US solar build set to surge long past Trump-Harris election
The U.S. presidential election should not impact solar and storage growth in the next few years, despite divergent policies on climate, and any longer-term reforms to incentives could depend on congressional splits, industry experts said.
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The result of November's presidential election could impact U.S. climate policy and comes amid rapid growth in U.S. solar and storage deployment.
The U.S. installed a record 9.4 GW of solar power in the second quarter of this year, following a record 11.8 GW of in the first quarter, and most of this was utility-scale capacity, the Solar Energy Industry Association (SEIA) and Wood Mackenzie said in their latest quarterly market report.
Republican candidate Donald Trump has pledged to scrap regulations on carbon emissions implemented under the Biden administration, withdraw the U.S. from the Paris agreement to fight climate change, and promote the deployment of new power plants without specifying which type.
Trump has said he would "rescind all unspent funds" from the 2022 Inflation Reduction Act and would target green policy implemented by the Biden administration.
The inflation act includes billions of dollars of tax credits for clean energy which have accelerated solar and storage deployment across the United States. Trump has not said which parts of the inflation act he would target and said he was a "big fan" of solar in a presidential debate on September 10. Any changes to the inflation act would require an act of Congress.
Vice President Kamala Harris said she is proud of the clean energy achievements of the Biden administration. Her party platform cites the success of the inflation act and calls for incentives to upgrade transmission networks to support solar and wind deployment, building on progress made over the last four years.
While there is some concern over the negative rhetoric on clean energy from the Republican side, "we’re also looking at the landscape of the beneficiaries of the policy that are in place today,’’ Jim Murphy, president and Chief Operating Officer of clean power developer Invenergy, told Reuters Events.
Many Republican leaders represent areas where new solar power generation and clean tech manufacturing plants are creating jobs.
“The [inflation act] has spurred investment and new job creation in both red and blue states, probably more red than blue states,” Murphy said.
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The U.S. solar sector created over 18,000 new jobs in 2023, representing a growth rate of 5.3%, the fastest rate in the energy industry, the Department of Energy (DOE) said in its latest U.S. Energy and Employment Report.
Since the inflation act, solar and storage deployment has soared and domestic module manufacturing capacity has hiked from 8 GW to 31 GW, according to data from SEIA and Wood Mackenzie. Invenergy has used incentives in the inflation act to build one of the U.S.' largest solar panel manufacturing factories in Ohio.
US solar installation forecast by market segment
(Click image to enlarge)
Source: Wood Mackenzie, September 2024
Surging investment in clean power and grids will continue in the short to medium term, whatever the outcome of the election, Ed Hirs, an Energy Fellow at the University of Houston, told Reuters Events.
“The [inflation act] incentives are baked into projects for the next few years,” he said. “I don’t think that Trump being elected would hurt the progress."
Congressional splits
The inflation act offers a tax credit for clean power projects as well as bonus credits for projects that source American-made content or are located either in areas of low income or regions impacted by the energy transition. The act also provides tax credits to clean tech manufacturing and created a transferable tax credit market that is boosting private sector investment.
The longer term future of inflation act incentives will depend on the outcome of congressional races as well as the presidential election, according to Murphy and Sanjay Patnaik, a fellow at the Brookings Institution think tank. There are 33 seats in the Senate up for grabs as well as the entire House of Representatives.
Electricity generation mix in 2023 by US state
(Click image to enlarge)
Source: American Clean Power (ACP)
If the Democrats win the presidency and both houses of Congress, inflation act incentives are likely to continue, and may even be scaled up, while a Democratic president and a divided congress might signal a continuation of the status quo, Patnaik told Reuters Events.
The ramification of a Republican sweep “depends on how much [inflation act] money individual members are willing to forego going into their districts,” Patnaik said.
Republican members of Congress have told Invenergy they were not happy with the way the inflation act was passed without any Republican votes, "but there’s also recognition for the positives in the bill and the things that are happening with job creation and economic development in their states,” Murphy said.
Even if some provisions of the act are cancelled, the impact on solar might be limited, Hannan Parvizian, CEO and co-founder of Exowatt, a supplier of an integrated solar and thermal battery solution, told Reuters Events. Exowatt received $20 million of seed funding from OpenAI’s Sam Altman and venture capital firm Andreessen Horowitz in April.
“We view the [inflation act] as gravy — it's nice to have and makes things even cheaper and more feasible, but I think even in the absence of the [inflation act] you'll still continue to see renewables be deployed,” Parvizian said.
Tariffs to stay
The Biden and Trump administrations both raised import tariffs for solar products and the Harris administration is expected to align with this approach. An oversupply of panels from China has hurt U.S. and European manufacturers and further tariff actions are possible. Trump has floated the idea of higher tariffs on all imports and has spoken of additional tariffs on Chinese imports.
“I think if anything, and I think both candidates agree, reducing dependency on the Chinese supply chain is something that they both can get behind. That’s why we are building our product in the USA and sourcing it in the USA,” Parvizian said.
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Huge grid investments are required to transport power from high solar and wind areas to the larger load centres in the coming years.
Delays in permitting and grid connections are a key challenge for US clean tech developers. A surge in applications from clean power developers has caused long backlogs in grid approvals, causing some to pivot to new markets.
The Federal Energy Regulatory Commission (FERC) has reformed grid rules to accelerate approval process but these will take time to impact project timelines.
There has been bipartisan support for a permitting bill introduced by West Virginia Senator Joe Manchin and Wyoming Senator John Barrasso, which aims to speed permitting of power transmission, mining and liquefied natural gas export projects. It is not clear if concessions will need to be made to pass Congress.
“We are all watching carefully federal action in permitting reform, including the Manchin-Barrasso Bill," Murphy said.
The bill could be "clarified to accelerate installation and enable buildout of more transmission, which is critical," he said.
The Biden administration has prioritised permitting reforms to accelerate clean power deployment. Recent measures include the streamlining of federal permitting processes, new deadlines for approvals and an expansion of development zones on federal land.
A Harris administration would be expected to "continue the current status quo of speeding up permitting for renewable energy projects," while a Trump administration would likely "speed up permitting for fossil fuel projects by weakening conservation and climate laws," Patnaik said.
Reporting by Mark Shenk
Editing by Robin Sayles