Smart Cities

Without Federal Support, COVID-19 Could Cripple US Clean Energy Sector

The indiscriminate economic impacts of COVID-19 are creating long-term implications for people and the planet. Ongoing research on the consequences of this evolving crisis predicts sharp declines for the US clean energy industry, leading to mass job losses and a slowdown in the growth of climate-saving clean energy technologies that could set us back years in the fight against climate change. This is not set in stone, however, and this novel crisis also presents an unprecedented opportunity to change the highly polluting US energy systems for the greener. According to research published by Wood Mackenzie Power & Renewables in April, the significant economic disruptions caused by COVID-19 and virus mitigation measures are forecast to reduce global solar PV installations from an initial estimate of nearly 130 gigawatts to just over 106 gigawatts in 2020. The firm also estimates that US solar installations will decline 18% in 2020, from 19.6 gigawatts to 16 gigawatts, in what […]

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The indiscriminate economic impacts of COVID-19 are creating long-term implications for people and the planet. Ongoing research on the consequences of this evolving crisis predicts sharp declines for the US clean energy industry, leading to mass job losses and a slowdown in the growth of climate-saving clean energy technologies that could set us back years in the fight against climate change. This is not set in stone, however, and this novel crisis also presents an unprecedented opportunity to change the highly polluting US energy systems for the greener.

According to research published by Wood Mackenzie Power & Renewables in April, the significant economic disruptions caused by COVID-19 and virus mitigation measures are forecast to reduce global solar PV installations from an initial estimate of nearly 130 gigawatts to just over 106 gigawatts in 2020. The firm also estimates that US solar installations will decline 18% in 2020, from 19.6 gigawatts to 16 gigawatts, in what will be seen as a huge step backward for renewable energy, associated industries like smart buildings/cities/grids, and the environmental movement as a whole.

Project delays caused by supply chain disruptions have been overtaken by uncertainty and risk-aversion as the key factors for the reduction in solar installations, for example, which are also limited by social distancing measures. Unable to sell in-person and with many planned installations put on hold, PV installers will be hit hard according to the Wood Mackenzie analysis, which predicts a staggering 40% drop in demand for residential solar in 2020. This is a big blow for the distributed energy proposition that connects buildings and utilities in an intelligent, efficient, and highly promising clean energy solution.

The Solar Energy Industries Association reported that over half of all solar workers could be laid off or furloughed as a result of the COVID-19 pandemic and various methods used to control it. Over 106,000 US clean-energy workers filed for unemployment benefits in March alone, while a total of 594,300 clean energy jobs lost since the beginning of the pandemic, a 17% drop in clean energy employment. These grim figures are enough to cripple any industry for years but even worse for a rapidly emerging sector that is already fighting significant challenges on many fronts.

Despite the need to replace fossil fuel-based electricity generation with cleaner alternatives, those alternatives face an uneven playing field in the US where fossil fuel competitors have long received favorable subsidies and policies. The growing environmental movement has celebrated the success of clean technologies forcing their place in the energy mix through increasing efficiency, price-parity, and innovation despite the impediments. Now with COVID-19 in full swing and a deep recession looming, that momentum is at risk unless the US government truly supports the clean energy industry.

“As the United States reels from an unparalleled economic recession sparked by the coronavirus pandemic, Congress has correctly responded with some $3 trillion in stimulus packages, with more on the way,” says Christina DeConcini, Director of Government Affairs, and Jillian Neuberger, Associate of Legislative Engagement, at the World Resources Institute (WRI). “So far, though, the government has provided tailored, targeted relief to oil and gas companies while largely dismissing the sector-specific requests of clean energy.”

In an analysis published on the WRI website, DeConcini and Neuberger set out all COVID-19-related US government actions specifically designed to help each side of the energy industry. For clean energy, the Treasury Department and IRS provided tax relief for renewable energy projects by increasing the flexibility of deadlines for tax credits. For dirty energy, the long list of specific support for the oil and gas industry includes changes to tax restrictions and rebates that allowing businesses to carry back losses from 2018 or even earlier, whether as a result of COVID-19 or not. And, according to a review of SEC filings, at least 37 oil companies claimed more than $1.9 billion in CARES Act tax benefits, as detailed in the study.

“Another glaring example of this disparate treatment is the administration’s granting of royalty relief to the oil and gas industry, while at the same time sending massive bills for retroactive rent to the wind and solar companies amid a global pandemic,” DeConcini and Neuberger continue.

“Congress must immediately address the disparity in assistance to energy companies that have been directly impacted by COVID-19 and provide assistance to the clean energy sector in any future stimulus packages. Doing so is imperative to ensure the future of the clean energy sector and to provide a down payment on addressing climate change.”

The US was already behind key energy goals designed to help avoid the most catastrophic effects of climate change, not helped by the country’s withdrawal from the 2015 Paris Agreement on climate change. However, total solar installations were higher in the first quarter of 2020 compared to 2019, despite 3 weeks of lockdown in much of the country. The American people still want renewable energy, highlighted by a late-April poll, and the conditions for a renewable energy revolution have never been so good.

Last week, a landmark and long-anticipated new IEEE standard (1547.1-2020) has been released that brings about applicable guidance for distributed energy resource (DER) manufacturers. This paves the way for US states to adopt more modern interconnection requirements for DERs to support high levels of renewable energy and energy storage in buildings, homes, and at the grid-scale.

Effective DER has long promised to ties all these potential electricity generators and consumers together with the intelligence to cut overall cost and reduce overall emissions but without aid for clean energy, this opportunity will go unrealized along with any hope of reaching sustainability goals.

“Even before today’s unprecedented crisis, the world was not on track to meet key sustainable energy goals. Now, they are likely to become even harder to achieve,” Dr. Fatih Birol, Executive Director of the International Energy Agency (EIA). “This means we must redouble our efforts to bring affordable, reliable, and cleaner energy to all in order to build more prosperous and resilient economies.”

The poor environmental reputation of the US has generally been balanced out by its strong clean energy industry, led by progressive companies and states like California. However, in the face of the unprecedented impact of the COVID-19 crisis, the clean energy movement will need support, or at least an even playing field versus fossil fuels. Without the leadership to bring about that support, the US clean energy industry will suffer, triggering knock-on effects for their smart buildings, cities, grids, and the environmental movement as a whole.

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