Tuesday, June 27, 2017

Texas Renewables Unfazed by Trump Energy Policies

By Tom Kleckner

GEORGETOWN, Texas — Preston Schultz, director of development for Chicago-based Hecate Energy, says his firm is named after the three-faced Greek goddess of the crossroads. “She’s also the goddess of black magic,” he said, “but we don’t talk about that so much.”

 Schultz | © RTO Insider

Schultz | © RTO Insider

It’s an apt enough description for where the renewables industry finds itself following last week’s election of climate skeptic Donald Trump as president of the United States: at the crossroads, and possibly needing a little magic to build upon its recent progress.

Trump, who has promised to scrap the Clean Power Plan and withdraw the U.S. from the Paris Agreement, has shown little affection for renewables but promised to “save” the coal industry and reduce restrictions on natural gas production.

“Obviously, there is some uncertainty,” Schultz said Friday, before participating in a panel discussion during the Texas Renewable Energy Industries Alliance’s GridNEXT conference. “It’s probably more the climate goals … whether they’re under threat or whether they’re actively implemented at this point. … [The U.S.] probably just won’t participate very much” in the Paris Agreement.

Others at GridNEXT also shrugged over the incoming administration’s effects on the renewable industry. Only a couple of speakers briefly mentioned the subject, and hallway discussions were animated less by concern over politics than excitement over emerging renewable and battery storage technologies.

State RPS, Federal Tax Credits Remain

One reason there was little alarm is that states — through renewable portfolio standards and policies favoring rooftop and utility-scale solar — are continuing to create demand. (See related story, Michigan Senate Increases RPS; Keeps 10% Retail Choice Cap.)

Another is that Congress last year approved legislation extending wind tax credits through 2019 and solar credits through 2021. (See Solar to Shine Under ITC Extension.) The bill also eliminated the longstanding ban on the export of crude oil.

The solar industry has added more jobs than oil and gas in each of the last two years, while the Bureau of Labor Statistics says that the fastest-growing occupation through 2024 will be wind turbine technician.

Pointing to the industry’s economic development, Hala Ballouz, president of Electric Power Engineers, expressed doubt the tax credits would be revoked, a sentiment others at the conference shared.

“That would not be a wise battle. It would be a hard thing to reverse,” she said. “Energy choice, job creation … those are things Americans like.”

“I think it would be quite an effort to reverse the extension that was in place,” Schultz agreed. “Many in Congress who were involved in that approval are still there. Ultimately, the extension was tied to the export of oil, so it was kind of a quid pro quo. There was dealmaking, so there may not be strong support … going back on a deal that was struck.”

But few expect the subsidies to be extended beyond 2021.

“With the election, we’re not going to get the government support we’ve been used to, so we’ll have to be cost competitive,” Texas Energy Aggregation’s T.J. Ermoian said.

trump texas renewable energy

During his campaign, Trump railed against the Obama administration’s “war on coal,” overlooking market dynamics that have made gas-fueled power plants much more attractive than coal-fed units. He derided “fast-tracked” wind projects that “kill more than a million birds a year” and said “the problem with solar is it’s very expensive.”

Falling Prices

Reed | © RTO Insider

Reed | © RTO Insider

A study last year by the Lawrence Berkeley National Laboratory, however, found that prices for installed PV solar fell more than 50% between 2009 and 2014 — and are still dropping.

“The developments we’ve been hearing today — that storage [costs are] coming down and how people and solar and storage can work together — all those things will proceed,” said Cyrus Reed, conservation director for the Sierra Club’s Lone Star chapter.

“I don’t see a huge change in markets for renewables, whoever the president is,” Reed said. “The market forces in place are such that I don’t see renewable energy impacted in a big way under the new administration. I think it will continue to develop. The big deals that Congress and the president made on the [tax credit] extensions … are likely to continue, so that gives some certainty to the industry.”

Royal | © RTO Insider

Royal | © RTO Insider

“This industry will stand on its own,” agreed Schultz, “and I think it will do that over the runway they’ve mapped out with the current incentives. I think you still need that support to keep driving this industry.”

Energy market forces include natural gas prices in the $2-3/MMBtu range, thanks to the fracking revolution. It is those prices that have primarily driven down the use of coal, and few expected those costs to change, given Trump’s emphasis on fossil fuels.

“With the election results, gas could remain low for a really long time,” said Hans Royal, associate vice president of strategic renewables for Renewable Choice. “That poses a challenge to renewable buyers.”

Foster | © RTO Insider

Foster | © RTO Insider

“Every time he talked about energy, it was usually in relation to the coal industry,” said Chris Foster, manager of resource planning for the city of Georgetown. “We’ve told people for years the only way to bring back a lot of the coal in our area is to essentially figure out how to raise the prices on natural gas. Those [coal and gas industries] are two lobbies in Congress that are usually together, so we found it highly unlikely one would pivot [against] the other. … So under [Trump’s] administration, we also don’t expect [many] changes.”

Foster is one of the driving forces behind Georgetown’s drive to provide its more than 54,000 residents with 100% renewable power by 2017. The 50-50 mix of wind and solar will be supplied by EDF Renewable Energy and SunEdison, respectively, through a combination of long-term, low-cost power contracts.

Red States Go Green

“This area is red for political reasons, but the reality is, renewable energy in Texas is getting so cheap every day,” Foster said. “Let’s say Capitol Hill went and said, ‘You know what, all those subsidies are done.’ It wouldn’t change the growth pattern of the wind industry here, because [it’s] economically competitive now. It would only delay some of the solar stuff by a couple of years, because of the timing of the pipeline the projects are in.

“The reality is, Texas has such a great wind profile and such a great solar profile that economically speaking, [renewables] are going to compete, with or without those subsidies.”

Indeed, a Brattle Group study in May predicted that natural gas and renewables could provide 85% of ERCOT’s demand by 2035, with coal’s contribution reduced to 6%. Schultz said he is seeing similar receptiveness to renewable projects in the equally red Southeast, where much of his work is. He said a Tea Party group in Georgia has been pushing renewables from the perspective of energy choice and avoiding regulated monopolies, and that Southern Co. subsidiary George Power recently issued an integrated resource plan that calls for “a big chunk of renewables.”

“This latest one had 1,000 MW of renewables over the next two or three years. They’ll have 700-plus solar megawatts in the ground by mid-next year,” Schultz said. “It’s a bipartisan issue … as compared to climate change. You talk to the landowners, they get it. They’re benefiting from this.”

Wind development has taken off in the Great Plains, where the wind is plentiful and the states — Kansas, Nebraska, Oklahoma and the Dakotas — are as red as they can be. When Trump made a campaign stop last November in Iowa, another hotbed of wind energy, he was asked about his stance on wind subsidies.

“I’m fine with it,” the candidate told his questioner. “Wind is a problem because it’s very expensive to build the towers. Very, very expensive. Wind will need subsidies. It’s going to have subsidies.”

Of course, that was then. Now, Reed said, environmental and renewable advocates will continue to make their case.

“We will continue to work on these issues, and we will continue to talk to people of all political stripes about the benefits of renewable energy.”

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