Renewable Energy Growth Stymied by Pandemic, but Optimism Is High

The renewable energy sector was on a steep growth curve entering 2020 with a lot of experts predicting a record year. Then COVID-19 disrupted the entire world, causing trouble in supply chains and putting millions of workers in unemployment lines.

However, a new report released by the American Council on Renewable Energy (ACORE), a renewable energy advocacy group, suggests that investors remain optimistic about long-term prospects for the sector. ACORE polled senior executives at financial institutions, including tax equity investors, lenders, asset managers, and others, as well as major renewable energy developers, asking questions about the sector’s attractiveness as an asset class over the coming three years. It also queried the executives about their experiences in obtaining project financing.

“The results reflect a near unanimous sense of optimism, with expectations of strong long-term growth in the renewable sector, despite near-term concern about headwinds posed by supply chain disruptions and other pandemic-related delays,” ACORE President and CEO Gregory Wetstone wrote in an opening letter for the report.

Tough to Beat 2019 Investments

In 2018, ACORE launched an initiative to help secure $1 trillion in private sector investment in renewable energy and enabling grid technologies by 2030. The group reported a record level of investment in 2019 ($68.4 billion), which it said was driven by phasedown schedules for federal tax credits, expanded state renewable energy standards, improved cost competitiveness, and increased demand. The report says the cumulative investment through the first two years of the campaign reached $125.1 billion, about one-eighth of the goal.

However, the report notes, “COVID-19 has led to the loss of almost 100,000 jobs in the renewable energy sector as of June 2020, strained renewable energy project financing and caused innumerable project delays, reducing renewable energy capacity expected to come on line in 2020 by 21%.” To achieve ACORE’s $1 trillion objective by 2030 would require an average of $87.5 billion in annual private sector investment through 2029, a 28% increase over the 2019 investment level, which seems highly unlikely this year.

“Returning to the booming growth trajectory of recent years will require the adoption of federal policies to help the renewable sector access currently available tax incentives. To respond to the challenges impacting renewable development this year, we need commonsense measures like temporary refundability that will allow for the monetization of renewable tax credits despite constraints on tax equity, along with delays in the credits’ phasedowns,” Wetstone said.

Positive Announcement

In spite of COVID-19, an Austin, Texas-based solar company reported record sales in the second quarter this year. Freedom Solar, a turnkey solar installer focused on Texas’ residential and commercial markets, said it saw 55% growth year over year and record sales of $13 million in the quarter.

“We entered 2020 with our sights, and goals, set high,” Bret Biggart, CEO of Freedom Solar, said in a statement. “And despite the slight setback caused by COVID-19, we are now on the upward swing as we continue to exceed projected growth in almost every way.”

In addition to increased solar panel sales, Freedom said it has seen a spike in demand for backup power solutions. It reported selling more Tesla Powerwall home batteries in the first half of 2020 than in all of 2019. The company said it has seen interest in solar increasing in the past year among financial institutions, hotels, multifamily housing complexes, automobile dealerships, and distribution centers in Texas (Figure 1).

1.         Solar power is growing in Texas. Austin-based Freedom Solar reported record sales in the second quarter despite some statewide shutdowns associated with the COVID-19 pandemic. Courtesy: Freedom Solar

Clean Energy Stimulus Could Help Renewable Sector

Analysis conducted by the groups E2 (Environmental Entrepreneurs) and E4TheFuture found that the U.S. could create 860,000 full-time jobs for at least five years and add $66 billion to the country’s economy every year for five years if targeted clean energy investments were included in the next round of federal stimulus payments.

The study modeled the economic benefits of $99.2 billion of federal stimulus invested in existing programs and funding vehicles in three specific areas: renewable energy, energy efficiency, and grid modernization. The groups said they chose the three sectors for their “proven track record of quick job creation during past economic stimulus programs,” and because most of the jobs can be done outdoors or in vacant buildings. Furthermore, they said existing funding-approved programs already managed by the Department of Energy and other federal agencies could be utilized to administer such a package.

The proposed stimulus would include increased funding for state energy programs, tax credit extensions for renewable energy and energy efficiency, port infrastructure enhancements, and upgrades to the nation’s electric power grid and communications networks.

“Our model shows a major surge in economic and jobs growth based on leveraging. The pandemic hit energy efficiency employment harder than other sectors, but a federal stimulus can put people back to work using a frictionless, proven approach. And efficiency provides a robust ‘dividend’ on top of the jobs benefits: It will enable people to spend cash on goods and services from energy bill savings due to decreased energy use,” Pat Stanton, policy director for E4TheFuture, said in a statement.

The E2-E4TheFuture report found a much greater loss of jobs due to COVID-19 than ACORE’s report suggested. “More than half a million clean energy workers (514,200) filed for unemployment between March and June, according to separate analyses for E2 and E4TheFuture,” the groups said. While some clean-energy sector employees returned to work in June, the groups said a robust recovery without direct action by Congress is unlikely.

“We’re in an unprecedented economic condition that calls for unprecedented leadership from Congress—and we need it now,” said Bob Keefe, executive director of E2. “The good news is that we know investing in clean energy is the best and quickest way to jumpstart our economy and get Americans—construction workers, factory workers, electricians, and solar and wind energy technicians—back on the job today, building a better economy for tomorrow.”

The study suggested Texas, California, and Florida would see the most jobs added through its proposed stimulus—72,400, 67,800, and 41,800, respectively—while Illinois, New York, and Ohio would each gain more than 30,000 jobs.

Aaron Larson is POWER’s executive editor (@AaronL_Power, @POWERmagazine).

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