The US wind industry would be wise to “lay low” as the Trump administration settles in, rather than mounting a noisy lobbying campaign, advises Gabriel Alonso, chief executive of EDP Renewables North America, one of the continent’s most important wind developers.
Alonso adds that the single most important objective for the industry right now is preserving the four-year window developers have to build out their projects qualified for the full production tax credit (PTC).
Preserving that window, he says, is more important than protecting the PTC phase-out, which will see the tax credit decline steadily to 40% of its value for wind farms that enter construction in 2019, before it expires again in 2020.
Since the surprise election of President Donald Trump last November, many in the renewables industry have argued in favour of pressing the case with the White House that wind and solar are now important employers, and drivers of economic growth in struggling rural areas.
However, Alonso believes that the less that the Trump administration thinks and hears about wind energy over the next few years, the better off the industry may be. Better instead to quietly engage with the Republican-controlled Congress, whose members in many cases have very different priorities than Trump, while allowing the White House to focus on other issues.
“As an industry we need to lay low with this type of president,” Alonso said, speaking Wednesday at the Wind Power Finance & Investment Summit in California.
Alonso shared an anecdote from his native Spain, where his father told him that the best approach to fulfilling one’s two years of military service – compulsory in that country until 2001 – was to remain as invisible as possible.
“If you leave after two years and nobody knows your name, you had a very peaceful military service,” Alonso’s father told him. “And if this president doesn’t talk about us or mention us over the next four years, or eight years, we’ll have had a very peaceful time.”
“Let’s not react to the provocations we may hear,” he adds.
Other industry leaders agree that hammering home messages about wind energy’s remarkable progress, however sensible it may seem, could backfire with Trump, who has a long history of antagonistic behaviour towards the industry.
“Keeping a relatively low profile is a good idea,” says Declan Flanagan, chief executive of Lincoln Clean Energy, the Chicago-based renewables developer.
Like many big wind developers, EDP Renewables moved last year to qualify turbines for the full PTC, worth an inflation-adjusted $23/MWh for 10 years.
The Houston-based developer, part of Portugal’s EDP group and a top-five US wind owner, had already qualified turbines for its 2017 projects, but last year added enough to its PTC-qualified stockpile to build up to 2.5GW of new wind farms during the 2018-20 period.
“The plans we have for growth in the US remain aggressive,” Alonso says. “But qualifying 2,500MW of capacity doesn’t mean we’ve committed to acquiring and installing 2,500MW.”
“If things go belly up with this administration, the amount we install could be much smaller,” he says, adding that the company has off-take agreements in “other geographies” where it could use the turbines.
Various estimates put the amount of turbine components developers qualified last year for the full PTC between 30GW-70GW.
Given the enormity of that number – enough even at the low end to keep the US wind market booming through the end of the decade – Alonso says it’s critically important that the industry finds a way to preserve the current four-year window developers have to build their projects.
“This is what really matters,” he says. “This should be the industry’s primary objective.”
Of lesser importance, in his opinion, is protecting the out-years of the phased-down PTC. For example, the possibility that the 40% PTC for wind projects that enter construction in 2019 might be scrapped as part of a US tax-reform package is “not something that keeps me up at night”.
“I don’t know how many people are relying on [the later PTC years]. We are not.”
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