The Blog - Wind energy market analysis

Posted 03/07/2018

Ilaria Valtimora


Trump has lost his battles with wind – but he could win the war

Investment in the US wind industry has carried on strongly despite the election of the wind-hating President Trump in late 2016, but a report from the American Council on Renewable Energy warns that lack of support from the federal government is putting vital investment at risk. Ilaria Valtimora reports

Trump and the wind industry

Thin-skinned tweet machine Donald Trump has largely spared the wind industry his online anger since becoming president. This has enabled committed companies and supportive states to drive the growth of the wind sector in the US.

However, the lack of support for wind from President Trump and his administration is now undermining the long-term confidence of investors in this sector.

New research suggests lack of investor confidence

This is the key finding of a survey conducted by the American Council on Renewable Energy in April 2018 of prominent investors in the US renewables sector, meaning those that each invest up to $500m annually. The survey has shown that investors in the US are looking to put their investment plans for the period after 2020 on hold.

The reason they are looking to do this is the Trump administration’s energy policies.
In May 2018, Trump announced steps to prevent the closure of any more coal and nuclear plants, having argued that the facilities are critical to national security and impact the resilience of the power grid.

This plan could also include new subsidies for coal and nuclear plants; and forcing electric grid operators to buy power from these projects, according to a leaked draft proposal from the energy department.

On top of this, the 25% steel tariffs imposed recently on countries including those in the European Union could negatively affect the cost of building wind farms in the US by increasing the cost of manufacturing the turbines.

What does this mean for wind power?

So far it’s possible to argue that Trump’s actions, including withdrawing the US from the Paris agreement in June 2017, have indirectly helped the industry by inspiring a backlash among US cities, states and corporations, which has driven the growth of the wind sector. But that isn’t enough to give investors long-term confidence.

Let’s look at the ACORE survey results. The report said that the wind-down of the production tax credit, plus the lack of further support from the federal government, meant that wind investors were holding off on any future investment plan post-2020. Fifty-eight percent of surveyed investors said the lack of federal policy support for renewables after the phase out of the PTC was a hurdle for renewables’ growth.

The American Wind Energy Association, for example, has shown that the five-year PTC extension passed in December 2015 had led to $25bn of investment flowing into the wind sector in the US.

Now, ACORE’s chief executive Gregory Wetstone has argued that the phaseout of the PTC would create an “uneven policy playing field” as wind and solar will have to compete with other energy sources that will be allowed to keep their tax incentives.

Possible solutions

The association has said that a long-term federal policy commitment to back carbon-free electricity generation would be the first step to rekindle investors’ confidence in the long term. This could be a price on carbon or a technology-neutral tax credit.

The report said that such a government commitment and ambitious state renewables targets would encourage 89% of the surveyed investors to double their firms’ overall investments in the years up to 2030. This would bring cumulative private investment in the US renewable energy to reach up to $1tn over the same period.

That would be a huge number if it happened. For now, though, we simply cannot see Trump changing his mind and backing wind and solar as well as nuclear and coal.

Unleashing $1tn of investment could encourage him though, as well as the jobs this would create in Republican states. Speaking to AWAW a couple of months ago, Stephanie McClellan, director of the Special Initiative on Offshore Wind, said that US offshore wind had seen only positive actions from President Trump, as he saw the economic benefit of the sector. That $1tn is dependent on him seeing the same case onshore.

The Trump administration and the federal government could do a great deal to help restore investor confidence in wind. But will they? Only his tweets will tell.

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