With the presidential inauguration of Donald J. Trump just days away, I wanted to briefly weigh in on the politics of solar as we move forward with a new administration, because if there was one question I was asked the most over the last two months it has been, “how will this election result affect the solar industry?”
And to be honest the best answer, as is probably the case for a lot of issues with this election, is – we will have to wait and see.
However, I think there are a few dynamics at play here that can perhaps inform our expectations for the coming years. And its with these dynamics combined with the shift in how solar is perceived in the market - specifically its economic strengthen - that we can attempt to predict the future. So here it goes.
Tax Policy
The best place to start is to go back a little over a year ago to the end of 2015 when Congress voted on the year-end Omnibus Bill. (You can think of this bill as a big grab bag of measures that falls into one document, accepted in a single vote by the legislature to close out the year.)
And in this particular year a compromise was agreed to that traded an extension of the main federal tax incentive for solar – the 30% Federal Investment Tax Credit (ITC) – in exchange for the lifting of a 40-year ban on exports of crude oil produced in the U.S. It was seen as a win-win among political groups and a nice way to end the year.
The two things that are important to point out here: 1) the agreement was a compromise with both sides receiving a benefit, and 2) the tax credit extension was given a definitive life with a graduated structure that eventually phased the credits out by 2021.
Why is this deal important?
The two points outlined above are reasons enough for the new administration to not touch the main incentive to solar, because as they begin to identify ways to offset any desired tax cuts, it would:
make more sense for the administration to look for more long term offsets (not a credit that is set to be phased out in fairly short order)
certainly look bad to unravel a compromise, especially one that was effectively made between two different energy sources.
But, if these fiscal policy dynamics were not enough to influence whether solar will be threatened by the new administration, then perhaps public perception of solar will.
Bi-Partisan Support
What was most interesting about the solar compromise in the omnibus bill, was that it was seen as a Democrat issue that they fought for, but in reality solar is a bi-partisan issue with significant Republican support.
Taking from a Pew Research Survey published in October 2016, solar is an energy source that has significant support, regardless of political affiliation or ideology, with almost 90% of U.S. adults in favor of the proliferation of solar.
I would argue this polling data reflects the current perception of solar in the marketplace. What once was an energy source only installed for and by environmentalists, has now become a energy source for those seeking economic independence and freedom, ideals as popular in America as cherry pie.
Supporting this view is how antithetical this polling is to that of the heavily divided climate change debate, which this same report showed deeply entrenched viewpoints.
As the report states, “one spot of unity in an otherwise divided environmental policy landscape is that the vast majority of Americans support the concept of expanding both solar and wind power”.
What does the future hold?
So what does these dynamics mean for the future of solar? Politically, despite these trends, solar could still be marginalized by the new administration due to old and outdated perceptions of solar. But one could also argue that the Trump administration may end up supporting solar more than what was represented on the campaign trail, just due to the overwhelming public support of solar. Either way, solar has proven to be a reliable investment among all sectors (one of the main reasons it has such strong support), whether on residential homes, commercial buildings, or large fields. And no matter how the new government decides to treat solar, the industry as a whole will continue to grow and expand.
To learn more about how solar can be a great investment for your commercial building, visit www.reinnovations.us or feel free to contact us directly. RE Innovations takes a unique approach to commercial solar making solar a more financially viable investment for commercial building owners.