Just days after Donald Trump’s election victory, speculation on what may happen to the rapidly growing renewable energy market has been fierce. In truth, neither we nor our partners in this space can accurately predict precisely how the new administration will affect this market.
The good news is that we do know five key things:
- Voluntary corporate buyers have been leaders in the renewable energy marketplace for many years. Even before renewables reached grid parity on price, thousands of companies were buying green power at a premium because it was the right thing to do. In 2015, corporations led the explosion in the clean energy market, driving more than 50% of new capacity in wind and solar. We have no reason to believe that corporate buyers will back away from the market now.
- Thousands of turbines have been protected under the 2016 safe harbor provision of the recently extended wind Production Tax Credit (PTC). These sheltered turbines will allow for competitively-priced power purchase agreements (PPAs) to continue over the next few years at a minimum.
- Dramatically falling wind and solar technology costs have made new projects increasingly price competitive against coal and natural gas. Regardless of any tax subsidization, falling equipment and operating expense means that it’s become ever cheaper for developers to install new renewable energy projects. This is a compelling reason for investors and developers to favor wind and solar over conventional fuels (which are historically more volatile on price).
- International market opportunities for renewables are exploding. Large-scale offsite and onsite renewables are already available in a variety of geographies. India has aggressive goals on renewables and many states provide economically-favorable financial incentives. Mexico, too, has an established, feasible market for PPAs. Many other markets including the EU, Chile, Australia, and Argentina are also opening up the PPA opportunity. In areas where PPAs are not currently available, many competitive, credible contractual instruments in the form of energy attribute certificates (EACs) can be used to help companies meet their sustainability, disclosure, and reporting goals. These include Guarantees of Origin in the EU, TIGRs in Singapore, and GoldPower® and I-RECs in many other established and emerging markets.
- Finally, even if the economic benefits of power purchase agreements are temporarily stalled by legislative or regulatory changes, the established domestic REC market will enable companies to continue to meet their environmental commitments.
For more good news, we recommend the following:
Trump Can’t Stop the Energy Revolution by Chris Bryant, Bloomberg Gadfly
The AWEA Statement on US Election Results by Tom McKiernan, CEO
For a more speculative position, check out:
How President Trump Will Affect Clean Energy and the Climate Change Fight by KatieFehrenbacher, Fortune
Trump’s Tax Proposals Would Threaten Wind and Solar Investment by Joe Ryan, Bloomberg
What Does a Trump Presidency Mean for Environmental Managers by Jessica Lyons Hardcastle, Environmental Leader
All Bets are Off by Gavin Bade, Utility Dive
And please, contact us if you have any further questions about how the 2016 election results may impact your energy strategy. We’ll be sure to keep you updated as we learn more.
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