. “At the end of the day what Trump says and what is actually implemented are two completely different things,” says Yuan-Sheng Yu, an energy analyst with Lux Research.
Still, Yu authored one of the darkest forecasts on renewable energy under Trump’s leadership. His report, issued last week, projected that energy generation from renewables would essentially flatline under two Trump terms, growing just 2.3 percent through 2024. That’s a stark shift from recent history, which saw wind and solar generation in the U.S. grow by 4 percent and 28 percent, respectively, just last year. Projected generation under Trump looked even more meager in comparison to the robust renewables uptick Yu forecast under a Hillary Clinton victory: a 56.9 percent increase in renewable generation over eight years, thanks to a renewables-centric energy policy platform.
However, the Lux projection, like post-election analysis from some investment research firms, makes a questionable assumption: that President Trump would wipe out the federal tax credits for wind and solar installations. Renewable-energy advocates say Trump never explicitly called for eliminating the tax credits and could find it difficult to garner the congressional support required to do so.
The tax incentives were extended by the Republican-controlled Congress in December 2015 with bipartisan support. “The renewable-energy tax credits are pretty firmly in place,” says Rob Gramlich, senior vice president of government and public affairs at the American Wind Energy Association, an industry trade group. In August, Senator Charles Grassley, an Iowa Republican, vowed to protect the wind tax credit if Trump became president and tried to scrap it. “If he wants to do away with it, he’ll have to get a bill through Congress, and he’ll do it over my dead body,” Grassley said.
Another driver for wind and solar power that’s likely to endure under President Trump is renewable portfolio standards, which are currently legislated by 29 states and the District of Columbia. Those state mandates, which require electricity retailers to supply a rising percentage of their power from renewable sources, account for about two-thirds of wind and solar power installations in recent years, according to the Department of Energy’s Energy Information Agency.
Cost reductions, meanwhile, are making wind and solar competitive in many markets even without subsidies. Installation costs for utility-scale solar farms, for example, fell 64 percent between 2008 and 2015, according to the Department of Energy. Even unsubsidized solar generation beats coal on price in sun-rich regions. Investment advisory firm Lazard estimates that new utility-scale plants in the U.S. Southwest would deliver power for 5 to 7 cents per kilowatt-hour without subsidies, whereas new coal plants deliver power at 6.5 to 15 cents per kilowatt-hour.
One unknown, however, is Trump’s vow to kill the Clean Power Plan, which was designed to constrain emissions from coal-fired power plants and offer incentives to replace them with renewables. The Energy Information Agency affirms Gramlich’s concern in its 2016 Annual Energy Outlook, which assessed scenarios with and without the CPP. Growth in energy generation from renewables is comparable under the scenarios in the early years through 2020, but it significantly slows thereafter in scenarios with no CPP.
One glimmer of hope for renewables’ long-term prospects under Trump is the president-elect’s promise to invest over $500 billion in infrastructure. If some of that spending is devoted to expanding and modernizing U.S. electrical infrastructure, it could eliminate the power-grid constraints that are the biggest impediment to long-term growth for these energy sources.
Another source of hope is that clean energy is supporting job growth and exports, according to Sam Adams, the former mayor of Portland, Oregon, who is U.S. director for the World Resources Institute, an environmental research organization based in Washington, D.C. “There is a fierce global competition already under way to determine which country will be the world’s top supplier of clean-energy technology and services,” said Adams during a press call on Wednesday. He said he would be looking forward to making that case to Trump and his administration.
Mindy Lubber, president for Boston-based nonprofit Ceres, argued on the same press call that Trump will ultimately recognize and want to seize the economic opportunity that renewable energy represents. “President-elect Trump is looking for results and for jobs. He wants to be seen as riding the winning horses to building a winning economy,” said Lubber, “and there’s no denying that sustainable energy will be part of that.”