Bloomberg New Energy Finance

Exponential growth expected for clean energy in the US

Photo credit: Sterling College via Flickr.
By Anders Lorenzen
Despite US Republicans, who control both the Senate and the House, having lambasted the groundbreaking global Paris Agreement on climate change, which was agreed last year, as ineffective and pointless; they surprisingly have given the green light for hugely important tax breaks for clean energy.December last year, the two houses of the US Congress, signed into law very significant tax credits for wind and solar energy. These new tax breaks could prove crucial for the US to reduce their emissions and tackle climate change.

The expiration of tax credits for both wind and solar have in recent years created doubts about investor confidence in the US clean energy market. But the new tax credits agreed by the Congress are set to bring about long-awaited investor confidence in the wind and solar industries, as the credits will be in place until 2021. Because of this, it is anticipated that the impact on the industry will be an added investment in renewables in the region of $73 billion.

Graph and data credit: Bloomberg New Energy Finance (BNEF).
Translated into energy generating capacity, the clean energy analysts, Bloomberg New Energy Finance (BNEF), expects that the tax credits will result in an extra 20 gigawatts (GW) of installed solar (see graph above) capacity and an extra 19 GW of wind power (see graph below) capacity.

Graph and data credit: Bloomberg New Energy Finance (BNEF).

Combined with the signing of the Paris Agreement and Obama’s landmark coal power plant regulations, the Clean Power Plan, this is set to achieve strong investor confidence signals and will propel wind power into being the cheapest form of new electricity in many US states.

Ethan Zindler, head of U.S. policy analyst at BNEF, expects that the surge of investments which will materialise due to the tax credits will dramatically reduce the cost of both solar and wind, even after they expire in 2021.

The wind and solar power industries have significantly grown during Obama’s term in office creating thousands of new jobs. The US solar industry now employs more people than the coal industry, representing a significant shift in the US energy revolution. Both Democratic and Republican states now rely more and more on wind and solar, not only to keep the lights on but to stimulate economic growth. Because of this, it is now becoming more difficult for Republicans not to back renewables. Earlier this month we wrote about the small Conservative state of Iowa who is generating more than 25% of their electricity from wind power. And because of this, Republicans in the state see wind power as an economic growth mechanism with jobs being created as well as adding to the energy independence of the state.

Iowa lawmakers and other US clean energy leading states would make sure to use these new tax credits to further invest in clean energy sources and strengthen their local economies.

Related news:

Opinion: Why renewables will have a bumper 2015

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