By: Amanda Smith, VP of Public Policy
As we approach the upcoming presidential election, the American public is seeking strong federal leadership to carry us through the pandemic and economic downturn. Energy infrastructure and climate change remain critical issues in light of their impacts on the environment and economy.
The Pew Research Center recently found that about two-thirds of Americans want the government to play a larger role in addressing climate change. Our existing energy infrastructure is out-of-date, unreliable and leans too heavily on polluting fossil fuels subject to foreign relations. U.S. voters are seeking energy policy that drives cleaner, more sustainable solutions, positively impacting the environment, strengthening our domestic energy security and contributing to economic growth.
While we can say without equivocation that sPower, our utility-scale energy partners and the renewable energy industry as a whole will thrive under any administration, a strong national energy policy would be a powerful tool in cohesively combatting climate change and jumpstarting the economy.
Advantages of a Federal Policy
Although we are confident we can outcompete utility fossil fuel pricing regardless of who occupies the White House, federal policies can be instrumental in creating demand and reducing inherent constraints and structural issues that make energy production difficult.
For example, Renewable Portfolio Standards (RPS) have proven successful at the state level. Twenty-nine states, Washington, D.C. and three territories have established an RPS, while eight states and one territory have set voluntary renewable energy goals. In the past two years, at least five states have increased their RPS requirements, and seven states and Washington, D.C. have targets of 50% or greater.
States have a good track record of meeting and exceeding their goals because an RPS requires that a percentage of utility electricity sold come from renewable resources. This fast-tracks renewable energy procurement, which stimulates the market and fosters more investment in technology and manufacturing—all of the underpinnings of a healthy market. It is a circular approach in which states signal the market to start producing, attracting more buyers and driving down prices to build the necessary infrastructure to keep the industry going.
While federal initiatives like the Investment Tax Credit (ITC) and Production Tax Credit (PTC) have helped proliferate renewable energy by driving down costs, incremental step-downs and strict timelines have also caused unrealistic competition as stakeholders race to meet project deadlines. I believe that implementing a national RPS or carbon tax would be a more powerful mechanism to drive renewable energy deployment than tax credits. A plan to tax greenhouse gas emissions while mandating clean energy would dissuade use of fossil fuels and encourage greater renewable adoption. Such legislation at the federal level would be a starting point to foster broader alignment among states through a consistent and predictable long-term policy.
Biden’s Climate Plan
As VP of Public Policy at sPower, I was excited to read Joe Biden’s Climate Plan and found several aspects extremely promising:
- A plan to enact a federal target for an emissions-free power sector by 2035
- Positioning of clean power in relation to the economic and environmental health of the nation
- A perspective in sync with our industry’s in regard to renewables and storage being a simple, clean form of power
- A focus on elevating environmental justice in the federal government
Though the plan lacks specificity, a federal target would serve as a goal post from which to develop requirements through regulatory agencies like the Federal Energy Regulatory Commission (FERC) or the Environmental Protection Agency (EPA) to ensure its fulfillment. Furthermore, discussing how the power sector relates to aspects such as jobs, the auto industry, transit, building, agriculture, housing and other elements—rather than looking at energy in a silo—ties everything into one positive reinforcing movement for rebuilding America. Biden sees clean energy as a way to reduce carbon in the atmosphere and aid in combating climate change, providing healthier communities for people to live and work yields economic benefits through low-cost energy and local tax income.
Regardless of who wins the election, I would like to see the Administration avoid various pitfalls such as imposing ineffective, aggressive tariffs or becoming embroiled in time-consuming lawsuits. For example, tariffs on imported solar cells and modules have led to the loss of more than 62,000 U.S. jobs and $19 billion in new private sector investment, according to the Solar Energy Industries Association (SEIA). Given the limited years a president is in office, a more orderly approach to energy policy is critical.
Continue to Count on Clean Energy and sPower
Again, renewable energy will remain a viable option regardless of political administration. Renewable energy prices have fallen 70% over the last decade, predominantly due to technology advances and increased component availability. Renewable energy is also more environmentally and economically sustainable than fossil fuels. Wind and solar power does not rely on a global supply chain for fuel like oil, gas and coal do. These factors make utility-scale renewable energy prices competitive with all other forms of generation.
In the last five years, we have seen utilities and municipalities turning to renewable energy purely based on cost. While corporate customers have long embraced renewables for a cleaner portfolio, more businesses are turning to clean energy as they see the cost competitiveness of what we are able to offer.
In Q1 2020, the U.S. solar market installed 3.6 GWdc of solar PV, the largest Q1 on record by more than 1 GW. During the first part of the year, solar accounted for 40% of all new electricity generating capacity added in the U.S. We are already at a tipping point, but federal policy would be incredibly helpful in aligning our industry across others, facilitating market innovation and moving us to a carbon-free, power-producing nation.