Times Are Changing, But There Is Reason to Be Hopeful
On the heels of the election, many of our clients (and pretty much businesses everywhere) are curious to know how their industry might be affected. In response, we’ve put together a four-part blog series that dives into the new administration’s campaign promises, and the potential impact on sectors we service at Kiterocket. In this series, we will also provide proactive marketing strategies you can take. If you are in clean tech, renewables, or smart energy, this first blog is for you. Keep reading and stay tuned for more.
With a new administration and congress readying to take power, and issues like climate change, pollution, and carbon emissions at stake, many are concerned about potential impacts to the Inflation Reduction Act and other policies supporting the deployment of renewables and the clean energy workforce in the United States. Yet, with all the progress and implementation that has been made across the country, in local communities and throughout different industries – and with billions of dollars spent (and made) – it may actually be too late to put the clean energy cat back in the bag.
Addressing the Worry – What Is Happening?!
Yes, people are understandably concerned. This, of course, is underscored by a strong desire on the part of the incoming executive and legislative branches to focus on traditional fossil fuels. In fact, early reports signal a desire to remove the country from all international climate agreements (including the Paris Agreement), eliminate clean energy programs within the Department of Energy (DOE), and unleash a “big oil boom,” according to Business Insider.
Plus, “the $400 billion pool of loan authority under the DOE’s Loan Programs Office is also under threat,” reports Canary Media. So far, the program has been responsible for making funds “available to solar projects, battery factories, nuclear power plants, clean hydrogen production sites, critical-minerals mining, processing, and recycling, and a host of other climate-related projects.” However, with only about $25B in commitments and $12B in loans obligated so far, a vast majority of the cache remains highly vulnerable. This may explain indications of “a rush to get deals done before Trump’s administration takes office,” reports Energy Storage News.
And according to an article in Power Grid International, Trump has “vowed to throttle offshore wind development ‘on day one’” and get rid of the Inflation Reduction Act – the most effective and largest climate legislation that the world has ever seen.
(Gulp.)
This is all on top of high tariffs on imports from China. If implemented, they could seriously slow down battery storage projects in the U.S., as well as other clean energy projects that require components from overseas – even while “energy storage enjoys enough bipartisan support and is viewed as sufficiently economically viable by utilities and grid planners in the US for demand to remain robust,” according to Energy Storage News.
To make matters potentially worse, without the “right” visa, millions may be prevented from working within the borders of the U.S. That could further hit clean energy below the belt, as many non-American citizen professionals, from Mexico to India, represent a huge swath of our nation’s workforce – over half a million have H-1B status. And it has been reported that, during the first Trump administration, the U.S. Citizenship and Immigration Services (USCIS) “denied a larger percentage of H-1B petitions than in the preceding four years.”
Then there’s Elon Musk, a wild card, who will co-lead the soon-to-be-created Department of Government Efficiency. With a well-known history in the world of solar and EVs, one might think he could have a positive effect on the White House and Congress, when it comes to promoting a cleaner infrastructure. That said, his role may a bit more complicated. For example, as a top competitor the EV space, Tesla has less of a need for subsidies than other manufacturers. This may be why he seems to support ending the $7,500 consumer tax credit for buying EVs – signaling that “killing the subsidy might slightly hurt Tesla sales but would be ‘devastating’ to its U.S. EV competitors,” Reuters reports.
Thinking Optimistically – We Might Be Ok, Here
All that said, there may still be good reason to remain hopeful overall in the face of this political transition. When it comes to the topic of going green, the world – including the U.S. – has come a very long way. According to Environmental Defense Fund, “the clean energy and sustainability economy remains a large and growing source of employment for over 4 million Americans.” And with billions in DOE loans earmarked for clean energy already obligated, that will continue to have impact on the industry’s growth – at least for now.
Plus, with our nation’s BIGGEST corporations focused on ESG (environmental, sustainability and governance) goals. it is almost impossible to imagine the clocks being rolled back here – especially when ESG practices require the use of renewable energy: “Over 90% of S&P 500 companies currently publish ESG reports, indicating a very high level of business engagement with ESG practices,” reports McKinsey Sustainability.
In terms of competitive strength in the market, solar also makes sense from a fiscal standpoint. Today, solar systems can produce electricity at a much lower LCOE than a new fossil fuel power plant. Consumer Affairs reports that “electricity from fossil fuels costs between 5 and 17 cents per kilowatt-hour [while] solar energy costs average between 3 cents and 6 cents per kilowatt-hour and are trending down.” Plus, solar and storage have a much faster downward price trend as compared to traditional fossil fuels. According to Our World in Data, with the increase in global manufacturing, “Solar photovoltaic costs have fallen by 90% in the last decade… and batteries by more than 90%.”
And current technology looks almost nothing like it did just 20 years ago, with not nearly as much labor or maintenance-related costs required for operation. Now, even the largest energy sites (including those with storage and EV charging stations) can be easily programmed to automatically optimize performance, resilience, savings, and carbon output – without much human intervention.
Savings, sustainability, AND convenience? That’s a hard combination for society to give up.
Another promising fact supporting the long game for clean energy, is the Inflation Reduction Act (IRA), which was intentionally designed to withstand the possibility of a new, opposing administration. In 2022, the IRA introduced $380B in investments across sectors, such as solar, hydrogen, wind, carbon management and more.
As a result of billions already disbursed, our country is experiencing what appears to be a runaway stimulus, with the opening of over 160 new clean energy manufacturing facilities, and the creation of over 100K new jobs – with at least 23K of those being in manufacturing. And overall manufacturing expenditures have gone from $9.9B to $34.6B, creating a strong local supply chain that is already highly operational – pumping out mounting systems, polysilicon, modules, inverters, transformers, HV distribution, battery packs and more.
This kind of economic progress has given thousands of families across America – in both blue and red states – a viable way to keep food on the table and a better understanding of how our communities benefits from smart, clean energy technologies. According to Forbes, the IRA has “embedded clean energy investments into the economies of red states and fostered new industries nationwide, making a full repeal or extensive rollback politically and economically challenging.”
Then there’s the USDA’s REAP (Renewable Energy for America Program), which provides loan financing and grant funding to entities in agriculture. According to Brownfield AG News: “Since January 2021, USDA has invested over $2.3 billion through REAP.” And, although the program could be a target under the new federal government, the impact has been strong across blue AND red states, including North Carolina, Iowa, and Wisconsin. In Lafayette, Indiana, for example, pork producers are seeing a 90% reduction in energy costs as a result of onsite solar, according to National Hog Farmer. At the end of the day, making an argument against REAP could be challenging without the support of key states that are benefitting.
Demonstrating how quickly the IRA has already become entrenched in our society and economy (which was by design), 18 House Republicans warned House Speaker, Mike Johnson “against fully gutting IRA incentives [as] eliminating its tax credits could… jeopardize billions of dollars of investments,” according to Energy News Network. This makes a lot of sense, considering that “Republican-held districts have received about four times more IRA funding than blue districts.” And while Senate could overturn the IRA as part of a reconciliation bill that only requires 51 votes (the same way the bill was passed), with the Republican House leadership wanting to show unity, it is unlikely that they will take votes that would split the party.
Power at the State Level Is Still a Thing
No matter which way the new administration goes, individual states (or governments) will most likely play a crucial role in advancing clean energy, both through policy and direct action. They can enforce laws that limit pollution, implement building codes that require energy-efficient construction practices, and ban the use of harmful pollutants. Plus, they can provide financial incentives for businesses and consumers to adopt green energy practices, like EV charging and battery storage.
In fact, during the first Trump administration, many states took matters into their own hands and began to implement clean energy strategies that remain intact and successful. Today, “25 states and Washington, D.C., have now instituted some form of target for achieving either economywide net-zero carbon emissions, 100 percent renewable or carbon-free electricity, or both,” reports Canary Media.
Driving Support Through Awareness, Advocacy & Education
It may not be possible to know exactly what the future holds for renewable energy in the U.S, however that fact that clean energy only grew under the first Trump presidency is a good sign.
Still, to get to net zero emissions by 2050, spreading awareness about the effectiveness and economic benefits of going green could be key. And the good news is that there are tons of energy-focused organizations that can help with resources and advocacy, like SEIA (Solar Energies Industry Association), which is constantly lobbying in a bipartisan manner for the protection and expansion of the U.S. solar market. By continuing to educate businesses and individuals on the savings, convenience, and environmental impact of certain technologies, more of America may become invested in a greener future, making them more likely to support the industry at the ballot box, as well as in everyday life.
