As the results of the 2016 presidential election came in, my thoughts were with and for our country, not the solar market. Since then, however, we’ve had a host of questions from our supporters, investors, and friends asking how Trump’s victory will affect the solar industry. To summarize our responses, Trump will have little to no effect on the solar industry, and its prospects are as compelling as ever. This may seem like hyperbole or naiveté given his statements on energy, but allow me to outline why they are not.
As the only significant federal support for solar, it all comes down to the Investment Tax Credit (ITC.) Fortunately, Congress extended the ITC to 2022 this year, well past Trump’s first term, and well into his second if he is reelected. By the time the ITC expires, the cost of solar - which has followed a Moore’s Law-like decrease for 40 years - will make solar less expensive than hydrocarbon-based power. In other words, if we keep the ITC legislation in place, solar will maintain its current competitiveness and mature to the point at which no support is necessary.
So the bulk of this question centers on whether Congress will pass new legislation to revoke the ITC. We see this as highly unlikely for a variety of reasons. First, supporting renewables enjoys one of the highest approval ratings of any issue, across party lines. Second, solar has been an extremely robust engine for precisely the type of high-paying, blue-collar jobs that we often decry the loss of in this country. Third, the Democrats retain enough Senate seats to block the removal of the ITC with a filibuster. Lastly, the Investment Tax Credit (ITC) is deeply embedded in the Consolidated Appropriations Act. Given these dynamics, it’s difficult to imagine the scenario in which the ITC’s reversal is politically plausible.
So, what’s the catch? The catch is that we did lose a lot on Tuesday as an industry. We lost additional support and momentum, and we lost a shot at enacting a market mechanism to take climate change’s significant costs into account (e.g. a carbon tax, cap & trade). While President-elect Trump’s capricious nature has already led him to step back his ardent stance on climate change post-election, it still seems safe to say we should anticipate no additional support from the federal government that has not already passed into legislation. Fortunately, support from the federal government is no longer a requirement, and the market will now dictate solar’s continued rise to power. The economics of solar are - in large part - what have led to solar panels on top of more than 1,000,000 homes across the U.S., and nearly 32 gigawatts of solar installed in the United States. Yes, this election result hampers our global effort to address climate change, but the solar train has left the station, and even President-elect Trump cannot stop it.
This article was written by Bryan Birsic, Co-founder and CEO of Wunder Capital. Wunder Capital is helping to accelerate the proliferation of solar by financing the commercial solar revolution. Wunder also offers investors a great way to invest in the future of energy. Learn more about Wunder by visiting WunderCapital.com.