To the surprise of many, Donald Trump won the U.S. presidential election in November. Some claim a Trump presidency will be a disaster for U.S. renewables and the environment; others say it won’t be so bad, if not actually good. With President-elect Trump slated to take office toward the end of January, should the U.S. solar industry be concerned about the potential impacts of the incoming Trump administration?
During his campaign, Trump promised to implement an “all of the above” energy strategy, which also included bolstering the coal industry and restarting the controversial Keystone Pipeline. In the past, he has called climate change a “hoax,” though when asked about the topic in a more recent interview, Trump said, “I’m still open-minded. Nobody really knows.” Furthermore, his support for solar power has been unclear, with Trump previously stating, “I love solar,” but also criticizing the “expensive” cost and viability of the renewable energy.
Nonetheless, several solar experts suggest there is no reason to panic.
David Burton, a partner at Mayer Brown who heads the firm’s renewable energy group in New York, says, “My general view is that the solar industry should not overreact to the results of the election.”
Tom Kimbis, interim president of the Solar Energy Industries Association (SEIA), says the organization feels hopeful about working with the Trump administration. However, he admits, “Change is hard, and it’s understandable that some people would worry when President Obama was such an incredibly strong champion of solar and we have a non-traditional Republican president about to take office. That’s a change, but it doesn’t mean President-elect Trump is going to be anti-solar.”
Kimbis emphasizes, “I think that, regardless of who’s in the White House, solar is a winning technology, a winning energy source, a winning solution for America.”
In a blog post about the election, Lynn Jurich, CEO and co-founder of residential solar provider Sunrun, writes, “I’m as optimistic as ever about demand for home solar.” She adds, “The solar caucus is strong, and it will keep getting stronger.”
Jurich even claims that solar is in line with the anti-establishment movement many U.S. voters supported: “One message I believe you can take from this election is that Americans want to feel they hold their destiny in their own hands. The freedom of getting solar energy from one’s own rooftop is just another manifestation of this. … Put simply, rooftop solar provides energy choice. It is inherently anti-establishment.”
Jesse Grossman, CEO and co-founder of New Jersey-based solar developer Soltage LLC, says, “Donald Trump’s victory has generated legitimate concerns over the future of federal clean energy policy because of pro-fossil-fuel campaign pledges and cabinet appointments, but we believe the incoming administration portends very little change in U.S. solar market velocity for at least several years – and it may even help.” He cites a December poll that shows 75% of Trump voters support “action to accelerate the deployment and use of clean energy.”
Given Trump’s campaign rhetoric, there’s no denying that some solar-friendly agencies and policies are in danger – there will be casualties. But just how big of an impact could those losses be to U.S. solar?
Take the U.S. Environmental Protection Agency (EPA), for example. Trump previously vowed to dismember the department, but after winning the election, he has made no real mention of such plans. Rather, Trump has tapped Oklahoma Attorney General Scott Pruitt to be the next administrator of the EPA. According to his biography on the state of Oklahoma’s official website, Pruitt is a “leading advocate against the EPA’s activist agenda.”
In 2015, Pruitt joined a multistate lawsuit against the EPA in an ongoing effort to block the Clean Power Plan (CPP), the Obama administration’s landmark climate change initiative to establish the first-ever regulations to cut carbon pollution from existing U.S. power plants. In 2016, Pruitt and another attorney general also penned an article in the National Review that stated the debate over global warming is “far from settled.”
Myriad environmental groups have spoken out against Trump’s EPA pick. In a press release, Michael Brune, executive director of the Sierra Club, says that Pruitt has “regularly conspired with the fossil-fuel industry to attack EPA protections.” Calling the attorney general a “climate science denier,” Brune adds that “having Scott Pruitt in charge of the U.S. Environmental Protection Agency is like putting an arsonist in charge of fighting fires.”
On the other hand, U.S. Sen. Orrin Hatch, R-Utah, says he is “extraordinarily pleased” with Pruitt’s nomination.
“For years, Scott has been the go-to leader in resisting the Obama EPA’s regulatory overreach,” the senator says in a statement. “By standing up to unwarranted and unlawful policies, he has demonstrated rightful concern for Americans whose livelihoods and communities have suffered under intrusive, job-killing regulations. Under Scott’s leadership, I have confidence we can implement commonsense policies that protect both our environment and our economy.”
Trump has said he will repeal the CPP, and now that he has chosen Pruitt to lead the EPA, that is all but guaranteed to happen. The climate change initiative was poised to help decrease the use of U.S. coal-fired power generation and spur more renewables development, but Frank Maisano, energy specialist at law firm Bracewell’s Policy Resolution Group, says, “I don’t think the CPP being rescinded will have any real impact on solar. Where solar can succeed in the marketplace, it will, especially as costs drop and regulatory burdens are reduced.”
Burton agrees. “One way or another, the CPP will not be an enforceable policy during the new administration,” he says. “The CPP was already being litigated, and its fate in that litigation was far from certain. Therefore, in my view, the CPP was not driving economic behavior. Thus, the loss of the CPP is not much of a detriment to the solar industry.”
According to Kimbis, “It’s a loss, but it’s not a large one.” Although the CPP helped spark utility efforts to consider more renewables, reports have shown that some states and power companies are already on track to meet or exceed CPP targets. Kimbis says SEIA remains determined to ensure solar becomes a bigger part of utilities’ integrated resource plans. “What we don’t want to lose is the momentum at the state level for solar,” he explains.
During his campaign, Trump also promised to back the U.S. out of the Paris Agreement, a global commitment to reduce pollution, but he recently indicated he is instead “studying” the possibility. If Trump were to pull out of the deal, what might be the consequence?
Maisano says, “We had no real binding commitments for Paris, so again, I expect the solar projects that are economical will go forward.”
“The bottom line is that the Paris Agreement has no teeth,” adds Burton. “Therefore, the administration can just ignore it without legal consequences. If the administration did formally repudiate the Paris Agreement, it may cause other nations, including China, to step up their efforts in order to distinguish themselves from the United States. Thus, it is difficult to predict the effect on renewables and climate.”
Kimbis says the Paris Agreement is similar to the CPP, in that “if it went into effect, I think there would be more pressure on states to adopt renewables, among other solutions. Some states are already moving forward regardless and anticipating some valuation on carbon, and they’re taking the lead and making those changes today. States would rather be well prepared than try to play catch-up.”
However, Kimbis notes climate change policy is not the main driver of solar market growth.
“Clean energy is being driven worldwide by a number of different factors, and climate change policy is one of them. To be frank, though, it’s really the costs that are causing the installations to go in. Of course, on a personal level, I would love to see the U.S. be proactive on climate change – and I’m sure many people in our industry would – but what’s moving the market forward is not climate policy, CPP anticipation or a sort of feel-good decision about the environment. It’s coming down to dollars and cents.”
Under the Obama administration, the U.S. Department of Energy (DOE) provided millions of dollars in funding for clean energy research and development (R&D), which ultimately helped bring down the cost of solar and other renewable energy technologies. Under the Trump administration, will DOE-backed R&D and other solar programs diminish?
Not long into the first presidential debate between Trump and Hillary Clinton, Clinton discussed her plans to install half-a-billion solar panels. Trump fired back with what appeared to be a reference to Solyndra, the infamous solar manufacturer that received a $535 million DOE loan guarantee before eventually going bankrupt.
“She talks about solar panels,” Trump said during the debate. “We invested in a solar company, our country. That was a disaster. They lost plenty of money on that one.” (As the solar industry and Obama administration have reiterated, Solyndra is one failed solar company among many successful ones that obtained DOE aid.)
Maisano warns, “R&D is the future of our innovation and climate policy. It would be shortsighted to undercut the great work that has and continues to be done at our national labs, as well as in partnership with the private sector.”
Indeed, Kimbis says the research at DOE institutions like the National Renewable Energy Laboratory and Berkely Lab is “very important to continue in order to keep our national competitiveness going and to increase the technological innovation that’s taking place in the private sector.” He says national labs can tackle research that any individual company might find difficult, such as third-generation photovoltaics. “Yes, of course, we have private-sector investment, but not nearly what a national laboratory can afford or engender through public-private partnerships, and we’d like to make sure that continues.”
Burton says federal funding cuts for solar R&D “would certainly not help technology advancement.”
“However,” he continues, “only a modest portion of clean energy technology developments in the United States are funded by the DOE, and the United States is not the only country that has researchers and industrialists working on clean energy R&D. DOE terminating funding for clean energy R&D would be unfortunate, but it would not mean that such R&D would come to a halt in this country, much less worldwide.”
Kimbis adds that the DOE’s solar programs, such as those under the SunShot Initiative, deserve to remain well funded. He says the programs are “helping to lower costs by cutting red tape, educating local administrators in cities and counties across the country, and encouraging the introduction of veterans to the solar workforce – those are positives I think you can support regardless of your party affiliation.”
When reached for comment, a DOE spokesperson declined to speculate on the Trump administration’s plans and what they might mean for the SunShot Initiative or other renewable energy programs.
Notably, President-elect Trump has chosen former Texas Gov. Rick Perry, who himself ran for U.S. president twice, to lead the DOE. Although Perry hails from Texas, a huge wind power state, environmental and clean energy advocates have raised concerns about Perry’s potential ties to the oil industry. Also, Perry previously said he would abolish the DOE.
According to a report from the Washington Post, Perry said in a 2011 debate that he would get rid of three federal agencies, including the departments of education and commerce, but couldn’t remember the third one, which he later said was the DOE. After the debate, he reportedly told the media, “The bottom line is I may have forgotten energy, but I haven’t forgotten my conservative principles, and that’s what this campaign is really going to be about.”
In a press release, the Sierra Club’s Brune says, “Rick Perry is being tapped to run an agency he would eliminate if he could only remember its name. Putting Perry in charge of the Department of Energy is the perfect way to ensure the agency fails at everything it is charged to do, so Trump might as well just lock the doors for four years.”
Under Perry’s leadership, progress in the renewable energy industry would be under “direct threat,” claims the American Sustainable Business Council (ASBC).
“His close ties to the oil industry in his home state will likely lead to department policy that tilts the playing field in favor of fossil fuels,” says David Levine, CEO and co-founder of ASBC, in a statement. “That would jeopardize the progress the nation has made toward building a world-leading renewable energy sector.”
Separately, Salo Zelermyer, a former DOE senior counsel under the George W. Bush administration and current senior counsel at Bracewell’s Policy Resolution Group, highlights Perry’s record.
“As governor of the state of Texas for 15 years, Rick Perry led a state that has, for decades, been critical to our domestic energy policy. During his time in office, Perry embodied the type of ‘all of the above’ approach to U.S. energy production that many have advocated on both sides of the aisle,” says Zelermyer in a statement. “Rick Perry’s Texas was not only a world leader in oil and gas production; it was also a global leader in wind power and renewable energy investment.”
Soltage’s Grossman even says Perry’s nomination as DOE secretary “could be a blessing in disguise,” adding, “As governor of Texas, he set a renewables capacity target bill in 2005 and pushed the Competitive Renewable Energy Zones transmission line to spur wind energy, hinting he supports energy when it makes economic sense.”
Regarding Trump’s cabinet picks as of press time, Kimbis says, “If this were a conversation 10 to 15 years ago, I think it would have an enormous impact on the solar market. Right now, the solar markets are in the hands of the companies that are out there doing business every day, the financial institutions – from the big players on Wall Street to the regional banks that are getting involved – and the men and women who are on the roof installing solar. It really has become more of an economics game, and if we have economics that make sense, we’re no longer as worried about energy regulations coming out of federal departments under the administration.”
However, Kimbis says smaller issues that “aren’t incredibly hot topics” still require attention at the federal level. “For example, building codes that might be blessed by the Energy Department. We want to make sure solar is treated as fairly as other technologies in those.”
Investment tax credit
Even after a heated election, everyone can agree on one thing – the federal investment tax credit (ITC) is safe. In a bipartisan effort at the end of 2015, Congress passed a multiyear extension of the incentive that gradually phases down the credit’s value.
“The federal ITC has powerful supporters in Congress on both sides of the aisle,” explains Burton. “Given everything else the new administration wants to do, why should it be spending time and resources picking a fight with respect to a tax credit that, under current law, ratchets down from 30 percent to 10 percent?”
He adds, “The fact the tax credit does ratchet down means that altering it would not be a significant source of revenue in the legislative ‘scoring’ process that could then be used for lowering tax rates.”
Maisano says, “I suspect we won’t be going back to reopen the deal, despite the promises to do new major tax reform legislation. There are plenty of controversial items that need to be addressed instead.”
“The people we’re speaking to on the Hill are indicating we’re in a relatively good position compared to other tax provisions in the code,” states Kimbis. “That said, if we get into comprehensive tax reform, we have to be very aware and vigilant that everything is going to be on the table, and we’re going to be prepared to defend the ITC and its attributes if and when that time comes.”
President-elect Trump ran on a promise to create jobs, and he’s a self-proclaimed smart businessman. According to Burton, that bodes well for solar.
“Mr. Trump has made it very clear that the creation of jobs in the U.S. is his priority,” says Burton. “The solar industry is a significant employer. In fact, it employs more people than the coal industry. I do not think the new administration would want to go out of its way to harm an industry that is a significant employer.”
Kimbis says, “Having over 200,000 Americans employed by solar is no small number, and I think that has been recognized by the Trump team. The benefits also have a trickle-down effect on local economies, as these jobs have an impact in the towns where the projects are being installed. Solar is an American success story. I don’t see why Trump would want to damage it, but I do see reasons why he would want to celebrate it.”
Suniva, a solar cell and module manufacturer that recently expanded operations at its U.S. headquarters in Georgia, welcomes Trump and his stated intentions to grow U.S. manufacturing.
“As a manufacturer, we are very excited for the implications on job creation that comes with the new administration,” comments Matt Card, Suniva’s executive vice president of commercial operations. “Job growth in the solar industry in the U.S. over the last eight years has been more typically found in the finance segment or the more seasonal/temporary construction segments. While these two segments are certainly key components of the overall industry, we believe that to truly achieve a healthy and sustainable solar industry in the U.S., we must also have a healthy manufacturing/hard-goods segment.”
The U.S. solar sector could also appeal to President-elect Trump’s business sense.
Kimbis says, “We spoke with the Trump team prior to the election, and they made clear to us that when Mr. Trump won, he did not plan on meddling in the electric markets, but instead encouraging competition. And to me, ‘competition’ is music to my ears.”
“Solar is allowed to compete with other energy sources across the country,” he explains. “We think that’s going to give us a leg up. We are the low-cost option for millions of American homeowners and businesses. We’re winning on the economics.”
Trump has also promised to address the nation’s infrastructure – a focus Maisano believes will help solar companies in the long run.
“The Trump focus on infrastructure and jobs will mean that all forms of energy development will see a wind at their backs,” he says. “The simple fact that each means new jobs and new economic opportunities will offer more real chances to build new projects. I wouldn’t expect renewables to be favored, but in the grand scheme, a rising energy tide will lift all boats – from coal to solar, to emerging innovative technologies.”
Burton mentions some other potential upsides of a Trump administration: “It may be easier to site projects on federal land,” he notes. “Further, the requirements for a National Environmental Policy Act study when a project has a federal nexus could possibly be reduced or eliminated. That could save some utility-scale developers time and expense. Also, increased financial regulations have made it more cumbersome for some banks to be tax equity investors. Repeal of those regulations could potentially help streamline the tax equity investment process for some banks.”
Although federal policy can still affect the U.S. solar industry, much of the work ahead will be on the state level. As Sunrun’s Jurich says in her blog, “State-level decisions drive most of the conversation around access to solar energy for homeowners.” She mentions a recent policy victory in Florida, where voters rejected an anti-solar amendment, and Kimbis notes other solar policy wins in California and Colorado. Most of the debate has centered on net energy metering (NEM), but there are myriad solar policies at issue.
“I think the majority of the fights in terms of numbers are going to take place on the state level,” says Kimbis. He notes solar stakeholders are, as of press time, battling utility-proposed measures in Utah and still trying to regain retail NEM in Nevada. Problems continue to rise in other states, as well. “It’s like a game of whack-a-mole,” he says.
According to Kimbis, efforts to protect solar require “many, many partners” on the local and national levels. “Going forward, we’re going to continue to see this kind of work. It’s going to be a combination of educating policymakers, PUC staff and others about distributed solar and its benefits,” he says. “When we do unfortunately get into rate cases that are unfair or thinly disguised efforts to eliminate solar, we’re going to fight like heck. But I’m also very hopeful that we’re coming to a point where we’re continuing to have battles, but we’re beginning to see the end of the war.”
In support of utility-scale solar development, Kimbis adds, SEIA plans to keep defending state renewable portfolio standards.
Four years from now
Soltage’s Grossman does not expect his company’s plans to change following the Trump victory, and he says, “Trump’s election may mark solar’s coming-of-age moment when the industry stands on its own.”
He echoes Jurich’s and Kimbis’ remarks, saying, “We believe the majority of solar policy will continue to happen at the state level, where the industry has won recent victories on value of solar and net metering and where we’ll continue to make the economic case for solar.”
Furthermore, corporate demand for solar keeps increasing – e.g., Google expects to become powered by 100% renewables in 2017 – and solar costs continue to decline.
Burton says, “The solar industry should progress over the next four years based on grassroots support, policies at the state and local level, technological improvements, and the tax benefits under current law.”
In the time ahead, Kimbis believes there will be a growing recognition of the true value of solar. “There will be a whole new wave of policymakers coming in, both at the federal and the state levels, who are going to look at their briefing books on energy and do a double-take when they see solar at the cost that it’s at today and the prices available to their constituents.”
In her blog, Jurich says, “This was a contentious election, but the sun rose again on Nov. 9. Americans want to harness that energy.”
To all of the industry stakeholders frightened about what the Trump administration means for the future of U.S. solar, Kimbis says the following: “We’re not only going to survive this; we’re going to thrive.”