Is renewable energy Trump-proof?
The social activism site TakePart.com posed that question after November’s election, and energy observers and industry leaders in Arkansas are answering yes, with a few caveats.
Donald J. Trump won the presidency after a campaign largely negative to renewable sources like solar and wind power, but forces in favor of cleaner power could prove even bigger than The Donald.
Energy professionals and observers say the falling price of solar and wind power, along with the prospect of new jobs in clean energy, will most likely withstand Trump’s goal of cutting $100 million in government spending on climate policy and his rhetoric favoring fossil fuels over renewables. Businesses and states are demanding more clean power, Arkansas experts say, and utilities are listening.
The Trump campaign promised “to hit reset” on the Clean Power Plan and to roll back Barack Obama’s climate and clean energy initiatives. But a GOP penchant for infrastructure projects and commerce-building is expected to favor endeavors like the Plains & Eastern Clean Line, a $2 billion plan for transmitting wind power across 12 Arkansas counties from Oklahoma to near Memphis.
Ken Smith, policy director for the Arkansas Advanced Energy Association, was hesitant to call anything Trump-proof until it has been “Trump-tested,” but he thinks the renewable energy industry will “survive and prosper during a Trump administration.”
Fortune 500 companies are embracing renewable energy, he said, utilities are buying it in bigger increments, and Arkansans themselves want more clean power. But the overriding factors are economic: Costs are down and job opportunities are rising, he said. “Wind is cheaper than coal and even natural gas, and solar is coming closer to being equal or cheaper. The economics are behind renewable energy, and that will be the case for years to come.”
Kathy Deck, director of the Center for Business & Economic Research at the University of Arkansas, said the equation goes beyond the simple price of electric power. Renewable energy aligns with the stated values of companies like Google, Microsoft and Target — as well as major Arkansas employers like Wal-Mart and Unilever — and Deck sees economics in the background. “It’s hard to say any energy source is good for good’s sake,” she said. “Companies have to make some judgment about consequences.”
The public’s growing zeal for clean power is one factor. “There is a values-based movement toward renewables, but it is also based on real costs,” Deck said. “Pollution, emissions, climate change, whatever it may be. This is often couched in terms of values, but from an economist’s point of view, companies take into account not just today’s price, but the overall long-term economic costs.”
Advanced Energy Economy, a national business group, reported last month that 71 of the Fortune 100 companies have set renewable energy or sustainability targets, up from 60 just two years ago. “Our own state-based company Wal-Mart’s renewable energy target is 50 percent by 2025,” Smith said. “Mars, Coca-Cola and hundreds of other companies have similar targets.”
Utilities serving those businesses take heed, said Michael Skelly, founder and president of Clean Line Energy Partners of Houston, the force behind the the planned wind-power transmission line.
“Utilities have a lot of customers who are very interested in the power source. Major corporations are saying, hey, we want 80, 90, 100 percent renewable power.” Economic developers increasingly promote clean power availability in luring companies, he added.
“Utilities are responsive to all this, and nothing in the Trump administration is likely to affect that,” Skelly told Arkansas Business in a wide-ranging interview. “Wal-Mart is a pretty big deal here in Arkansas, last I heard. Unilever is a big employer over in Jonesboro. Wind energy generation is opening up a lot of investment, so a lot of those wind turbine blades that are coming out of the [LM Wind Power] factory here in Little Rock are now going to Texas because they built a grid to accommodate it.” In November, LM Wind and Unilever were among seven businesses with big interests in Arkansas that signed a letter supporting the Clean Line.
“Big corporations don’t just throw their names onto letters,” Skelly said. “It’s a major statement for a company like Unilever, a whole process that goes into that.”
Smith said regulatory realities also favor renewables. Energy policy is mostly set below the federal level, and 29 states and the District of Columbia have set goals for renewable energy. Arkansas isn’t among them, but state laws on net metering and distributed generation have stated a goal of promoting renewable energy. The Arkansas Public Service Commission has opened dockets to revise state rules on private energy generation, with proposals due in 2017.
“Arkansas is not a California or even a Texas or Georgia, but our utilities are buying renewable energy in large swaths of megawatts,” Smith said, pointing to Arkansas Electric Cooperatives Corp.’s announcement adding 173 megawatts of wind capacity from the Drift Sand Wind and Chisholm View II projects in Oklahoma, which will supplement several hundred existing wind megawatts. “SWEPCO [Southwestern Electric Power Co.] has hundreds of megawatts of wind energy” and is adding more wind and solar, Smith said.
Academic voices say the trend toward renewables may be too entrenched to be crippled by Washington. Trump “can eliminate subsidies for solar power as well as electric cars, and he may not be very supportive of renewable energy, but ultimately technology and market forces will be the determining forces,” said Rajesh Sharma, an Arkansas State University assistant professor and expert in renewable energy technology. “Clean technology is advancing every year and costs are going down.”
One big signal is that “last year there were more private-sector investments in renewable energy as compared to fossil fuels,” he said.
Alan Mantooth, an engineering professor at the University of Arkansas, said falling prices for renewables can’t be ignored. “Now there’s a business case to be made, beyond jobs and infrastructure,” he said. “The cost of the power is competitive, and the administration is likely to be dealing with that kind of dynamic.”
Local utilities, too, are on board. AECC chief executive Duane Highley said his corporation, which serves the 17 electric cooperatives around the state, is evaluating new wholesale clean energy opportunities. “Over the past five years, AECC has secured long-term power purchase agreements for wind, solar and biomass capacity.”
Several of the individual electric cooperatives have their own smaller-scale solar projects going, including a 12-megawatt array in East Camden overseen by Ouachita Electric Cooperative Corp. that supplies defense contractor Aerojet Rocketdyne and a new 500-kilowatt array near Arkansas Valley Electric Cooperative’s offices in Van Buren. Smith said that he and his wife, Mary, were two of the first purchasers of solar shares in a 1-megawatt Ozarks Electric Cooperative Corp. solar field in Springdale.
Rick Riley, CEO of Entergy Arkansas, has embraced plans for the largest solar field in Arkansas, an 81-megawatt project to be built near Stuttgart beginning next year, and the investor-owned utility is also now seeking to buy another block of 100 renewable megawatts. “If we get good economic bids, we’ll be buying a little more, but not less,” Riley said. “We remain committed to Stuttgart solar, which will provide 20 years’ worth of renewable energy at good prices.”
Kurt Castleberry, Entergy’s resource planning director, said good stewardship requires careful use as well as sourcing. “People think of an integrated resource plan just from the supply side, but we approach it from the demand side as well. When we conserve electricity, we don’t have to build additional generation facilities.” He said Entergy’s energy efficiency program, approved by the PSC in November, will save about $230 million worth of power, basically the cost of a new power plant.
Again, efficiency is regulated largely by the states. The only real federal incentives for renewable energy are a production tax credit for wind power and an investment tax credit for solar. Those probably can’t be affected by the new administration before 2020 because Congress authorized a five-year extension in 2015.
“A president has great power, but sometimes inertia has set in,” Mantooth said. “Renewables will probably benefit from that.”