How will the election shape the solar, wind, energy storage and utility sectors?
The reailty is there’s no bad outcome for clean energy in the upcoming election, though the climate is another story. For clean energy resources — solar, wind and energy storage — the range of possibilities over the next four years runs from the merely good to the incredible.
Renewables will continue to thrive regardless of the outcome on November 3, driven by their cost-competitiveness and broad political support, experts say.
“Things have been good under the Trump administration — oddly good,” says Dan Shreve, principal at Wood Mackenzie. “They’ve done their best to try to prop up fossil fuels, but it hasn’t really come to the detriment of renewables.”
The key battleground for energy and climate policy looks to be the Senate, where a third of the seats are up for grabs, most of them held by Republicans. Joe Biden has promised to set the country on a course to decarbonize its power sector by 2035, but his options for game-changing progress will be limited if Mitch McConnell from coal-loving Kentucky remains Senate Majority Leader.
Biden would do his best to find compromise or, barring that, force change through executive orders — making it easier to build renewables projects on federal land and waters, for instance, or requiring government agencies to procure more wind and solar power.
But in the context of the climate emergency — or even the existing renewables market — these would be relatively small steps.
On the other hand, things could get very interesting for clean energy should Democrats take both the Senate and the White House. Meeting Biden’s 2035 target could require an annual renewables market of 100 gigawatts or more in some years, compared to the 30 GW or so of new renewables capacity expected to get built in 2020 (itself an all-time high).
There’s a “magnitude of difference” between Biden in the White House with a Republican- or Democrat-controlled Senate, says Shreve, who analyzed the implications of a Biden win in a recent WoodMac research note.
With less than two months until the election, GTM’s journalists look at what’s at stake for the clean energy sectors — solar, wind, energy storage and broader power industry. The American political system tends to move incrementally, but don’t rule out the incredible just yet.
The U.S. power sector has undergone major changes over the past four years — just not the kind that President Trump promised.
Trump withdrew the country from the Paris Climate Agreement, harming its international standing in the climate change fight. His administration dismantled the Clean Power Plan, Obama’s signature energy-sector carbon reduction policy, and replaced it with a much weaker standard called the Affordable Clean Energy rule.
But that hasn’t stopped coal-fired power plants from closing at an even faster pace over the past four years than during Obama’s second term. Coal companies and utilities most supportive of Trump’s vision have filed for bankuptcy, including Ohio-based utility First Energy Solutions (now Energy Harbor) and Murray Energy. Major natural gas and oil pipeline projects have been abandoned or halted by legal challenges.
Meanwhile, the federal government’s carbon-reduction policy abdication has been counteracted by state-level action. Zero-carbon or 100 percent renewable energy goals by mid-century have been set in numerous states.
The Trump administration has certainly thrown sand in the gears of state-level policy to support renewable energy. Republican appointees at the Federal Energy Regulatory Commission (FERC) have imposed policies on mid-Atlantic grid operator PJM that could disadvantage state-subsidized clean energy resources against fossil fueled competitors in its multi-billion dollar capacity market, and FERC has blocked New York grid operator NYISO from changing its capacity market rules to support the state’s clean energy growth.
Trump appointees at the Department of Energy have buried a study of the value of interconnecting the country’s interstate transmission system, dubbed SEAMS, reportedly due to its undermining of the administration’s case against renewables as a reliable replacement for baseload coal-fired power plants.
All of this serves as evidence of what a second Trump term could bring to national electricity policy. But what would a Biden win do?
Biden’s plan to reach 100 percent clean energy by 2035 would set a much more aggressive target than any of the state and utility goals on the books today, forcing utilities to react rapidly. Two weeks ago, Duke Energy published its new integrated resource plan (IRP), and included six different scenarios for reaching its carbon targets.
“I think you’d see a lot more of that,” Shreve says of the multi-pathway approach. If the utilities “wake up on [November 4] and find that Joe Biden is the new president and the Democrats took a full sweep, they’re going to say, ‘OK, the first order of business is we’re redoing our IRPs tomorrow.”
Biden’s pledge to direct $2 trillion toward decarbonization efforts in his first four years in office would be critical to jumpstarting massive growth in renewable generation capacity and grid balancing capability.
His 100-percent clean energy goal is a massive undertaking — Wood Mackenzie projects it could cost $4.5 trillion to accomplish over the next 10 years, with hard-to-imagine increases in zero-carbon generation capacity and supporting transmission and storage infrastructure. But there may be lower-cost alternatives.
A U.C. Berkeley study this year lays out a pathway to 90-percent-carbon-free grid by 2035 that could reduce wholesale electricity costs compared to today by leaving a margin of natural gas-fired generation in place, but not building any new fossil-fired capacity. Even this lower-cost scenario would require about 70 gigawatts of new wind and solar per year, however.
What’s at stake for the solar industry?
The U.S. solar market has flourished over the past four years, and the industry is expected to add more than 18 GW in 2020, a new record. That’s all been accomplished despite Section 201 tariffs, a waxing investment tax credit and an uncertain policy landscape.
WoodMac expects the market to continue growing, hitting 20 GW in 2022, but Biden’s platform, fully realized, has the potential to multiply those installations by several times.
The solar industry’s most important policy has been the 30 percent investment tax credit (ITC). Developers are scrambling to start construction in the next several years as the credit phases down from its original 30 percent to a permanent 10 percent. Last year lawmakers declined to offer solar an ITC extension, even as the wind sector’s production tax credit got a one-year reprieve. Biden has promised to “reform and extend” clean energy tax credits, which could alleviate the installation cliff often seen after such credits expire.
The 100 GW or more of annual solar additions the U.S. may need to reach Biden’s decarbonization target would require not only herculean development efforts, but also a more robust U.S. supply chain that can support at least some of that demand. Current U.S. module production capacity sits around 7.5 GW, according to WoodMac, while solar cell production in the U.S. is near-nonexistent.
Under a Trump administration, the industry would continue confronting challenges of inconsistent policy — such as the administration’s flip-flop on Section 201 tariff exemption for bifacial modules — and the president’s clear preference for supporting fossil fuels.
Regardless of who wins the election, solar will increasingly be the go-to source of clean generation in utility IRPs and a threat to other sources in merchant power markets.
What’s at stake for the wind industry?
Wind power’s reign as the leading source of U.S. renewable energy will be short-lived: it took the crown from hydropower last year and will lose it to solar in the 2020s. But wind still has strong cards to play — very cheap power, broad political support and a new market shaping up offshore — and the election will influence how it gets to play them.
Depending on the post-November landscape, there could be a push to level the playing field for federal clean energy subsidies, with wind an obvious beneficiary.
The wind industry secured a one-year extension for its production tax credit (PTC) in late 2019 even as the solar sector was shut out. But while the solar ITC is only phasing down to 10 percent, the wind PTC is on its way to zero — an advantage for solar over the long term, all else being equal. A technology-neutral support mechanism — whether a tax credit, a carbon price or something else — could soften solar’s edge over wind in the 2020s.
A long-overdue breakthrough on transmission could bring similar benefits. There is no cheaper form of power generation today than a new wind farm built in the Central Plains. The challenge, and it is has grown quickly in recent years, is getting that power to market. The most competitive wind farms tend to be large and located far from cities. But developing major U.S. interstate transmission projects to deliver wind power to population centers has become enormously difficult and time-consuming.
Federal action — perhaps through an infrastructure package — would help alleviate the transmission bottleneck, and progress could conceivably come under a Republican-controlled Senate. The wind industry has notably broad political support, thanks in part to its concentration in conservative states like Texas, Iowa and Kansas.
Then there’s the multi-gigawatt annual market taking shape off the Atlantic Coast, with California’s waters in developers’ sights for the late 2020s or beyond. The U.S. offshore wind market has continued to gain momentum under President Trump, although the unexpected permitting delay of the pathbreaking Vineyard Wind project rattled the industry.
The federal government could take a different approach to offshore wind under a Biden administration, with potentially big consequences given the market’s budding development, says WoodMac’s Shreve. Project permits could come faster, and with more predictable timelines, and the government could move more aggressively when it comes to leasing out new development zones.
As with the transmission issue, improvements offshore could come under a Republican-held Senate. Simply providing agencies like the Bureau of Ocean Energy Management with more funding and resources could help things move more quickly.
What’s at stake for energy storage?
Donald Trump hasn’t claimed credit for it, but his administration has overseen the best four years in the battery storage industry’s history.
From 2017 to 2020, annual installations have more than quintupled — a slightly greater increase than in the second term of Barack Obama’s presidency. If correlation revealed causation, Trump should be hailed as the Grid Battery President (in addition to Coal Killer-in-Chief).
Battery growth, though, has happened almost entirely free from active federal intervention during this time. Research investments years ago keep paying dividends, and Order 841 from the Federal Energy Regulatory Commission is nudging wholesale markets to let batteries compete. The investment tax credit that Congress extended in 2015 sweetens economics for batteries paired with solar.
Instead, the battery acceleration owes its success to state policy in places like California, Hawaii, New York and Massachusetts. Creative utilities got out in front of state policy in Arizona, Colorado, and Nevada, and have promised big things in Florida and the Carolinas. Competitive market dynamics spurred a battery boom in Texas.
So, what does a presidential election mean for batteries?
Trump’s campaign website omits policy proposals. His “promises kept” on energy says nothing about energy storage. Absent new ideas, a Trump victory means more of the same. The key risk there is that Trump’s FERC decides to make it harder for carbon-free resources to compete, like it did in the mid-Atlantic PJM market and New York.
Biden’s policy platform mentions energy storage specifically. That said, it frames storage as something in need of research and development funding, lumping it in with pre-commercial technologies like small modular reactors, green hydrogen and carbon capture. No storage developer would say no to additional cost declines, but this framing says little about what storage is accomplishing with competitive deployments today.
Biden also promises “historic investment” in battery storage. The precise role for the federal government in those investments remains hazy, though Biden wants to power government operations with clean energy.
Ultimately, the biggest impact would come from Biden’s target of 100 percent clean electricity by 2035. Compliance with that goal effectively kills the payback for new gas plant construction, and would force utilities that aren’t already building storage to get moving or find some other carbon-free capacity, fast.
Biden also wants to fight for environmental justice and to redevelop old power plants; batteries can check both boxes by adding clean capacity in urban areas polluted by old fossil plants.
