If you take him at his word, President-elect Trump thinks that America’s energy policy has gotten onto the wrong track. He says that we need to waste less effort developing renewables and give more help to generating and using fossil fuels.
Given that most public policy affecting the solar industry comes at the state level rather than from Washington, what effect could a Trump presidency have on the industry?
Utility-scale solar may face challenges under Trump, but experts mostly agree that a Trump administration will have little direct effect on rooftop solar.
Trump Is No Fan of Solar
Trump has dismissed climate change and expressed his contempt for both renewable energy generally and for solar power specifically in no uncertain terms. As he wrote in his 2015 book Crippled America:
There has been a big push to develop alternative forms of energy — so-called green energy — from renewable sources. That’s a big mistake. To begin with, the whole push for renewable energy is being driven by the wrong motivation, the mistaken belief that global climate change is being caused by carbon emissions. If you don’t buy that — and I don’t — then what we have is really just an expensive way of making the tree-huggers feel good about themselves.
The most popular source of green energy is solar as several decades after installing solar panels to get your money back. That’s not exactly what I would call a good investment. Even if that number is only half right, what kind of investment do you want to make that takes 20 years before you break even.
This is typical of what Trump has said about solar elsewhere, such as this somewhat confusing statement from a campaign rally in Pennsylvania. “It’s so expensive,” Trump said. “And honestly, it’s not working so good. I know a lot about solar. I love solar. But the payback is what, 18 years? Oh great, let me do it. Eighteen years.”
He’s also said repeatedly that he supports fossil fuels and will oppose any limits on oil and gas production. Trump even famously promised to bring back America’s failing coal industry, an unconvincing campaign promise that now looks likely to fall through.
Is there a bright side?
Energy never made it to Trump’s list of top issues such as immigration, trade and foreign policy. So Trump may not have much of a position on solar outside of a few general comments during the campaign.
And Trump is famous for being unpredictable and willing to change his mind on various issues. Solar company CEO Barry Cinnamon has even surmised that Trump, as an experienced businessman, might recognize that solar power is a good investment, and throw his support behind solar in the future.
But barring some unexpected change in Trump’s attitude towards renewables, at best the solar industry can expect little help from Washington over the next four years. And Washington’s new attitude to energy will probably mean more for big utility-scale solar installations than it will for rooftop solar.
Trump May Slow Utility-Scale Solar
Two developments at the federal level may hurt utility-scale solar.
First, Trump has promised to cancel the EPA’s Clean Power Plan, which would have required states to reduce their carbon emissions from electricity generation. To meet targets to reduce pollution, states would have required utilities to cut their use of fossil fuels and to increase generation from renewables including solar.
Some states have already voluntarily implemented regulations to meet the requirements they anticipated under the CPP. But with the program now effectively dead, mandates under the CPP will no longer provide a reason for utilities to switch from dirty generation to clean power.
There are of course other reasons for utilities to get into solar, especially its affordability, but the lack of a mandate from Washington to make the switch may slow things down.
The second action Trump has promised to take that could reduce demand for utility-scale solar is to pull the US out of the Paris Climate Agreement.
Of course, that won’t be so easy. Terms of the treaty mean that it could take the US up to four years to fully remove itself from the Paris climate process, though Trump could simply refuse to honor the treaty’s commitments during that period and risk the consequences.
Meanwhile, delegates at the climate conference meeting now in Marrakech, Morocco are pledging to put pressure on the US to remain in the accord, with France threatening to slap a carbon tax on US imports if Trump makes good his anti-Paris pledge. And big US companies including Nike, Starbucks and the Gap have urged Trump to stay in the agreement.
Whatever happens, Trump and his new EPA chief, climate-science denier Myron Ebell, have sent a clear message to the world: the incoming US government doesn’t believe that climate change is caused by human activity and the new administration will do nothing to solve a problem that it views as a hoax invented by China, to paraphrase a famous Trump tweet.
This clear position is certain to send a message to US utilities that support for solar in Washington has dried up. And if the administration doesn’t put the Paris Accord into effect here, then any federal incentives for renewables or any disincentives on fossil fuels that would have come with the agreement will now not be coming at all.
So, barring a big change in Trump’s approach, there won’t be much help for solar coming from Washington in the next four years. That may slow down utility solar…or it may have little effect.
Some industry analysts think that utilities have already gotten so much religion on solar that they’ll continue to install it on their own. Another bright spot is that big companies like Microsoft and Walmart are now demanding so much solar that utilities will have to ramp up renewables just to keep from losing big corporate customers.
If utilities don’t offer enough solar quickly enough, they may find themselves at the losing end of a big customer revolt. That’s what just happened to NV Energy in Nevada.
There, big casinos who wanted more solar than the utility was willing to provide led a successful effort to deregulate the state’s electricity market on November’s ballot. Passage of this ballot initiative promised to end NV Energy’s monopoly. The initiative’s success also punishs the company hard for dragging its feet on solar for its biggest customers for years and even fighting against solar policies including net metering.
Trump Probably Won’t Hurt Rooftop Solar
Since energy was not one of Trump’s top campaign issues it’s safe to assume that he’ll focus on other priorities including trade, immigration, abortion and foreign policy.
So, even though Trump is on record opposing federal support for renewables, his administration may not get around to attacking the main federal incentive for rooftop solar, the 30% Federal Investment Tax Credit, in the near future.
For now, the tax credit enjoys enough support from both Democrats and Republicans that it would be difficult to roll back. A Trump administration is unlikely to want to spend its political capital to fight federal support for rooftop solar that’s popular even among Trump supporters.
But that doesn’t mean the tax credit is safe for the remainder of its expected lifespan.
“Although the Trump team has indicated to our sources that it has no plans to roll back the ITC extension, our checks suggest the ITC could very well be on the chopping block at some point,” writes Roth Capital Partners.
The good news is that a potential threat to the federal tax credit might have a silver lining for rooftop solar installers.
Ironically, the renewal of the ITC in 2015 helped lead to a slowdown in growth of rooftop solar sales in 2016. In the same way, a threat to the tax credit could help installers add urgency for residential customers in particular to stop waiting and get solar in 2017 to lock in the tax credit before it might go away.
In any event, rooftop solar has become viable on its own without the federal tax credit in some areas.
And rising utility charges expected by many experts in the future could make solar relatively more affordable. Residential electric rates actually fell 0.6% in 2016, adding to this year’s solar slowdown. But electricity costs could start rising again soon. Shayle Kann, the senior VP of GTM Research, predicts that residential power rates could go up 3% in 2017. He also predicts that rooftop solar will continue to grow, though more slowly than in the recent past.
Overall, for rooftop solar, the real action is not at the federal level, but in individual states. And on the state level, the public has shown recently that it wants more solar and wants state governments to enact solar-friendly public policy. As Frank Andorka writes,
Fortunately, state policies have always been the biggest drivers of solar industry expansion, and increasingly solar is being procured on its economic merits alone, including in states that do not have renewable energy mandates. In fact, state ballot issues Florida, Nevada and Washington last week highlighted state-level policy’s continued importance.
Utilities Are A Bigger Threat to Solar Than Trump
To protect and encourage solar-friendly policies on the state level, industry consultant Pamela Cargill says that rooftop solar companies need to do more policy work. In her article “In Residential Solar, Policy Work is the New Customer Acquisition,” Cargill writes that “Unlike the trades and related construction and home services industries, energy policy weighs heavily on the viability of a local market for prospective solar customers.”
Rooftop solar companies have put too much focus on finding customers in the short term and have paid too little attention to how public policy can hurt them in the longer term. Cargill thinks that this puts rooftop solar companies at risk:
Many solar companies have considered the benefits of net energy metering (NEM) and the utility rates rooftop solar builds its value upon as de-facto. While we are fussing over endlessly optimizing system designs, creating ever more efficient sales funnels, the results of rate reforms could easily eat the solar industry alive.
Never forget – as long as we engage consumers with the primary message that solar is about lowering utility bills, the value of a behind-the-meter PV system to a consumer is inextricably linked to the results of rate design and utility regulations. That’s not a particularly powerful position for us to operate from.
As long as the utility and its policies are “the hand that feeds us,” we need to engage collaboratively and cooperatively to shape tomorrow’s energy frameworks and policies. This is the crucial element that distinctly separates solar from being “just another one of the trades.”
Cargill advises solar companies to pull their heads out of the sand when it comes to dealing with government — or else they may lose much of the leverage they have today to get new customers.
That’s going to mean going up against the real power at the state level when it comes to energy policy. And that power is not Donald Trump. It’s the local electric utility.
- After all, it was utilities led by NV Energy who got the Nevada Public Utilities Commission in December of 2015 to gut the state’s net metering program, causing major solar installers to pull out of the state until the industry could later negotiate a compromise with utilities and the state.
- It was utilities including Florida Power and Light that led the effort to get the anti-solar Amendment 1 passed in Florida just this year. Fortunately, Florida voters rejected this ballot measure. But utilities may try something similar in other states in the future.
- And it’s the utility industry lobby, the Edison Electric Institute, that’s continuing to lead an effort nationwide to convince the public that rooftop solar is selfish and that only utility-owned solar is good for ratepayers.
The solar industry and all solar advocates should keep an eye on Trump. But they shouldn’t let the political fireworks that his administration is sure to set off in Washington distract them from the real battle for solar happening in every state capital in America.
— Erik Curren, Curren Media Group