Renewable Energy Takes Hit from Trump’s “Skinny Budget”
On February 27, Donald Trump announced in his first budget proposal that he would slash spending for non-defense programs by $54 billion in order to boost defense and security spending by the same amount. In even more recent proposals to Congress, Trump has said he wants to slash funding for the Office of Energy Efficiency and Renewable Energy by $516 million, and that he will decrease funding further for 2018.
The Trump administration’s cuts to the offices within the Department of Energy that deal with renewable energy are an apparent regression from Barack Obama’s efforts to champion clean energy—specifically, solar energy. The Obama administration had planned to bring one gigawatt of solar energy to low and moderate-income housing by 2020, but after the Trump administration’s cuts it is unclear whether that goal is still attainable. Trump has said that he will eliminate Obama’s Clean Power Plan—a policy that set a national limit on carbon dioxide emissions. He also plans to suspend the solar investment tax credit (ITC), which gives a 30 percent tax credit to residential solar buyers, and its parallel corporate tax credit, which encourages businesses to lease solar energy and buy PPAs (Power Purchase Agreements). In essence, the ITC offers a financial incentive to residences and companies to go green with their energy usage. It is difficult to argue that the cuts are warranted for economic reasons, since the solar power industry has contributed positively to the American economy. In 2016, according to Forbes, 43 percent of jobs in the electric power generation sector belonged to solar power, whereas only 22 percent belonged to fossil fuels.
Michael Wheeler, the vice president of policy initiatives at Recurrent Energy (a clean energy company that specializes in solar energy for large-scale clients), said in an interview with NPR that Trump’s budgets cuts and the end of the Clean Power Plan will “hurt solar companies, but it won’t kill them.” Wheeler went on to say that the solar industry is growing at too fast a pace to be completely deterred by an administration that doesn’t support it. While experts in the industry are worried about the pain inflicted by these budget cuts, solar power will survive.
According to Kim Wolske of the University of Chicago’s Energy Policy Institute, solar companies had already anticipated that residential ITC credits would expire at the end of 2021 (commercial ITC credits will continue at a reduced rate of 10 percent). “[In 2015, the ITC] was extended at the very last minute, leaving most in the industry to believe that it wouldn’t be renewed,” she told the Gate.
Instead, the fate of solar may depend on policies set by the states. “Electricity is regulated at the state level, with each state having its own renewable energy goals and mandates,” Wolske said. “States can influence rooftop solar through policies that affect the price of electricity, such as net metering, as well as the upfront costs of solar panels, such as through tax credits and cash incentives.” The fact that states already handle most energy policy indicates that they will likely be responsible for the future of solar policy.
State rather than federal intervention in the solar industry means that we will likely see inconsistent growth based on individual state policies. “Under the Trump administration, the fast growth we’ve seen in solar can be dampened,” Wolske said. “But in states where solar makes sense, we are still going to see growth. It may just not be at the same rate.”
It is difficult to determine whether states will take on more responsibility for the acceleration of clean energy without confirmation that Trump will indeed bring an end to Obama-era solar policies. His detailed budget plan, which will expand upon the blueprint released in mid-March and determine how cuts to the Department of Energy will be enacted, is due later this spring. In any case, it can be expected that the rate of growth of solar companies around the nation will decrease as the industry is relegated to lower political priority. The future of these companies will be determined by state policy, and by American citizens and companies becoming more aware of the type of energy they use.
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