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 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.
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.
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 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.
TRUMP'S IMPACT ON CLEAN-ENERGY BUSINESS
Wind and solar power will probably continue to grow during the next few years, though longer-terms prospects are cloudy.
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