What’s at Stake for Clean Energy in the US Election?

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.â€

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.

What’s at stake for utilities?

The U.S. power sector has undergone major changes over the past
four years â€” 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.â€

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.

(Reported by Jeff St. John)

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.  

Historical U.S. power market capacity additions vs. Biden’s
“Build Back Better” estimates. (Wood Mackenzie)

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. 

(Reported by Emma Foehringer Merchant)

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, such changes offshore could come
even under a Republican Senate. Simply providing agencies like the
Bureau of Ocean Energy Management with more funding and resources
could help things move more quickly.

(Reported by Karl-Erik Stromsta)

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.

(Reported by Julian Spector)

Source: FS – GreenTech Media
What’s at Stake for Clean Energy in the US Election?