Steering renewable energy projects through a second Donald Trump presidency
Here we go again
This week marks the beginning of Donald Trump’s second term as U.S. President – a sobering milestone for those of us on the front lines of the energy transition.
Before his inauguration, Trump has already looked at the U.S. renewables sector and did what he does best – grandstand, posture, bully, and threaten.
He wants to pull the U.S. out of the Paris Agreement. The Inflation Reduction Act is under threat. New U.S. offshore wind projects are in serious jeopardy. And for some reason he’s revisiting his obsession with Greenland, which has sent Denmark reeling.
Against this backdrop, in our recent poll we asked global renewable energy thought leaders to anticipate how much impact Trump will have on their businesses. The results were unequivocal – 90% of respondents anticipate that Trump will have a minor negative impact on their companies. In other words, people are worried and may make some adjustments to try to compensate.
In the data, however, there is a note of optimism. Only a minor negative impact? Why not a major negative impact? To unpack these dynamics, it’s important to remember a few things when it comes to Trump.
A schoolyard bully in a business suit
Trump fancies himself to be a successful businessman. Sure, he has a penchant for leveraging debt and seizing opportunities when they arise, and he’s undeniably savvy in saying what his intended audience wants to hear.
Some of his businesses have been very successful. But most have failed in spectacular fashion. In the end, like most schoolyard bullies, he will stop at nothing to come out on top. More than anything else, Trump wants to win.
This is a negotiation
We need to recognize that Trump is always negotiating. Those petulant rants in the media about X-Y-Z topic? Negotiating. He is anchoring the conversation where he wants it. Then through more diplomatic, reasonable channels at lower levels of government, a compromise is often reached.
In this negotiation, we should appeal to his identity as a successful businessman who wants to win. An all-of-the-above energy approach to the U.S. economy? Sure thing – we can stand on our own economics, especially wind and solar. The messaging now is the same as it was in his first term: homegrown energy, local jobs, energy security. You want economic dominance? Then you have to include renewables. Renewable energy is far too affordable and efficient to stifle for the next four years.
And we need to press the China button. Let’s remind Trump that if he makes good on all of his threats, China will not only distance its lead on renewables over the U.S. (already a sizeable lead), but they will then stand to reap the long-term economic benefits of manufacturing and supply chain setups. China will leave the U.S. in the dust across these technologies and gain much-needed momentum for further growth up to 2050. The U.S. can close the gap on China, but only if Trump doesn’t exit the Paris Agreement, leaves the IRA alone, and stops his childish obsession with ‘windmills’.
There’s reason for hope
For all his posturing in his first term, let’s not forget that Trump presided over some significant milestones in the renewables sector:
BOEM seabed auctions
In December 2018 BOEM[1] issued four offshore wind seabed auctions, earning the federal government a record-breaking $410 million, laid the groundwork for lease areas in the New York Bight and other regions, and made investments in R&D such as floating wind and grid integration.
So why didn’t Trump just disregard BOEM’s auction results? Because the industry showed influential administration officials that offshore wind was a good business case. In fact, back in 2018, when we worked for MHI Vestas Offshore Wind, we had the pleasure of hosting Trump’s Special Advisor on Energy[2], Vincent DeVito, in his visit to Denmark to see the world’s largest offshore wind turbines. Mr. DeVito’s skepticism was reversed as he was compelled to acknowledge after his visit that offshore wind was impressive technology and indeed a very good business case, carrying that message back to the administration.
Solar buildout
The US solar industry also experienced significant growth, not only in installed capacity, but also in job creation and investment. Texas and Florida (Republican states, mind you) ranked #2 and #3 respectively in installed solar PV installations in 2020 according to numbers from SEIA, accounting for 43% of all new electricity-generating capacity added in the U.S. in 2020[3].
Tax Incentives
During Trump’s first term, the ITC[4] remained at 30% through 2019, with a 2-year extension in 2020 at a 26% rate for both residential and commercial projects[5].
The PTC[6] extension in 2020, although not a standalone initiative from Trumps administration but a part of the broader “Consolidated Appropriations Act, 2021” provided the continuity for renewable energy projects that the industry needed to ensure continuous investments in the supply chain.
Navigating the next four years
If you can somehow look past Trump’s sophomoric rhetoric, particularly when it comes to renewable energy, you will see that some projects on his watch actually got financed and built. The industry showed resilience. We will need to do that again. Here are three things to keep in mind as you saddle up for the next four years:
Engage the administration directly. At every opportunity, show federal administration officials your projects, your technology. Lots of tours and visits. They need to touch steel, concrete, and microchips. They need to smell the factories and watch workers in action.
Showcase renewable energy technology on its own merits. It’s not just about proving cost reductions, it’s about demonstrating value – to local communities, the job market, to society and the U.S. economy as a whole. Keep presentations clear and decisive. Oh, and ‘let’s beat China’ while we’re at it.
Embrace the Trump administration’s ‘all-of-the-above’ mantra. Lean into it. Hold him to this pledge. If he wants to win across the board, he will invariably support fossil fuels, but he will also need to support solar, wind, hydro, storage, EVs…all of it. In this, we need to maintain a brave face and fight for every bit of Trump’s energy mix that we can.
Deep breath. We can do this.
[1] Lease and Grant Information | Bureau of Ocean Energy Management
[2] red. DOI’s Counsellor to the Secretary for Energy Policy
[3] Solar Market Insight Report 2020 Year in Review – SEIA
[4] Investment Tax Credit (ITC): offers a credit for solar energy investments
[5] Consolidated Appropriations Act Extends Solar and Wind Tax Credits and Treasury and IRS Extend Safe Harbor for Eligible Renewable Energy Projects | Practical Law
[6] The PTC for wind energy, provides a per-kilowatt-hour credit for electricity generated by qualified wind projects
