Trump took incentives away from renewable energy, but now it’s breaking records

Donald Trump could preside over a renewable energy boom. Yes, it’s serious. The administration and its allies in Congress have removed clean energy tax credits and raised hurdles for renewable energy projects — efforts that, in the long run, will mean fewer wind and solar farms will be built.

But any significant slowdown in the growth of renewable energy and battery storage in the United States will likely take a few years. That’s because companies are rushing to install solar panels, wind turbines and container-sized batteries before federal tax credits expire or become harder to claim.

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The pipeline is so large that analysts widely expect the United States to add record — or near-record — amounts of renewable energy and batteries by 2027. BloombergNEF, a research firm, recently raised its forecast for how much wind, solar and battery power the country would add next year by more than 10%.

“There is a huge rush,” said Thomas Byrne, CEO of New York-based CleanCapital, which develops, owns and operates solar power and battery storage projects.

Wind and solar projects must be under construction by July to be eligible for federal tax credits that Congress voted to end years earlier than anticipated. (Battery projects have more time to get started.)

To meet this deadline, many developers ordered custom power transformers — devices used to increase or decrease voltage — solar panels and other equipment much sooner than they normally would. Making such requests is a way to demonstrate to the IRS that a project is underway.

Only relatively large companies can afford to spend such large sums upfront, and analysts expect them to start buying smaller projects whose backers are strapped for cash.

To ensure its projects would still qualify for credits, CleanCapital this summer purchased about $25 million worth of solar panels it doesn’t yet need. The company plans to store the panels in a warehouse it is renting in San Bernardino, California, for $145,000 a month.

“This rush is real,” Jennifer Granholm, then-Energy Secretary under former President Joe Biden, told reporters recently in New York. “You will see an increase over the next two years, and then you will see a decrease unless something changes.”

The fact that so much renewable energy is on the verge of being built despite federal opposition reflects how much momentum the sector has — not just because of subsidies, but because there is tremendous demand for new energy sources.

Solar power and batteries can be installed much more quickly than natural gas and nuclear plants. Solar sources and batteries have also become cheaper, while the cost of building gas plants has soared.

This year, renewable energy and batteries will make up about 93% of capacity added to U.S. electrical grids, according to the federal Energy Information Administration (EIA).

“We’ve never seen this kind of demand, ever,” said Sandhya Ganapathy, CEO of EDP Renewables North America, a leading energy developer. For that reason, the company’s development plan looks a lot like it did before Congress rolled back the tax credits, she said.

Trump’s long-term impact

That said, the Trump administration’s efforts to hamper renewable energy will come at a cost. In addition to tax credits, there are federal permits, which Trump has said his administration will not approve for wind or “farm-killing solar.”

The Paris-based International Energy Agency (IEA) recently nearly halved its expectations for how much solar and wind power capacity the United States will add over the next five years. Most of this effect will be felt starting in 2028, the last full year of Trump’s presidency.

Between licenses and the time it takes to connect to the network, companies can only advance a limited number of projects. Already, some smaller solar companies are laying off employees or preparing to close.

Some developers are focusing on building batteries that charge when electricity is cheap and plentiful and release it when power demand soars. Such batteries are in high demand to help balance wind and solar projects built in recent years.

Meanwhile, offshore wind energy has become nearly impractical, largely due to the administration’s attacks on the industry.

“This is the death knell of offshore wind,” said David Giroux, chief investment officer at T. Rowe Price Investment Management.

“Whenever you increase uncertainty around the ultimate return on an investment, you have to get a higher return to compensate you for that risk, or, more likely, you won’t take that risk at all.”

Higher energy prices in sight

Ultimately, the loss of renewable energy tax credits will likely increase energy bills because it could take years to build alternatives like gas or nuclear plants. Existing gas plants also tend to be used more.

“There won’t be as much supply as expected,” said CleanCapital’s Byrne. Necessarily, prices will rise.”

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