Trump promises to cut electricity costs, but state incentives and regulations could hold him back

President-elect Donald Trump campaigned on promises to cut electric bills, but a new study from the Heartland Institute shows that utilities benefit from financial incentives to go green. Additionally, there are state-level requirements that can keep utilities on a path to net-zero, regardless of what Trump does.

Trump has signaled he intends to keep his campaign promise to continue U.S. energy dominance. Her cabinet appointments has strong credentials as an energy champion, and he reportedly intends to deploy an energy plan favorable to oil and gas when he took office.

But whatever his intentions, there will be policy And economic limits to what he can do. If Trump’s choice for the EPA, Representative Lee Zeldinis confirmed, Zeldin will likely put on the chopping block the EPA’s power plant rule, which aims to close all coal-fired power plants and limit new natural gas power plants.

Critics argue that the rule seriously compromise reliability and affordability electricity, as this makes the grid increasingly dependent on intermittent wind and solar power. Critics say the rule would also discourage investment in new gas plants and force the closure of coal plants.

While its proponents claim that renewable energy is the cheapest form of energy, when including the costs associated with transforming intermittent energy into constant energy, wind and solar are the most expensive. As more coal-fired power plants have been retired, rates have increased.

Even if utilities want to keep rates low for their customers, they can benefit from other financial incentives to increase wind and solar power at the expense of electricity generated from coal and natural gas. Heartland’s “Utilities Are Going All-In On Leftist Net-Zero Agenda” report explains that they can benefit from investments in new wind and solar farms. Utility regulators allow utilities to earn a rate of return on equitywhich is generally between 9% and 11%.

“In other words, if a utility proposes a $2 billion wind power project to replace a fully operational coal plant, the utility is guaranteed a $200 million profit just for the construction and installation of wind turbines,” explains the report.

States also have Revolving Portfolio Standards, which are goals or requirements for utilities to produce a certain amount of their electricity from renewable energy.

“If you didn’t have a mandate that 15 or 20 percent of your energy has to come from renewable energy, which basically means you have to produce this regardless of the cost, a lot of these utilities wouldn’t would ever start down this path,” H. Sterling Burnett, director of Heatland’s Arthur B. Robinson Center on Climate and Environmental Policy, said Just the news.

Thanks to these incentives and regulations, many utilities, as the Heartland report shows, have jumped on their commitments to net zero emissions.

Lynn Good, president and CEO of Duke Energy, boasted in 2022 that the company is “leading the largest clean energy transition in the United States”

“Our more than 27,000 teammates have rallied behind our mission to achieve net zero emissions by 2050. Our promise is to continue this momentum. Our five-year corporate capital plan includes $63 billion in investment, 80% of which is dedicated to our clean energy transition,” Good said in a statement.

Duke Energy provides electricity to 7.2 million customers in six Southeast and Midwest states. American Electric Power, with 5.6 million customers in Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia, published a “Climate impact analysis» report in 2021 promising a commitment to reaching net zero.

“For the country to meet its economy-wide clean energy goals by 2050 or sooner, as called for in the Biden administration’s climate plan, transforming the electricity sector is vital,” the report says.

Federal tax credits also encourage the development of solar and wind energy, even when they are not needed. Energy analysts Mitch Rolling and Isaac Orr, who publish their work on their “Bad Energetic Boys“Substack, explained in a January article,”The death of a wind farm» that the $26 per megawatt hour tax credit enjoyed by wind farms means that the farms can be profitable even if the price of the electricity they produce becomes negative. This happens when there is more wind power than electricity demand.

Homeowners benefit from tax credits even if electricity is not necessary. Wind farms saturate the Great Plains, Rolling and Orr shows, where wind resources are significant. In this area, the frequency of negative prices is highest in the United States.

Burnett said it doesn’t make sense that renewable energy continues to require taxpayer support, if it is indeed as cheap as its proponents claim. The tax credits were intended to help a fledgling industry gain a foothold, but they are now four decades old.

“That tells me that wind and solar can’t work alone,” Burnett said.

The climate agenda has put the United States on a path to net zero emissions, and a maze of programs at the local, state, and federal levels have been rolled out to make the energy transition possible. It is unlikely that this problem will be resolved with the change of presidential administration.