President Donald Trump’s signing last Tuesday of an Executive Order to effectively nullify the U.S. Clean Power Plan signals the new administration’s support for the coal industry and intention to turns its back on Obama-era climate change efforts. However, the move “won’t derail U.S. decarbonization” due to the plummeting cost of renewable energy and the decreasing profitability of coal power, according to BNEF. While repealing the bill is deeply symbolic, and spells concern that the U.S. may pull out of the 2015 Paris climate agreement altogether, it will likely have little impact on the U.S. renewable energy industry. The cost of wind and solar farms has dropped significantly in recent years, to the extent that these technologies can now compete with fossil fuel plants on price. Energy generated from the sun and wind accounted for more than half of the new capacity added to U.S. grids in the past two years. In addition, the low price of natural gas is driving down the price of electricity and forcing record numbers of aging coal plants to close.
Crucially, the federal tax credits for wind and solar power, coupled with state laws requiring that utilities source a certain portion of their electricity from renewables, play an important role in fueling the growth of the industry.
“As long as you have the tax credits, you should continue to see solid growth of renewables over the next three to four years,” Ethan Zindler, a senior BNEF analyst in Washington, said in an interview with Bloomberg News.
Even without the Clean Power Plan, BNEF forecasts that wind and solar energy will grow by some 51% in the U.S. over the next three years. Among the plethora of clean energy deals struck in the past week was $59.8 million in loans arranged by GCL New Energy Holdings for an 84.5-megawatt portfolio of solar projects in North Carolina, and First Solar’s sale of a 250MW solar PV plant in Nevada to a unit of Capital Dynamics, the Swiss asset manager.
Nevertheless, President Trump’s move last week to cancel policies quantifying the damage from carbon pollution and regulating methane emissions on federal land are a setback to environmental protection measures in the U.S.
“This is not the time for any country to change course on the very serious and very real threat of climate change,” said Erik Solheim, executive director of the United Nations Environment Program, quoted in the New York Times. “The science tells us that we need bolder, more ambitious commitments.”
There are concerns that last week’s Executive Order puts the U.S. on a path to miss its commitment to cut CO2 emissions 26% from 2005 levels by 2025, agreed at the COP21 negotiations in Paris two years ago. And that this in turn could embolden resistance to climate action in other countries.
Meanwhile, dozens of private companies are backing the move to a greener energy system. From Google to General Motors, many large companies have pledged to power their operations entirely with wind and solar, and are investing millions of dollars in the sector.
Yesterday, Facebook and Microsoft, together with venture capitalist firm Allotrope Partners, set up a facility to finance energy access projects in Indonesia, India and East Africa. The aim is to unlock some $50 million from 2018 to 2020 from private capital into projects that help to transmit renewable energy over small electricity networks.
In other news last week, Enel announced plans to move ahead with its largest solar project yet — the 754MW Villanueva photovoltaic plant in Mexico, which will be financed by the group’s own resources.
Enel has also been active in Chile’s Atacama Desert, where the first geothermal plant in South America began operating last week. The 48MW plant, located at nearly 15,000 feet above sea level, is owned by Geotermica del Norte, a joint venture between Enel and Chile’s state oil company ENAP.
In the U.K., a contest for 290 million pounds ($363 million) of electricity generation contracts kicked off yesterday, with clean energy companies bidding to get a firm price for the power they sell. Atlantis Resources, a British developer of tidal stream turbines in Scotland, will enter the process in a bid to show its technology is commercially viable.
To win in the U.K. auction against other technologies, the Atlantis turbines must reduce costs by almost 70 percent to roughly 100 pounds/MWh, within striking distance of the cost of nuclear and offshore wind. Winners will be announced between June and September.