Unemployment poised to skyrocket, creating urgent need to spur renewables: Obama veteran of 2008 financial crisis

Source: By Catherine Morehouse, Utility Dive • Posted: Sunday, March 22, 2020

The outlook is grim for industries across the country as the market continues its unfavorable response to the COVID-19 pandemic. Stalled supply chains are halting projects and hampering job growth as businesses freeze hiring and struggle to stay viable.

In a partisan time, bipartisan consensus has propelled relief packages quickly through Congress to soften the most devastating blows of this crisis on health and the economy. As a third stimulus package pushes its way through Congress, power sector leaders are urging the federal government to address energy infrastructure.

“These are immediate problems with immediate ramifications,” American Council on Renewable Energy CEO Gregory Wetstone told Utility Dive. “Renewable energy is the nation’s largest area of private sector infrastructure.”

As industries jostle for priority in an economy with few winners, it’s not yet clear who all will be included, acknowledged stakeholders. But as the country faces what could be the fastest increase in unemployment in U.S. history, the power sector has a critical role to play in employment, Reed Hundt, who served on President Barack Obama’s Transition Team during the fallout of the 2008 Housing Crisis told Utility Dive.

“It’s inevitable — we’re going to go from record low 3% to double digits and we’re going to be there in no time,” he said. Hundt expects this to be the fastest increase in unemployment in the history of the country.

“We have got to have the healthcare system get fixed. That’s job one. And job two is we’re going to have to get people back to work. Now, what are they going to do when they go back to work?”

The first line of hiring

According to Hundt, now founder and CEO of the Coalition for Green Capital, two broad sectors will be ripe for employment in a world where six feet of separation is the preferred form of human interaction for the foreseeable future — the virtual ecommerce economy and construction. And under construction and manufacturing, the greatest opportunities are communications, transportation and electricity infrastructure, he said.

“Relatively speaking, it is safe to do construction work. You’re outside, you’re not standing in a group of 100 people, you’re not standing across a retail counter … you’re not in a dangerous place.”

To get those jobs moving, the sectors need momentum, and that’s where congressional spending needs to come in, he said.

“We can stimulate the clean energy sector. We can have transmission, we can have big huge solar farms. We can put solar on people’s roofs. We can have windmills put up. We can do whatever needs doing in the clean energy sector.”

Analysts have found the immediate economic impacts could be devastating to clean energy technologies in particular, projecting demand for budding technologies such as solar, storage and electric vehicles will drop dramatically from original estimates in 2020.

And the American Wind Energy Association (AWEA) on Thursday released its initial industry impact estimates, projecting the novel coronavirus could threaten $35 billion in investments and $8 billion in rural community tax benefits, as well as over 35,000 jobs.

“There is a record amount of wind projects under development. Delays caused by COVID-19 will make it difficult for some U.S. wind projects to come online in time to meet financial and economic obligations, putting projects at risk of cancellation,” said AWEA Vice President of Research and Analytics John Hensley in a statement.

Though the Solar Energy Industries Association (SEIA) is still evaluating impacts to its sector, “[e]arly results from a survey of our companies confirm some of our worst fears,” Abigail Ross Hopper, president and CEO of SEIA said in a statement. “Customer demand for solar has plummeted and companies are seeing significant construction slowdowns, project cancellations, labor shortages and a host of logistical problems tied to equipment and delivery delays.”

What power sector leaders want

Supply chain disruptions and diminishing availability of tax equity for renewable project financing are the two most critical issues facing the clean energy sector right now, said Wetstone.

“Supply chain is particularly problematic because tax incentives are very much time-limited and a delay of even a few months can disqualify a project for taxes that are central to its financing.”

A coalition of industry groups including ACORE, SEIA, AWEA, the Energy Storage Association and more sent a letter to House and Senate leaders on Thursday outlining concerns for their respective industries during this time of crisis.

Specifically, the groups want to see an extension of safe harbor and construction deadlines so delayed projects don’t lose key financing available from renewable energy tax credits, while urging a direct tax credit for standalone energy storage “to foster renewable energy growth and help secure the more resilient grid we need in these difficult times.”

Though groups “don’t have clarity yet on how this [stimulus] package is going to develop… there are a large bipartisan group of members who want to see these issues addressed,” said Wetstone. The Senate Energy and Natural Resources Committee did not respond to a request for comment.

The nuclear industry also on Wednesday called on Congress to support its member companies seeing a shortage of industrial power demand, and delays and cancellations of product orders through regulatory fee relief and incentivizing near-term investments in existing nuclear.

But timing is key for a federal government with vast, but limited resources, and an economy on the brink of disaster, say some policy watchers. Though clean energy can and should play a strong role in a recovering economy, the time for that may not be now.

“When we get to the point of looking at the recovery, because energy plays such a large role in how we transport, build, produce and pretty much do anything in our daily lives, there’s there’s going to be a very big and necessary” place for energy in an economy rebuilding,  Josh Freed, founder and leader of Third Way’s Climate and Clean Energy Program told Utility Dive.

But “what Congress is focusing right now on is what Congress should focus on, which is ‘where are the parts of the economy that are in need of immediate help? … And I think that’s where the conversation needs to focus,” he said.

However, the U.S. has been here before, said Hundt, and the 12 years it took for the U.S. economy to recover from the Housing Crisis should spur a greater sense of urgency.

“I know that people will say they can’t get started right away,” he said. “Look, when your unemployment is double digits, the best time to hire someone was yesterday and the next best time is as soon as you can.”