Donald Trump’s win in the US Presidential Election is not likely to slow down the pace of energy transition
He may end up influencing up to 25 GW of wind, solar and battery deployment by 2040
A more extreme Project 2025 agenda may negatively impact the deployment of more than 200 GW of wind, solar and battery by 2040
Oxford, UK-based power market analytics firm Aurora Energy Research believes there is no reason to worry when it comes to the pace of energy transition in the US slowing down in the event of Republican Presidential candidate Donald Trump coming back to power.
The prospect of him repealing the Inflation Reduction Act (IRA) if he wins, is remote, according to Aurora’s new report titled US elections: implications for gas and power markets. Yet, Trump is likely to offer greater support for coal power plants and scrap electric vehicle (EV) subsidies that could reduce wind, solar and battery deployment by up to 25 GW by 2040, across all major power markets in the US, according to the report writers.
Further, if Trump goes for a ‘more extreme’ Project 2025 scenario, it may lead to the scrapping of tax credits for solar, wind and batteries from 2025, leading to a much more significant slowdown in the pace of energy transition leading to slashing of wind, solar and battery deployment by more than 200 GW by 2040.
Published by the Heritage Foundation, Project 2025 is a compilation of policy suggestions from over 100 conservative-leaning organizations for the future US administration. One of the 4 policy recommendations in the document is related to the energy sector. It suggests ‘ending the Biden administration’s war on fossil fuels in the developing world responsible management of oil and gas reserves as the quickest way to end wrenching poverty and the need for open-ended foreign aid.’
Aurora analysts believe under a tougher Project 2025 scenario, the Trump administration may choose to ignore opposition from red-state communities that have benefited from IRA incentives. While it will slow down the pace of energy transition in the country, it won’t go down well with consumers as a drop in renewable energy deployment will push up wholesale power prices by up to 22% in the most impacted regions like Texas.
Trump is not likely to deliver on his promise to reduce energy costs for consumers by 50% as the US President has limited ability to really influence oil and gas prices. Even though he may encourage oil and gas drilling on federal land as against the Biden administration’s barriers to drilling, Aurora analysts add that oil and gas prices are more influenced by macroeconomic factors and international markets.
“We have tried to capture all potential outcomes by modelling both what is realistic for either candidate to achieve, and what is possible but less likely; the realistic outcome of either presidency has a more limited impact on long-term U.S. power sector outcomes than we typically see in commentary surrounding the upcoming election,” said Aurora Energy Research Associate for Pan-US team, Lizzie Bonahoom. “Harris largely represents the status quo, while Trump may struggle to honor his campaign promises.”
Earlier, in a May 2024 report, Wood Mackenzie said Trump’s election win is likely to impact the growth of renewable energy in the US as he may abandon the country’s 2035 net-zero target for the power sector that’s centered around solar energy (see US Decarbonization Efforts Depend On Presidential Election 2024).