Gas prices will likely come down as we expand our domestic drilling operations and lift regulations. This will lower costs for consumers across the board (hopefully, corporations do love their profits).
I don’t think energy prices will come down because utilities have proven time and time again they love their profits over consumer relief.
And commercial renewable energy like solar/wind/hydro+storage has significantly helped reduce utility costs over time. The cost of solar generated electricity has dropped by 90% over the last decade. Cost averaged, it’s about $60 per MWh for solar while gas is about $80/MWh.
So, the option homeowners will continually be left with is their monopolistic utility or… solar (happy to hear other options). Good for solar right?
What will help solar is we’ll continue to see rates drop🤞which eases the transition to solar for investors, corporations, and homeowners. To note, any president has marginal marginal influence on interest rates. That’s run by the Fed Chair/Federal reserve who tries to maintain independence as much as possible. Interest rates dropping would’ve happened under either administration. Trump’s relationship with Elon may also help solar (heck Powerwall 3s are fantastic options for clients) but at the same time, Tesla’s Solar panel arm is a disaster and who knows what Elon really wants. He heavily believes in solar but he doesn’t believe in subsidies. Further innovation from Tesla or other manufacturers will continue to help drive prices down. However, I also think trump doesn’t know much about policy or energy mostly because of the following…
Tariffs
If trump enacts tariffs like he says he will, the cost of acquiring solar components will go up significantly for companies and therefore be passed directly to the consumer. He has mentioned 10-20% on imports across the board and up to 60% on imports from China. We import 88% of our panels. Less than 1% of those imported panels come from China but they are the main manufacturer of components. China is 82% of our battery imports. American companies are already pre-emptively increases purchases from China (and other countries) to avoid eating the cost hikes. So regardless, a 10% tariff will see all consumers bare that cost (see links below), immediately upon implementation. Furthermore, retaliatory tariffs from countries will make it harder for American producers, especially farmers (see effect from tariffs in his first term), to export goods and thus, possibly have to charge Americans more.
- https://www.inc.com/chris-morris/trump-tariffs-what-they-mean-for-businesses/91000365
- https://thehill.com/homenews/4959329-businesses-brace-for-trump-tariffs-on-chinese-goods/
- https://www.agrinews-pubs.com/business/2024/11/04/analysis-shows-tariff-induced-trade-war-hurts-farmers/
Renewable Energy Investment Tax Credit (ITC)
If trump reduces or slashes the investments in renewable power like he adamantly says he will, that will reduce or cut the 30% Renewable Investment Tax Credit (ITC) altogether, significantly stunting an industry that has blossomed over the last decade+ and currently employs 270000+ in the US and accounts for about 5% of home energy, 14% of corporate energy. Savings isn’t the only reason people go solar and the tax credit going down won’t stop people from doing solar but savings is the #1 reason. We saw that when NEM 3.0 in California made system costs spike overnight and sales hit a cliff.
If the ITC solar tax credit gets cut, states like California, Colorado, Arizona, etc. will likely start bringing back state tax credits to boost the solar/alternative energy industry. But overall, as a country I believe we need to be investing in alternative sources of energy and the bipartisan support for the Infrastructure Bill showed that.
Dismantling the Nuclear-Centric “Green New Scam”
If trump truly has a goal of dismantling what he calls the “new green scam” (the IRA/climate infrastructure bill), investment in nuclear energy will be stunted as well. My hope is that doesn’t happen because to be very honest, small modular nuclear (SMRs) energy is one of best things we can start creating if we have the right investments in waste disposal. While trump talks about wanting to invest more in nuclear, I don’t truly believe he realizes how gutting the IRA out of spite will affect that industry. In the same breath, trump says they “build these massive things (reactors) and then environmentalists get in”. Based on our history with nuclear, environmental regulations getting in is a very good thing to prevent larger disasters while pursuing cheaper energy. To note, $161 billion dollars of $206 billion allocated for manufacturing from the IRA has gone to Republican districts.
- https://www.aei.org/economics/trump-and-nuclear-energy-there-are-questions/
- https://www.bloomberg.com/graphics/2024-opinion-biden-ira-sends-green-energy-investment-republican-districts/
The Environment
Natural gas accounts for 43% of US energy overall. That % will probably go up again but at the cost of drilling into the Alaskan wildlife refuge among other federal preserves/lands and solar getting smacked in the face. Not to mention restored relations with Russia, a country that thrives on natural gas production and will continue to seek ways to bolster that. As we lift regulations on water/air/land, we will continue to decrease our biodiversity. That’s a fact (would love to be proved wrong). That’s a problem. Diversification of ecoystems and our energy sources is never a bad thing. The Biden administration also expanded domestic production and liked competing energy sources but they did abide by regulations that protected things for good reason. Trump has said he wants to do away with those regulations.
The Ultimate Analysis
Here’s how I view solar. Ultimately, solar is a stepping stone to longer-lasting, more “infinite” (infinite in regards to our lifetimes) sources of energy. Solar panels far outlast fossil fuels as a source of energy. In the immediate, it provides relief for homeowners from money-hungry utilities and diversifies our energy sector. They harvest the sun’s energy (which should be around for a couple more billion years) and they continue to last longer every year. Panels now last AT LEAST 25-30 years and we know when the sun will come up and go down every day. They are 90% recyclable (compared to 0% for fossil fuels). Once we’ve created them, we can continually use them as an energy source. In the longer term, solar gives us the opportunity to develop recyclable, durable energy sources over our next few decades like SMR and hydrogen cells. To find ways to generate energy that are even closer to as long lasting as the sun is while maintaining better environmental impacts. To treat our planet with better regard than fracking (yes, lithium and silicon mining have their own impacts but they are far more manageable than fracking’s devastating long term effects). I’m very much for proper oil/gas use but I think we have to be very diligent when we think about how to power our planet in a fashion that leaves a world better than we found it over the next 20-100 years instead of “let’s get cheap gas now”.
In summary, I don’t think trump will kill the solar industry but I think he will overall negatively impact our ability to help energy consumers shift away from hungry utilities and by doing so, have a negative impact on our electric costs while hindering more creative sources of energy.
Short term, we will get relief on our pocket books from lower gas prices and the ripple effect from that. Overtime our reliance on that combustible source of energy will continue to make our lives more difficult. In the long term, we will be left with a planet that has more irreversible damage done to it and begs for diversification in how we get our power. I’m open to other viewpoints because I seriously hope I’m wrong and trump doesn’t/can’t do what he says. Truth is no one knows what the future holds, it’s all speculation until it happens, so that means I won’t stop trying to create a better future for everyone even if it may get a bit harder now.
