BIG PIVOTS: What Does the Election Mean for Colorado’s Energy Plans?

This story appeared on BigPivots.com on November 17, 2024.

In October 2023, I tagged on a question to an interview with Jigar Shah.

“What if we get a change in presidential administrations and we get a Republican lock on Congress? How much of the Inflation Reduction Act will stand regardless?”

Trump still had opposition in the primaries, but was clearly the front runner.

“There’s obviously no answer to that question,” answered Shah, who then and now directs Department of Energy’s loan program. Shah then proceeded to suggest that things might not change all that much.

“Four major technologies have thrived to the point where they’re super cost-effective today: solar, wind, lithium-ion battery storage, and electric vehicles. All four were unscathed but [actually] thrived under the Trump administration,” he said.

“Folks argue about policy, but when it comes to going to the ribbon-cutting in their community, they’re the first in line. And they’re the first ones who want those 800 jobs. And if those 800 jobs are contingent upon those IRA incentives continuing, my sense is that they’re going to continue.”

That fits in with a broad theme of what I’ve heard in the last year, even continuing to the last week.

In July, for example, I had posed the same question to Will Toor, who directs the Colorado Energy Office. Toor said much the same thing then about tax credits and other provisions.

“Easy to talk, in theory, about repealing them, as sort of a culture war anti-climate thing, but I think it’s a lot harder in practice when you have ratepayers who are benefiting from billions of dollars of investment that is lowering their costs or businesses that are investing in new manufacturing facilities in red states. They are not going to be supportive of removing those tax credits.”

Others have offered the same line of reasoning: Colorado has so much forward momentum that it will almost continue to advance rapidly in its decarbonization efforts, if perhaps not as fast as some would like or even as fast as state law says we must.

But there are doubts. For example, even as Colorado moves at an impressive schedule in its EV adoption rate, achieving 28% in the third quarter of sales this year, the New York Times on Friday cited the evidence to wonder whether the federal tax credits for EV purchases — which are at least partly responsible for Colorado’s success — will remain.

Oilman Harold Hamm has been talking with the Trump team about discontinuing the tax credit for what he calls “virtue cars.” And Elon Musk also wants them eliminated, which would be “devastation for our competitors, and for Tesla slightly.”

Then there are Trump’s tariffs on Chinese imports.

In late October, I reached out to Mike Kruger, who directs the Colorado Energy and Storage Association, which represents about 280 companies in that sector in Colorado who have about 9,000 employees.

Kruger was worried that the high tariffs on Chinese goods that Trump had promised would dramatically raise prices of solar panels.

“You would see massive hemorrhaging of solar jobs and solar companies going bankrupt. A tariff that produces a 70% rate hike on imported panels will result in total costs on solar installations going up 25% or more. I don’t know of any product that goes up 25% in price or more without massive impacts.”

Even without solar tariffs, Xcel has been struggling to get new renewable generation bids remotely in line with what had been expected in response to its 2021 electric resource plan. People are now starting to talk darkly about the Colorado Power Pathway sort of being a transmission line to nowhere.

On Friday, in an interview about these struggles of the renewable sector that pre-dated the Trump election, Kruger and I talked at greater depth.

“My concern with the federal election is that Donald Trump doesn’t really pay attention to nuance, doesn’t really pay attention to data,” he said.

Domestic production can’t meet even a third of demand, he said, “So we’re going to need to buy panels from other countries, and slapping a 60% tariff on solar panels from China or, huge tariffs on panels from other places like have been threatened — Southeast Asia, Mexico, India, Turkey, etc. — it doesn’t stop the train. It just makes the train a lot more expensive.”

The tariffs will result in increased domestic production of solar panels — probably including in Colorado — but it will slow the deployment of solar just as the sector was heading toward an unprecedented boom, partly in response to the drive to decarbonize but also a giant increase in demand for electricity after two decades of slow growth.

What else can be said? Colorado has been promised a big bundle of money through the Inflation Reduction Act of 2022, by one estimate $1 billion altogether, plus large amounts from the 2021 Bipartisan Infrastructure Act.

For example, both U.S. Senators from Colorado during July were at EPA headquarters near Denver’s Union Station to announce $200 million in funding from the Inflation Reduction Act for a broad program in the nine-county Denver Regional Council of Governments (DRCOG) to help reform our buildings. The Colorado Energy Office had received another $129 million, also from the IRA.

Will that money actually arrive?

Leah Rubin Shen, managing director at Advanced Energy United, said some programs will be fully “out the door” by the end of the last fiscal year, i.e. for the federal government, in September.

Others programs, such as the state efficiency rebate program for home electrification, are more state dependent.

“Colorado already has their funding approved. They’re going to have the funding,” she said.

DRCOG confirmed its $200 million grant. “The grant agreement was completed in October and those funds have now been obligated to the building decarbonization program at DRCOG. We have no reason to believe the funding is insecure,” said communications specialist Charmaine Robledo.

But there are other programs, such as the Grid Resilience and Innovation Program, or GRIP. A couple rounds of funding have been issued. “I think round one is certainly safe,” said Rubin Shen. “Round two is probably safe, but there’s still funding for another round. That fundraising is to be decided if it ever gets obligated.”

Congress has power of the purse strings, and as Jigar Shah had pointed out, members of Congress love to bring home the bacon. Could Trump and his appointees intercede?

Rubin Shen points out that much interpretation has been left up to the administration, as is often the case and which was particularly true with the massive Inflation Reduction Act.

“The administration could change what has been up until now the agency interpretations of some of these programs, and that’s not just with the grant programs but also with all the tax credits that were either reauthorized or extended or created. They could rewrite guidance at the Treasury as well,” she said.

“If so, there could well be pushback from industrial sectors, voices saying “Hey, don’t mess with this too much, because we’re making these investments. We’re making these decisions based on X, Y, and Z and now you’re saying it’s A, B and C.”

But again, Congress has control of the purse strings.

“If the Trump administration wanted to take funding for home electrification and repurpose it to, say, border security, I don’t think they could do that easily without approval of Congress.”

Like others, Rubin Shen sees Colorado momentum carrying it forward despite the turbulence in Washington.

“The state has already put so many policies in play. Those policies have made it more competitive for the federal funding it has already received, and it has a better plan to maybe sort of take that funding and do something with it. They’re well positioned to move forward quicker than a lot of other places. That’s a testament to what Colorado has done already as a state, and I would say a sign that they should keep going, do more…”