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What a severe downside US post-election scenario could be for renewables
November’s US elections will have major implications across the power and renewables industry
2 minute read
Chris Seiple
Vice Chairman, Energy Transition and Power & Renewables
Chris Seiple
Vice Chairman, Energy Transition and Power & Renewables
Chris brings more than 30 years of global power industry experience to his role.
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Though current predictions suggest the races for the presidency, the House and the Senate are too close to call, we recently took a look at what a Republican sweep might mean for the industry - and the resulting scenario wasn’t pretty.
With generally broad support for the Inflation Reduction Act (IRA), we expect it will remain largely intact under most election outcomes. Even under a Republican sweep of the Executive and Congress, it may remain mostly intact.
However, there still remains risk that such a sweep could result in material modification to the IRA as Republicans seek to finance trillions of dollars in proposed tax cuts and appease some members of the party that have called for a substantial overhaul to US climate and energy policy and maximisation of fossil fuel production.
To understand the impact of such a scenario, we have modeled how significant revisions to the IRA could play out and what impact it might have. Key factors we have modeled in our analysis include earlier ends to production tax credits and investment tax credits, the elimination of bonus adders, increased protectionist policies, and reduced DOE and FERC support to build out transmission to support renewable energy.
If this unlikely scenario were to play out, some of the key impacts include:
- Renewable additions through 2033 would fall by almost 30%, with average annual additions of 51 GW rather than the 71 GW in our base case, as illustrated in the chart below.
- Total investment in new renewable plants would fall by US $350 billion over the next 10 years.
- We would see a scaling back of the renewables manufacturing industry with total solar module manufacturing capacity reaching 33 GW by 2027, substantially less than in our base case.
- Another decade would pass where we only make a small impact on decarbonizing the economy.
We found that the impacts on wind, solar, and storage sectors will vary and utility scale versus distributed generation sectors will be impacted differently.
Learn more
To get insight into the different sector impacts and other implications of this possible scenario, existing customers can read the full report here in our P&R portal.
For those who are not existing customers, you can get in touch with our experts today to get information on how to gain access by filling out the form at the top of the page.