Photo Credit: Duke Energy
Over the past several years, utilities and public power producers have increasingly diversified their portfolios for a variety of strategic reasons in a dynamic that echoes the U.S. government’s own “all of the above” energy strategy. Diversity in generation sources can enhance energy security, reliability and consumer protection, and it can improve the environmental profile of the fleet.
As part of the effort to diversify, many power companies have developed solar projects or have purchased solar-generated power, or both. As a rule, power companies plan on a 20-year cycle and depend on predictable cost structures, particularly for their solar projects.
The strategic assessments of renewable projects are based, in part, on the continued viability of the US solar industry -- a prospect that has looked increasingly sound over the past several years as U.S. solar has experienced tremendous growth. Solar today employs over 260,000 American workers, and was responsible for 1 out of every 50 new jobs created in the U.S. in 2016. Most importantly, solar is increasingly cost-competitive with wind and even natural gas. This achievement is not just good for solar; it’s a welcome development for our nation’s energy security as a whole.
Yet the imposition of trade remedies on solar technology sought by the two petitioners in this case, Suniva and SolarWorld, could fundamentally change those carefully calibrated assessments of grid stability -- and do so without any consequent societal benefits.
Duke Energy commented before the International Trade Commission that if such a remedial floor price or tariff is imposed, it expects the installed cost of solar projects to increase 30 percent or more and that demand for modules would contract, perhaps even precipitously. “As solar energy is just approaching parity with the traditional grid resources in a number of states, a significant reduction in demand for new solar projects could deliver a serious blow to continuing development and evolution of this market,” Duke argued.
For utilities like Duke Energy, which must select cost-competitive resources (whether they be fuel-based or renewable) when selecting new generation resources to meet customer demand requirements, such cost increases may eliminate solar generation from its evaluation processes entirely.
Obviously, this cost spike in the price of key components in solar manufacturing would quickly ripple throughout the supply chain. As these price increases slash the growing demand for solar, they likewise disrupt the carefully planned investment decisions of this nation’s power providers. Conversely, the development of a reliable consumer base is critical for solar’s continued expansion in the years to come.
Determining that the solar company trade petitioners were harmed, and issuing protective remedies as a result, could lead to higher electricity prices and a disruption in the nation’s generation mix. Neither of these are acceptable outcomes for American electricity consumers. Modern electric markets work by combining a diverse array of generating resources, each with its own strength. Upsetting that balance through the imposition of unnecessary trade barriers not only puts the solar success story at risk, but also undercuts the strength of the entire electricity delivery system.
Appropriate planning and coordinating to maximize bulk reliability and resilience on the grid, all with an eye to dominance in energy production, consumer protection and security, are laudable goals. Ill-conceived energy protectionism in the guise of a trade remedy, on the other hand, will only do more harm than good. We would all do well to take heed of recent events and remember to prioritize the importance of maintaining a diverse and resilient electric grid. The government should say no to the Section 201 trade petition for solar.
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Scott Segal is Director of the Electric Reliability Coordinating Council. ERCC is a coalition of utilities providing power to millions of consumers across the nation and is a part of the Energy Trade Action Council. ETAC comprises a group of utilities, retailers, cooperatives, manufacturers, developers, financial investors and free-trade proponents that oppose the Section 201 trade petition.