Harris or Trump better for renewable energy? There's arguments both ways

OPINION | The presumptive Democratic nominee can be expected to continue Biden's energy transition push but the pro-business Republican could electrify development.

With President Biden recusing himself from the 2024 campaign, the renewable energy industry waits with bated breath for the outcome of the election and the impact that a new administration will have on the sector.

While Vice President Kamala Harris could be regarded as a 'green warrior' and would presumably be a renewable champion as president, would the industry actually have a path towards growth during a second Trump term?

Capacity growth, interest rates and project permitting will all be impacted whichever way the election goes. Looking at a few trends over the past eight years has uncovered some unconventional patterns and leads many to think that a few surprises could yet be in store.

Trump surge

Between 2017 and 2020 almost 33% of the 148GW installed capacity of onshore wind in the US was commissioned. A total of 48GW was installed or repowered during that period, as compared to 42.2GW between 2021 and 2024, including IntelStor’s estimated 11.4GW expected through the end of 2024.

The reason for higher renewables deployment under Trump was that a lot of projects had been in the consent queue during President Obama's second term, and the consented capacity just took some time to build out under Trump. Also, interest rates were lower during most of Trump’s presidency, so oil & gas companies piled into renewable energy investments including solar as well as onshore and offshore wind at the time.

Solar as well as battery storage has seen more growth during Biden’s administration, partly due to the electricity market trading and energy arbitrage offered by batteries. Additionally, the reduction in unit cost for batteries through economies of scale helped facilitate wider adoption in the past three years.

Solar has also benefitted from additional cost reductions in recent years, but overflowing interconnection queues have led to more hybrid or distributed generation projects getting built. This resulted in the removal of some solar capacity from grid tie-in, and the smaller project sizes meant capital was easier to come by, compared to utility-scale development projects.

Biden slowdown

The other reason that Biden's term has seen much lower onshore wind capacity additions was because of inflation spiking after Covid-19. The interest rate increases, which were necessary to fight inflation, also drove away investors who were not seeing returns from wind, solar or storage projects as good as what they could get with oil and gas investments.

While the Biden administration did put the Inflation Reduction Act (IRA) in place, the industry has yet to feel the full force and impact of the benefits. The manufacturing tax credits are only just getting doled out now, with most factories to be built later this year or well into the term of the next sitting President. Extension of the production tax credit (PTC) has also helped interest in both greenfield project development as well as asset repowering to flourish, but the benefits will continue through 2033, covering the span of a few more presidential terms.

In offshore wind, lead regulator Bureau of Ocean Energy Management (BOEM), as directed by the White House, is already rushing to get as many projects consented as they can before the end of Biden’s term. They were doing this irrespective of his candidacy or the outcome of the election. If Harris wins the election, the trend of project consents would likely continue, and could even increase, since Harris has less patronage to the oil & gas sector than President Biden. If Trump wins, BOEM's activity for offshore wind consents will likely grind to a halt, but any projects that are already consented would get to move forward if they can find capital.

Finance factors

Prospects for offshore wind in the US are actually more tied to interest rates than who is serving as president anyway. The technology is proven and cost effective, particularly if we are in a lower interest rate environment. More companies, including oil & gas players who recently backpedaled from renewable investments, would readily plow money back into projects if they can get better financing than in today’s interest rate environment.

A Harris administration, with its appointees at the head of the US Federal Reserve, is likely to keep interest rate cuts slow, which would pose a continuing challenge for the industry. Higher rates of project permitting, but less capital available at favourable interest rates to build projects, would necessarily slow down the pace of capacity additions.

The strange thing for many industry watchers is that, if Trump wins, interest rates will likely fall faster. This is because appointees at the Federal Reserve will be replaced, with the presumptive installation of a chairman/woman who would be more compliant and likely to lower rates faster.

Whether they are wind, solar or storage, any projects which were already consented prior to the inauguration in January 2025 would benefit from wider access to cheaper capital in the early part of next year. This will likely lead to a surge in capacity additions under Trump that might also draw oil & gas investors back into the renewable energy market.

Where a potential Trump administration would hurt the industry would mostly be through lack of permitting approvals for anything that is in an early stage of project development. This would impact the industry in three to four years, similar to how it did for Biden's early term. Additionally, there is a high potential for a Trump administration to slap additional import duties on Chinese, Indian or even European components which the domestic wind, solar or battery storage OEMs are reliant upon.

So, while a Trump election win would not necessarily be a good thing for the renewable energy industry, it wouldn't be a complete disaster either, with investment potentially poised to surge. If Harris wins, the industry will see a modest pace of growth, but the enormous potential of the market may not be fully unlocked.

Philip Totaro is CEO of US data analytics firm IntelStor (copyright)