64 Business The Economist May 21st 2022
Slowandunsteady
A
merica’s clean-energybosses thought they would by now
have more to celebrate. In the presidential campaign of 2020
Democrats tried to outbid one another on climate plans—Joe Bi
den offered $2trn, Bernie Sanders’s Green New Deal was $16trn—as
if the nomination would go to the highest bidder. In the three
months after Mr Biden defeated Donald Trump, an index of clean
energy firms jumped by about 60%. Goldman Sachs, a bank, fore
cast “a new era for green infrastructure” in America and beyond.
Though Mr Biden’s infrastructure bill offered some help for
clean energy, a giant climate bill now seems fantastical. Worse,
green power is not just failing to boom. It is going bust. An array of
American solar projects have been delayed or cancelled amid a
federal probe into tariff evasion by manufacturers of solar panels
and modules. The countries in question—Cambodia, Malaysia,
Thailand and Vietnam—together produce about 80% of America’s
solarpanel imports. Politics is stymying makers of wind turbines,
builders of wind farms and the utilities that buy power from them.
The results are stark. So far this year the cleanenergy sector
has lost about 25% of its market value, compared with an 18% drop
for the benchmark s&p500 index of big American firms. Rystad
Energy, a research firm, estimates that twothirds of its forecast
solar installations for this year are in doubt. According to Bloom
bergnef, a data provider, the capacity of new renewables projects
in 2022 looks set to be a tenth lower than in 2020, under the wind
millhating Mr Trump.
Two years ago cleanenergy enthusiasts were right to feel bull
ish. In the decade to 2020 the levelised cost of electricity—which
takes into account investment in equipment, construction, fi
nancing and maintenance—had fallen by 69% for onshore wind
and 85% for solar projects, according to Lazard, an advisory firm.
With renewables technologically mature and economically com
petitive, utilities and developers planned to pour money into solar
and wind. NextEra Energy, a giant utility that in 2020 briefly over
took ExxonMobil to become America’s most valuable energy firm,
said it would spend up to $14bn a year on capital projects in 2021
and 2022, calling it “the best renewables development environ
ment in our history”. In the arduous effort to decarbonise Ameri
ca’s economy, building clean power would be the easy part. Turnsoutit isn’t.Some problems stem from the pandemic and
gummedup global supply chains. Pricey commodities helped
push up the levelised cost of wind and solar in the second half of
2021 (though more slowly than for coal and gas). But many of the
current woes are political in nature. Take restrictions on products
from Xinjiang. Last year Mr Biden, seeking to limit imports made
with forced labour, announced a ban on polysilicon coming from
big companies producing in the Chinese region. American im
porters scrambled to present proof that they weren’t violating the
ban. As customs officials pored over suppliers’ lengthy attesta
tions, in Chinese, solar modules languished in ports. A lack of
equipment forced developers to delay construction.
That problem has now been dwarfed by a bigger one. In March
the Commerce Department humoured a request by Auxin Solar, an
American manufacturer, to check if Chinese companies were cir
cumventing antidumping tariffs. Duties had originally been im
posed by Barack Obama, then extended by Mr Trump; Auxin
claims that firms are dodging tariffs by making parts in China but
assembling modules in their SouthEast Asian factories.
The effect is that a small American firm is obstructing more
than 300 projects, according to a tally by the Solar Energy Indus
tries Association, a lobby group. Some developers cannot get their
hands on kit. Others find that costlier gear has put their construc
tion deals in the red. NextEra told investors in April that up to 2.8
gigawatts of solar and battery projects planned for this year,
equivalent to around a tenth of its intended renewables invest
ments in 202124, would be delayed. American assemblers of solar
panels, it said, were sold out for the next three years. America’s
largest solar project, spanning 13,000 acres of Indiana, has been
postponed. NiSource, the utility behind it, will instead delay the
retirement of two coalfired power stations to 2025.
The challenges facing the wind industry look less severe only
in comparison. Like many capitalintensive industries, the wind
sector is grappling with rising costs of steel, copper, resin and
other materials needed to craft turbines. Global manufacturers
such as Vestas and Siemens Gamesa have seen their margins
shrink. In America, rising input costs have unfortunately coincid
ed with declining tax credits. It is possible that Congress could ex
tend those for wind—but improbable given partisan deadlock. In
the meantime developers and utilities are delaying new contracts,
unwilling to make commitments before knowing the true costs.
Politicians may create problems where things have been going
well, as with auctions for seabed leases for offshore wind farms.
These have attracted ample bids from oil firms and utilities. The
House passed a bill in March with bipartisan support that would
require the giant boats used to install turbines off America’s coast
to replace some foreign crews with Americans. Wind executives
note the country lacks enough people with the requisite skills. A high-voltage situation
Republicans, who look poised to control Congress after the mid
term elections in November, remain more hostile to greenery than
Democrats. But the renewables industry’s current troubles high
light the contradictions within Mr Biden’s coalition. It wants to
build green projects quickly. At the same time, it wants Americans
to build them with American inputs. The trouble is that you can
not have both. In a letter to Mr Biden on May 17th, 85 members of
Congress argued that the tariff inquiry could costAmerica’s solar
sector more than 100,000 jobs. That is bad for workers,bad for the
renewables industry—and terrible for the climate.nSchumpeter
America’s clean-energy industry is stuck. Blame in part its climate-friendly president