Coach Dave’s Playbook
Apologies for the brief hiatus, but my hope is that you survived last month - even if only barely - without a February edition of Coach Dave's Playbook. That being said, it's never too late to do the right thing. So with that being said, let's get right to this month's topics that caught my attention:
Back in January, I wrote about the then-pending solar trade case. Well, as you may have heard, on January 22nd President Trump issued these new tariffs. Here are the key things to know:
- The Trump administration imposed 30% tariffs on imported crystalline silicon photovoltaic modules and cells.
- The tariffs will decline in 5% increments over a four-year span, ending at 15% by 2022.
- The first 2.5 gigawatts (GW) of cell imports each year are excluded.
A diverse coalition—which saw solar industry advocates banding together with unlikely partners including utilities Duke Energy and NextEra, as well as Heritage Foundation—had vocally opposed the trade decision, arguing that the tariffs on imported products would not accomplish the purported goal of increasing domestic production of solar cells. And get this—Suniva and SolarWorld, the two companies that petitioned for strong tariffs in the first place, probably won’t stay afloat because the final tariffs weren’t as hefty as they’d originally requested.
So what does it all mean? Well, GTM Research forecasts that the tariffs will cause an 11-percent reduction in the US market over the next four years. While all sectors of the solar market—from residential to commercial—will likely cool off, the greatest effect will likely be on the utility-scale sector, where modules make up a higher portion of overall system costs. Utility Dive says that the tariff threatens two-thirds of future utility-scale solar installations set to come online in the next five years. Markets in emerging regions (such as the South), where profit margins are thinner, will also feel the impact.
What’s next? In some ways, it’s too soon to tell, but I see this as a speed-bump, not a stop sign. The World Trade Organization will likely challenge the new tariffs, which are set to expire in 2022 anyway. While delayed investments in solar are likely in 2018, when tariffs are steepest, the long-term impact on the solar market will most likely be limited, as solar hardware prices continue to fall and solar becomes increasingly cost-effective.
MARYLAND CONSIDERING UPPING ITS STATEWIDE RENEWABLE ENERGY REQUIREMENT
The Maryland General Assembly is evaluating two different proposals to increase the state’s use of renewable energy and inject new life into the state’s struggling solar market. Senate Bill 732 and House Bill 1453 would increase the state’s Renewable Portfolio Standard (RPS), which requires utilities to sell a specified amount of electricity from renewable sources, from 25 percent by 2020, and from 50 percent by 2030. If the bill passes , analysts estimate that an average household’s bill will increase by $1.40 to $1.85 each month. A separate bill, The Clean Renewable Energy and Equity Act, would put Maryland on track to source 100% of its energy from renewable resources by 2035, and would no longer permit trash incineration and farm-produced methane as renewable energy sources. Regardless of which bill ultimately advances, it’s clear that Maryland’s RPS has successfully fueled economic growth throughout the state. Either bill would help improve the statewide solar market. I’ll keep on eye on these bills for you and will report back with any updates.
NEW STATE SCORECARD ON COMMUNITY RENEWABLE ENERGY
Each year, the Institute for Local Self-Reliance (ISLR) provides a score for each state’s energy policies based on how they help or hinder local clean energy action. The 2018 scorecard shows 21 states with a failing grade, 17 with a mediocre score, 11 with a passing grade, and just 2 with exemplary marks for creating a robust, consumer-friendly clean energy marketplace. Washington DC received a high “B” grade, while Maryland received a low “B.” Check out the full rankings and supporting info here.
FERC ORDER ON ENERGY STORAGE
Last month, the Federal Energy Regulatory Commission (FERC), voted to remove long-standing barriers to energy storage in power markets. This is a significant development, as cost-effective energy storage is a game changer for renewable energy. Batteries can help solve the intermittent nature of renewable energy—dependent on sun and wind—compared with traditional generation sources like gas and coal, which can run all the time.
This stuff can get wonky pretty quickly, so I’ll keep it brief: the FERC order requires electric grid operators to recognize the benefits of energy storage and allow storage technology to compete with traditional energy generators in the wholesale power market. (Previously, regulations imposed barriers to emerging technologies such as energy storage, because the rules were designed when regulators did not envision such innovations). For more information, check out this article. I’m pleased to see FERC take this position because it means the Commission recognizes the value of energy storage in enhancing grid resiliency and reliability.
That’s all for now—until next time!