Developers of the renewable energy industry said the demand for wind and solar power from U.S. cities, states and corporations can offset headwinds from President Donald Trump’s tax policy and tariffs, Reuters reported.
The tax-overhaul trimmed production and investment tax credits. The Trump administration has also imposed a 30 percent tariff on imported solar panels. The moves, aimed at boosting manufacturing and economic growth, also dimmed prospects for renewables.
The removal of federal support for Obama-era climate goals indirectly helped the renewable energy industry by inspiring a backlash among U.S. cities, states and corporations, which have grown more ambitious about installing cleaner forms of energy.
Investors with years of deals under their belts are less wary about financing solar and wind than they were years ago, said executives and investors at the Renewable Energy Finance Forum-Wall Street in New York.
The industry has cancelled two big solar projects worth about $2.5 billion since the tariffs were announced in January, Gregory Wetstone, president and chief executive officer of the American Council on Renewable Energy, said.
The Solar Energy Industries Association has said the tariffs would result in the loss of 23,000 U.S. jobs.
Some solar and wind manufacturers and developers have announced new projects in the face of the tariffs. Wetstone noted that solar led all generation sources with 2.5 gigawatts of new capacity in the first quarter of 2018.
“More and more corporations and consumers are looking for 100 percent renewable energy,” City and state governments are adopting renewable-friendly policies to reflect that growing demand,” Susan Nickey, managing director at Hannon Armstrong Sustainable Infrastructure Capital, which invests about $1 billion a year in the sector, said.
A survey of financial institutions that showed two-thirds of respondents planned to boost renewable investments this year. Some 89 percent said they would sharply increase planned investments from now to 2030 unless government policies slow demand for renewable energy.
Trump’s tax bill was initially worrying. But it has been ultimately easier to work through the repercussions than we anticipated, Craig Cornelius, president of NRG Renewables, told a panel at the conference.
The final version of the bill kept 80 percent of the investment tax credit and production tax credit values, and dropped a proposed corporate alternative minimum tax that would have made the tax credits less valuable.
Laura Beane, president and chief executive officer of Avangrid Renewables, said Avangrid is developing the 800-megawatt Vineyard Wind project off the coast of Massachusetts.
“A lot of the projects that were planned went in and bought two years’ worth of panels before the tariffs,” Stacey Kusters, president of Berkshire Hathaway Energy Co’s BHE Solar, said.
The renewable energy industry is bracing for the scheduled reduction and ultimate expiry of lucrative subsidies on solar and wind power over the coming years, including a 30 percent tax credit on solar installations.
This will make it trickier to finance some renewable projects, said Robert Sternthal, managing director at Rubicon Capital Advisors, who is putting together a team of bankers to advise on renewable deals in North America.
Improvements in technology could help make wind and solar more competitive in terms of cost and sustainability after tax credits expire, said Rafael Gonzalez, president and chief executive officer of Enel Green Power North America, whose projects include wind, solar, geothermal, and hydropower.
Avangrid starts construction on the Vineyard Wind project next year, and it is slated to come online in 2021.