From Mike Hall, CEO; and Ilan Gutherz, Vice President Policy and Strategy, Borrego Solar
The election results are in and Joe Biden becomes the 46th US President. Like many in our industry, we expect the new Biden-Harris administration to adopt a strong clean energy and climate agenda that contrasts sharply with the outgoing government’s harmful policies and actions. The new dynamic for clean energy and climate action already results in thousands of pages of speculation and advice for the new government about which problems to address first and how to make up for the time lost over the past four years.
In our view, three potential areas of action are key to accelerating clean energy advances in the Biden presidency: trade policy, wholesale market reforms, and EPA emissions regulations for generators and vehicles. Unlike extensions to the federal investment tax credit or a federal tax on carbon, advancement in these areas does not require action by Congress. Given the expected makeup of the next Congress, the industry is far more likely that changes in these areas will be beneficial if the Biden team in Washington takes the lead.
Perhaps the quickest and least controversial move the new administration could take would be to de-escalate the trade wars that the Trump administration has started to alleviate the pain these solar and clean energy policies have caused.
The first step should be the unprecedented tariffs the Trump administration has imposed on imported solar cells and modules. These tariffs have put a de facto hidden tax on the entire industry, increasing solar energy prices, slowing industry growth, and opening up US allies and solar manufacturing hubs such as Taiwan, South Korea and Canada (whose imports are also taxed) in Collateral turned damage because of the outgoing government’s obsession with punishing China. The module tariffs have benefited a small number of U.S. module manufacturers (many of which are owned by multinational corporations) while causing harm to American manufacturers who supply shelving, inverters, and other components, as well as tens of thousands of local electricians and workers installing them Because of this policy, jobs have been put on hold.
In addition to clearing tariffs on modules, the administration could also remove trade barriers recently imposed on other Chinese clean energy components such as inverters and lithium-ion batteries. While we would certainly not suggest that the government “unilaterally disarm” in the ongoing trade dispute with China, the Biden team should do their best to achieve continued trade sanctions to avoid reducing the cost of components that drive decarbonization. climb.
Wholesale market reforms
The second step that President Biden could take to undo the damage suffered by the previous administration would be to appoint a strong, competitive agent from the Federal Energy Regulatory Commission (FERC) to replace Neil Chatterjee, whose term ends in June 2021. For the past four years, FERC has taken a protectionist, tenacious approach to states and regional markets, rejecting consensus-based proposals and trying to protect older fossil-fuel generators from competition by building new barriers to clean energy and storage from the wholesale markets keep away. FERC’s rules slow down the use of renewable energy and energy storage and increase costs for consumers who end up paying higher prices because clean energy is excluded from the markets.
Biden is expected to quickly release current FERC Chairman James Danly from his responsibilities. This would be a good start. However, the Commission could make further progress by adopting the current policy against renewable energies with a clear majority in favor of the free market. (Commissioner Chatterjee, who is likely to be a ‘swing vote’ on the five-member commission, has tried in some cases to open doors to new technologies, in other cases he has voted to raise market barriers to clean energy.) With a new presidency and a less conservative commission, FERC could reverse its controversial minimum offer price rule (MOPR) policy; Open new documents to revise outdated interconnection rules that prevent gigawatts of clean energy from going online. and expand access to wholesale markets for distributed clean energy resources.
FERC could also take a positive stance on regional energy markets that choose to include carbon prices. By forcing fossil generators to internalize the negative cost of carbon emissions, regional carbon prices introduced through energy markets could promote clean energy and correct one of the largest hidden subsidies that support the fossil fuel industry across the country.
Finally, the Commission could also step up the review of new natural gas pipelines and delay or derail their construction. If these pipelines are built, they will satisfy the country’s current dependence on fossil fuels and will likely become stranded assets costing customers billions of dollars. Slowing down or stopping these new pipelines will encourage utility companies to look seriously at readily available clean energy and storage solutions to meet their new generation needs.
Finally, the Biden government EPA could take two important steps to shift the balance away from fossil fuels and towards clean energy.
First, the EPA could revise emissions regulations for power plants and oil and gas operations, eventually forcing these industries to adopt best practices to reduce carbon emissions. Although the Obama administration’s approach to regulating power plant emissions was ultimately foiled by a conservative U.S. Supreme Court, the Biden EPA could reconsider the problem and put the most polluting generators on a firmer path towards decarbonization or retirement.
Second, the EPA could raise fuel consumption standards for cars and trucks and create new incentives for the electrification of transport. While an increase in the ramp rate in the introduction of electric vehicles would not directly affect the competitiveness of renewable energies or energy storage, the electrification of transport and heating could more than double the demand for electricity, reduce carbon and at the same time increase the available cake for our industry. In addition, preparing for full EV deployment requires significant network upgrades and modernizations that could help remove many of the current connectivity bottlenecks and prevent distributed clean energy from achieving its full potential.
Each of these areas has the potential to significantly improve the outlook for the solar industry while delivering on the bold promises of the Biden campaign to accelerate clean energy and address the generational challenge of climate change. We are confident that the new government’s bold statements on climate and clean energy will quickly produce tangible results that will benefit our industry and future generations.
Mike Hall was one of the founders of Borrego and has led the company as CEO since 2009. He is based in Borrego’s Oakland office. Ilan Gutherz has been with Borrego since 2016 and currently leads Borrego’s policy and business development efforts in the United States. He is based in Boston.