Trump’s Budget Proposal Comes Down Hard on Solar Energy - But to What Effect?

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Trump’s Budget Proposal Comes Down Hard on Solar Energy - But to What Effect?

In recent years, industry insiders and clean energy advocates have likened the full-scale adoption of renewable energy to a fast-moving train. But with a new administration in power, it’s clear that opponents of solar energy are looking to pump the breaks on continued development of energy independence—or at least throw up roadblocks.

Beyond just rhetoric, Trump’s first budget signals clear action on what he and the Republican party are hoping to do to renewable energy, and it’s looking more and more like a “hostage on the train tracks” scenario: Cut subsidies as much as possible to thwart further market expansion.

But renewables like solar and wind power have enjoyed federal subsidies for much of the past decade, with America’s objective being a domestic energy landscape that isn’t solely reliant upon fossil fuels—particularly foreign oil. The successes of this strategy are obvious: Employment in the American energy sector is up, the nation’s energy portfolio is more diverse and true energy independence is within reach.

So why are solar subsidies on the chopping block?

Slashing Subsidies

More than 50 programs within the EPA are slated to be cut as part of Trump’s budget plan. Additionally, key research initiatives, grants and loan programs that fuel clean energy adoption are also scheduled to be curtailed.

The State Energy Program—which provides states more than $28 million a year to fund energy efficiency efforts to combat climate change—is headed for the ax.

The Advanced Research Projects Agency-Energy—established a decade ago to finance alternative energy projects the private sector would otherwise not pursue—is similarly in the balance. That registers another $382 million that could dry up immediately if the new budget is enacted in full.

These examples are but a few key rollbacks on the horizon. In total, expected cuts to the 2018 budget would lead to a six percent reduction in Energy Department spending and a 31 percent decline in EPA funding.

One of the largest impacts that Trump’s budget may have indirectly on solar is the termination of the Clean Power Plan, which would lose funding entirely. The plan was rolled out by former President Obama in 2015 and sets climate change benchmarks like the number of coal-fired power plants to be retired each year. Obama’s action signaled to private businesses and utility companies that fossil fuels would no longer be the backbone of American energy production, which caused many enterprises to make the jump to renewable energy. Initiatives that prioritize clean energy are now seriously at stake.

Details on solar-specific cuts are still sparse, though insiders are preparing for substantive changes.

“While President Trump’s budget proposal does not specify what funding levels they would like to see for the Energy Department’s solar program, its drastic cuts to federal initiatives supporting clean energy and environmental protection leave little doubt that he would like to end any marketplace competition with fossil fuels,” said Amit Ronen, director of the Solar Institute at George Washington University.

The more promising news is that the Investment Tax Credit and state-level solar programs are still active (and will continue to be), providing solar companies and consumers with ongoing incentives, albeit less so than in past years.

Supporters of coal, oil and gas have lamented the subsidy levels solar has received of late, yet the fact remains that energy in all forms has historically been heavily subsidized. When accounting for the former CEO of ExxonMobil now heading the State Department, staunch oil defender Rick Perry leading the Department of Energy and climate-change denier Scott Pruitt piloting the EPA, it’s clear America’s energy priorities are shifting.

No Looking Back

Renewables may take a big hit if Trump’s budget proposal is written into law, but many in the energy industry suggest the window of time to turn back the clock on solar has closed. In effect, solar has already reached the utility tipping point. With or without subsidies, the industry is strongly positioned to reap enormous rewards on a continual basis, eating into oil’s dominance over time.

That’s why a majority of states are opting to retain solar-friendly tax credits, and even conservative officials are lining up to promote solar’s growth: Consumers realize savings on utilities, businesses bring jobs to local communities and state coffers swell with new tax revenue streams.

In the last five years, the price of solar panels has fallen roughly 60 percent while the number of new solar installations skyrocketed 119 percent. It’s also estimated that in the next five years, solar will become 50 percent cheaper, which will essentially make solar energy cost-competitive and accessible to average consumers in all 50 states—even those without subsidies.

Despite Trump and Co.’s tough talk on slashing energy budgets, the president’s business advisory council is almost exclusively made up of executives whose companies are currently investing in renewables—but is he listening to them? At this point, it appears not.

Another component to the debate is that the majority of Trump voters support clean energy, and if Republicans are successful in their anti-renewable budget goals, they may face repercussions at the ballot box—not to mention, red-state governors would be in a precarious position defending policies that their party maligns.

In the meantime, some solar subsidies are likely to end, which places the onus on states to carry on the baton for their own clean energy initiatives—many are already up to the task.

On one hand, solar growth has certainly slowed this year due to the overheating demand of previous years. However, this has merely allowed solar companies to scale back some of their sales and installation programs in favor of honing in on making their products more cost-friendly and sustainable.

Moreover, federal subsidies are expected to wane in 2022 when the Investment Tax Credit lapses. It will be at this juncture when solar energy will have to prove itself fully capable of operating on its own at a national level, and most projections support the likelihood of it doing just that—and more.

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