West Coast renewable investors unfazed by prospect of Trump

Source: Debra Kahn, E&E reporte • Posted: Thursday, November 3, 2016

SAN FRANCISCO — Renewable energy backers are optimistic about their industry’s prospects heading into next week’s presidential election.

Despite the wide distance between Republican nominee Donald Trump and Democratic nominee Hillary Clinton on renewables, observers at the American Council on Renewable Energy’s conference yesterday said current economic conditions and policies are stable enough that the industry should continue on strong footing for the next several years.

“I have yet to hear from a single investor, ‘I’m going to wait this out,'” said Skip Grow, head of Morgan Stanley’s clean technologies group, in response to a question on whether political uncertainty around the election is causing investors to wait on the sidelines.

“From the tax equity perspective, I don’t think anyone’s on the sidelines,” agreed Jack Cargas, managing director of renewable energy finance at Bank of America Merrill Lynch.

The main cause for optimism is Congress’ extension last December of tax breaks for solar and wind power. The investment and production tax credits for solar and wind, respectively, have revived investors’ appetite for those projects.

“Holy moly,” said Sue Sparks, vice president of PNC Energy Capital, which arranges financing for renewable energy investors. “It has been a blowout year; it’s just been gangbusters.”

“Once that ITC was extended, everybody could now start to plan, and the world of renewables took off and it’s here to stay and we’re here to finance it,” she said.

Developers are a bit warier. Mention of Trump prompts a wry knock on the nearest wooden table.

“I think there’s still that nagging doubt in the back of your mind,” said Robert Morgan, chief strategy officer of Renewable Energy Systems, a renewables, storage and transmission developer. “We’re kind of afraid.”

“The industry’s on track for 15 to 30 gigawatts a year,” said Steve Vavrik, chief commercial officer at Apex Clean Energy, a utility-scale developer of wind and solar. “If one candidate’s elected, we’re off that track.”

The tax credit extensions would be difficult if not impossible to undo right away, due to bipartisan support, observers said.

“A year or two into a Trump administration, there could be some very different dynamics,” said Dan Reicher, executive director of Stanford University’s Steyer-Taylor Center for Energy Policy and Finance, former assistant secretary of Energy under President Bill Clinton and adviser to Hillary Clinton.

Incentives aside, observers said the federal government’s influence over their business is limited and harder to change than state-level policies.

“Political risk is more state by state,” said Jordan Newman, director of renewable energy and environmental finance at Wells Fargo & Co. He highlighted the ongoing debate in many states over the compensation that rooftop solar customers receive for energy sent back to the grid, a policy known as net metering.

“We can move the needle a little more at the state level than it seems like we can at the federal level,” said Tim Healy, CEO of EnerNOC Inc., which sells demand-response tools to businesses and utilities.

Other state policies that are determining the growth of renewables include California’s renewables target of 50 percent by 2030, its energy storage target of 1.3 gigawatts by 2020 and the state’s push to establish a Westwide energy market through its independent system operator.

“State mandates out here far outstrip what the feds can do,” RES’s Morgan said. “All D.C. can do is change the price California will be paying.”