Now that Donald Trump is the president-elect, does that mean that greener energies will get shunted aside? Despite his predilection toward the fossil fuels, renewables in their own right have gain the legs that they need to compete. The tax credits given again to wind and solar last December will hold for a few more years — at which the industry and its supporters can re-evaluate their options.
“Trump’s renewables policies are not clear,” says Merrill Kramer, chair of the sustainable energy practice at Sullivan & Worcester. “He will remove existing obstacles to coal and nuclear plan development and life extensions.
“However, economics as much as energy policy are driving the markets — fracking is not economic at current gas prices, worldwide demand for oil is down and the cost of coal retrofits is prohibitive,” he adds. “Conversely, the cost of solar PV panels and wind turbines continue to decline.”
The reality is that renewable portfolio standards are taking place at the state level and it is those policies that have spawned the development of wind and solar resources. Even red states in the midwest are rich in wind resources and the jobs that they are providing: Nebraska, Iowa, Montana and Ohio. Texas, meanwhile, is one of the nation’s leading host for wind energy while Arizona and Nevada are major solar states.
“It is thus more probable that a Trump Administration will be pro-all energy resource development rather than undertaking anti-renewables initiatives,” says Kramer. “In short, the renewables train has left the station.”
But what happens to tax credits? While the tax credits were part of a horse trade in December that included the right to sell US-produced oil overseas, the subject of subsidies remains touchy in the energy field. All producers are, in fact, fighting to get their slice of the government pie: renewable advocates argue that they want to be able to compete with fossil fuels on a level playing field while those producing natural gas and coal say that they are responsible for a much larger share of the electric generation portfolio.
With the extension of the tax benefits, wind and solar projects started before the end of 2016 will qualify for a 2.3 cents per kilowatt hour production tax credit. It will gradually diminish through 2019. Wind and solar projects could opt instead to take a 30 percent investment tax credit that reduces their federal taxes dollar-for-dollar by what they put into the project. The main difference is that the solar production tax credit will phase out at the end of 2022.
“There is a consensus in the wind industry that another extension after this one phases out is unlikely,” says Clint Johnson, a wind analyst and director of project development for DNV GL, in a phone interview. Wind energy — the cost of construction and wind turbines — has fallen by 50 percent over five years, he adds.
“On the solar side, the ramp down is an acknowledgement that solar is becoming economically competitive with other fuel options,” adds Ray Hudson, director for DNV GL’s solar segment. The cost of solar panels is dropping precipitously, he adds in a phone call, noting that the theory is that they fall 20 percent for every doubling of capacity.
Consider: American Electric Power has said it will triple its wind purchases because of favorable pricing. Meanwhile, Xcel Energy is adding more renewables all the time as way to reduce carbon emissions. Berkshire Hathaway’s Mid American Energy is another one beefing up its wind operations in Iowa.
Meantime, the Internet giants such as google, Intel and Microsoft are investing heavily in green energy — everything from buying green credits to helping finance the development of wind and solar resources. Their goal is to run their energy-intensive data centers entirely with clean energy.
That’s the free market at work — a more powerful force than any campaign speech.