When President Barack Obama took office in 2009, renewable energy sources such as solar and wind power relied on tax credits and other government subsidies to get traction in the marketplace. These days, however, alternatives to carbon energy are becoming cost-effective on their own, without government aid.
“It’s a very attractive dynamic for businesses trying to isolate themselves from the cost variability of a carbon-based energy complex,” alternative-energy investor Matthew Weatherley-White, managing director of the investment firm Caprock Group, tells Yahoo Finance in the video above. Alternative energy, he says, is “here to stay”—with or without subsidies from the new Trump administration.
President Donald Trump has shown no enthusiasm at all for the sorts of green energy Obama tried to cultivate. Instead, Trump has vowed to unleash the carbon economy by easing restrictions on drillers and miners, which, in theory, ought to make oil, gas and coal cheaper. Trump just signed legislation rolling back Obama’s so-called stream-protection rule, for instance, which will make it easier for coal producers to mine. If carbon-based energy becomes cheaper, that would put non-carbon energy at a disadvantage.
But the costs of wind- and solar-energy production have been falling as well, similar to the way electronic components get smaller, cheaper and more capable over time. In areas where sun and wind are plentiful and electrical grids are modernized, energy from non-carbon sources can be cheaper than that produced by burning coal or gas.
Renewable energy still represents only about 9.7% of US energy consumption, up from 6.2% in 2000. What’s changing, however, is the business case for wind, solar and other renewables. “Five years ago, subsidies drove the adoption of alternative energy,” says Weatherley-White. But with falling costs and better technology, he says, “the transition to a renewable and alternative energy complex is irreversible.”
It will be slow, too. The US economy is obviously heavily dependent on oil and other fossil fuels, especially transportation. Climate change is prompting some nations—most notably, Germany—to kick the carbon habit. But Trump is skeptical of climate science, despite mountains of evidence of a warming planet, and he seems unlikely to favor subsidies for renewables the way Obama did.
For consumers, the economics of converting to solar power are continually improving. Weatherley-White says he’d get a 6% return on the cost of installing solar panels on his home in Idaho, which is one of the least cost-effective states for solar. The return is higher in Sun Belt states such as Nevada and southern California. The math ought to improve as panels get cheaper and the technology continues to improve—without any need to worry about what Trump might do.
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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman