With the exception of a few fringe individuals, the reaction to Trump winning the presidency in both renewable energy and environmental circles was highly negative. The president-elect’s rhetoric on the campaign trail was a combination of blistering ignorance and climate denial, and his statements about energy policy showed a distinctly 19th century approach, with a bizarre promise to bring back coal jobs.
Equally worrysome is Trump inheriting Republican Majorities in both houses of Congress, meaning that any of his bad ideas about energy will encounter few roadblocks, and that disastrous energy policy moves could also arise from the House or Senate.
At the time of writing this, The Donald had not made any permanent appointments at federal agencies. But what he had done is appoint individuals to oversee the transition at these agencies. This included professional Climate Denier Myron Ebell to oversee the transition at the Environmental Protection Agency (EPA) and Koch Brothers Lobbyist Mike McKenna to oversee the transition at the Department of Energy (DOE).
However, so far all of these are only indicators, not defining appointments or policy moves. And while the overall direction is bad for renewable energy, we are not clear at all about what Trump will actually do as president.
This is really two questions: What Trump and the Republican Congress can do, and what these two forces will prioritize. With this in mind, we have created a quick guide to policies important to solar, which we are categorizing according to likelihood of change.
On the Chopping Block
Two policy areas face a dismal future under Trump: the DOE’s SunShot Initiative, and the Clean Power Plan. Neither are expected to be continued under Trump and his appointees.
As for SunShot, given Trump’s stated opinions about solar and his picks of McKenna it is unlikely that DOE will give any support from DOE under a Trump Administration. This will likely mean cancelling of the SunShot Initiative, which began six years ago under former DOE Secretary Steven Chu and which aimed to bring the cost of installed solar down to $1 per watt.
Second, the Clean Power Plan, Obama’s signature climate policy and the cornerstone of U.S. participation in the Paris Agreement, is dead in the water. Trump doesn’t believe in Climate Change or internationalism, and has already promised to pull out of the Paris Agreement.
However, given the level of maturity of the solar industry, neither of these moves is damning at this time. While DOE support under SunShot was undoubtedly helpful, it was never critical for the survival of the solar industry. Also, as the solar industry grows companies are more able to fund their own R&D, moving government support less necessary.
As for Clean Power Plan (CPP), it is important to note that this was a trend-following, not a trend-leading policy. If nothing else, the setting of the initial compliance period to 2022 greatly reduced the potential impact of CPP in the near term, given the level of change that the solar industry has gone through over the last six years. In an interview with pv magazine BNEF’s Nathan Serota said cancelling CPP would have a “minimal impact” on the solar industry.
Thus, the two policies most endangered by President Trump and the Republican majority in Congress are not essential for the solar industry.
In the dark
There are a lot more areas where the potential impact of the Trump Administration and Republican Congress is unclear. Topping the list is the fate of the 30% Investment Tax Credit (ITC), which was extended last December through a deal that lifted a ban on oil exports.
And while everyone has been asking about the ITC, experts are divided on the odds of a repeal of the deal. While Roth Capital expects the ITC to be repealed at some point during the Trump Administration, Solar Energy Industries Association (SEIA) VP of Federal Affairs Christopher Mansour told pv magazine that the odds of this are not very likely, saying that Republicans are unlikely to change the rules mid-stream when the credit is already expected to step down to 10% after 2020.
Another policy that fewer have considered is the Public Utility Regulatory Practices Act (PURPA), a 1978 law which requires utilities to buy power from independent power producers if it is less than their cost of generation. While this law had little effect on solar for the first 35 years it was on the books, in the last few years it has become an important driver of solar markets in states such as North Carolina and Utah that have weak or no state-level renewable energy mandate.
A final area of concern is President Trump’s appointments to the Federal Energy Regulatory Commission (FERC). As FERC’s jurisdiction is interstate electricity matters, this could potentially be problematic for areas such as transmission policy for renewable energy.
In terms of the ITC, it is not likely that even if Trump and/or the Republican majority moves to repeal the credit that this will happen soon. Energy was never the center point of the Trump campaign, and the first concerns seem to be changing policies for immigration, healthcare and social services, not dismantling renewable energy credits.
This plays into the hands of the solar industry, because as solar costs continue on their downward trajectory the market is less and less in need of this credit. As such, even if the ITC is repealed, the later it happens, the less effect it will have.
As a wonky energy policy, PURPA is even less likely to be a target. One factor here is that PURPA is not specific to solar and wind, and because it sets the rules for independent power producers, overturning PURPA could be complicated. PURPA reform may not even be on the radar for Republicans at the federal level.
And while anti-renewable members on FERC could spell trouble, it is not clear that appointees will have this perspective. Ideological considerations do not seem to be as important to Trump as personal loyalty, and one of the people who is rumored to be considered for a role at FERC is pro-solar Georgia Public Service Commissioner Lauren “Bubba” McDonald, an early Trump supporter.
Safe policies
In the end, the most critical policies for the U.S. solar industry at this time are not at the federal level. State-level renewable portfolio standard (RPS) policies have traditionally been the biggest drivers of wind and utility-scale solar deployment, and state-level net metering policies are the foundational policy for distributed solar.
And while net metering is in danger, this is happening through state-level fights. Due to the U.S. federalist system, the president and Congress simply have no jurisdiction over either of these two sets of policies. Furthermore, the states with the strongest clean energy mandates such as California and New York are in strong opposition to Trump, and unlikely to sway their position due to his presence in the White House.
The big unknown
There is one final area of concern, which is the potential for changes to polices that have effects on the larger energy sector with negative repercussions for renewable energy. Perhaps the greatest threat here is that Trump and Congress could provide additional incentives to fossil fuel and nuclear power plants which allow them to flood the market with artificially cheap power and slow the growth of renewable energy.
There are precedents for this at the state level. New York has written a blank check for nuclear power plants through its Zero Emissions Credits (ZECs). Additionally, at the time of writing this Exelon and its allies were trying to push a bill though the Illinois legislature which would use a similar mechanism, along with a subsidy for coal plants.
And while Trump and the Republicans might not wade this far into market design, they could provide additional tax incentives to help keep the playing field weighted against renewable energy.
A larger question is whether or not they will. At the state level more and more Republicans are joining pro-solar groups, and despite his regressive rhetoric Trump is leading a party which is slowly turning toward renewable energy.
Borrowing trouble
Right now what we do know is that the most likely policy moves by Trump and the Republicans will have a delayed and limited impact on the U.S. solar industry. We must also stress that as time goes on this industry is driven more and more by raw economics, with utility-scale PV costs already below $1.50 per watt in the first quarter of 2016, and power purchase agreements in some areas of the country under $40 per megawatt-hour.
In many areas solar is already cost-competitive with fossil fuel and nuclear power, and the continued fall in costs in solar over time cannot be matched by any conventional technology – even gas, which has seen considerable cost declines.
Even if Trump and Congressional Republicans do everything in their power to fight the future, there is only so long that they can do. The Trump Administration will definitely slow the progress of clean energy, but no one can stop the march of technology and the inevitable transition to renewable energy
Not even Donald Trump.
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