Last May, the US Department of the Interior approved the Gemini Solar Project, a planned 7,100-acre installation in Nevada that is anticipated to be the largest solar plant ever constructed in the US.
The $1 billion project, located in the desert north of Vegas on federal land, will soon supply power to some 260,000 homes in the region. Some viewed the Trump administration’s swift approval of the project as a surprise, presumably because of the right’s alleged aversion to green energy.
But a glance at renewable energy data reveals an even bigger surprise: solar power saw record growth during the Trump era.
A Rip-Roaring Industry
Many may have missed the growth of solar power over the last four years, but it’s a reality nevertheless. Fifteen months ago, Scientific American reported on the record explosion of solar energy use in America.
“The expansion of solar-powered electricity in the US broke major records,” the magazine reported, “accounting for nearly 40% of all new generating capacity.”
Since then the growth of solar has only accelerated. Solar energy is now the fastest-growing energy source in the US. A record 19 gigawatts of solar generation was installed last year, according to a Wood Mackenzie report commissioned by the Solar Energy Industries Association—the equivalent of 43 percent of the power plant capacity constructed in 2020.
“[Wood Mackenzie] forecasts the U.S. solar industry will install 324 gigawatts of new solar farms over the next decade, more than quadrupling the current solar fleet,” the Houston Chronicle reported earlier this year. “One gigawatt can power at least 300,000 homes, according to estimates.”
The rapid growth of solar energy—which now accounts for nearly 2.5 percent of all electricity generated in the US—has naturally resulted in a jobs boom as well, Forbes noted last year.
“The US Bureau of Labor Statistics estimates that solar PV installer will be the fastest-growing job between 2018 and 2028, with a median annual wage of over $42,000,” noted energy writer Joshua Rhodes.
Few would deny the solar energy industry is surging. The real question is why.
Falling Costs, Rising Efficiency, Lower Taxes
While there’s a perception that solar energy can’t compete with fossil fuels in price, evidence suggests that may be changing. Industry leaders say costs have fallen by as much as 90 percent in the last decade, which means that in many cases solar energy (at utility-scale) isn’t just cleaner than alternative energies, but cheaper.
“Solar is becoming so competitive that not only is it a means of decarbonisation for corporate buyers, but also a way to lower the cost of energy for their businesses,” Wood Mackenzie research director Ravi Manghani said in a paper published in January.
The paper found that solar is currently the cheapest form of new electricity generation in sixteen states, as well as nations such as Spain, Italy, and India. Much of the cost reduction is the result of improving technology that has made solar power more affordable and efficient.
The Department of Energy notes that the average price of solar PV panels has fallen nearly 70 percent since 2014, and this has helped solar energy markets evolve rapidly and adapt to a form of energy that is both clean and increasingly competitive. This has helped drive a nearly five-fold increase in solar electric power consumption in the US.
Fact: Solar energy is the fastest growing energy source in US.
Costs have fallen by 90% in the last decade bc of innovation & market competition.
The question: Can solar now compete with fossil fuels on a level field (i.e. without subsidies).
Some tell me yes. Others skeptical pic.twitter.com/skde3QXNw2
— Jon Miltimore (@miltimore79) August 3, 2021
Innovation, however, is only half the story. Johnnie Taul, the CEO of DEPCOM Power, one of the fastest-growing energy companies in the world, says it’s no coincidence that the solar industry saw its strongest growth in history under the Trump administration
“Trump wasn’t necessarily promoting solar, but what he did do was reduce taxes on corporations. He rolled back regulations,” Taul told me. “What that did was create an environment that was perfectly suited for competitive US businesses to flourish. And with the economics today of utility-scale solar, it was the right environment for that technology and businesses like ours to grow exponentially.”
Taul says he believes that with lower tax rates and fewer regulations, solar companies had more capital to invest to expand operations and hire workers.
Taul’s reasoning is almost a textbook explanation of how economists describe the long-term benefits of lower corporate tax rates.
“Lower corporate taxes increase rewards for improving techniques, technology, and increasing capital investments, which increase worker productivity and earnings,” Pepperdine University economist Gary Galles explained in 2019. “They expand rewards for risk-taking and entrepreneurship in service of consumers. They reduce the substantial distortions caused by the tax. And those changes benefit others, such as workers and consumers.”
Hence, there’s little doubt that the explosion in solar energy to some degree was the result of the Trump administration’s policy of slashing corporate taxes and regulations.
The Future of Solar Energy
Government subsidies are an undeniable part of the story of solar power. And there are those who believe that solar energy’s future success still depends on them. Zeke Hausfather, Director of Climate and Energy at Breakthrough, recently wrote that the surge in solar energy will play an integral role in global decarbonization over the next decade.
But he also argued continued expansion relies on sustained subsidies.
“[We] find that some degree of future subsidies — either in the form of current tax incentives or future nominally technologically-neutral mechanisms like carbon pricing or a clean energy standard — will likely be needed to sustain cost-effective deployment of the high levels of solar over the next three decades,” Hausfather wrote.
This dependence on subsidies—and the fact that solar energy is intermittent and generated over relatively short periods of time—is what has long made conservatives and libertarians skeptical of its viability.
But some industry insiders say they believe solar can now compete with fossil fuels on a level playing field without the benefit of government largesse.
“Those were influences a decade ago,” Taul says. “But today it’s not needed.”
If true, it will mean that the future of solar energy lies not with propping it up with subsidies, but in creating a tax and regulatory climate that doesn’t impede its success.
The post Solar Energy Exploded During the Trump Years. Why? was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.
