By Akshat Rathi The US is lagging developing nations in Asia in the race to electrify — and that gap may increase if lawmakers decide to add duties on new solar and wind farms to pay for President Donald Trump's tax cuts. A new report from clean energy think tank Ember finds that countries such as Vietnam and Bangladesh are growing their share of electricity in the total energy mix faster than the US. Since 2000, China has doubled electricity's share as a proportion of primary energy to nearly a quarter, while the US and Europe have stagnated. "Electrification is the more consequential race today" for countries looking to grow their economies, says Daan Walter, researcher at Ember. Electricity doesn't just help increase efficiency and lower costs of operation, he says. Industries supporting electrification, such as electric-car manufacturing and heat-pump installers, are also growing faster than other sectors. The report comes as the US Senate continues to debate a tax and spending bill. A group of Senate Republicans is pushing to soften an aggressive planned phase out of subsidies for wind and solar projects in the package. An amendment being circulated would also do away with a proposed new excise tax the Senate bill would slap on wind and solar projects that use components from China and other "foreign entities of concern." Read More: Senate Pulls All-Nighter on Trump Tax Bill With GOP Divided Most Asian nations are importers of fossil fuels, which makes electrification and adding renewables an economic imperative. As the world's largest producer of oil and natural gas, the US seemingly doesn't have the same economic incentives. And, yet, the country's electricity demand is becoming tougher to meet with data center power consumption from artificial intelligence on the rise. Shortages of equipment and people, alongside regulatory hurdles, are making it hard to build the energy supply. Meeting growing power demand is pushing Asian economies, even outside China, to build out the manufacturing sector for basic grid equipment, such as transformers and cables. Vietnam and Indonesia rank high in Ember's report on countries that are rapidly electrifying, while others including India, Pakistan and Sri Lanka are outperforming with solar and wind power's share of the grid mix. Walter said the lag in electrification is a lost opportunity for developed countries. "Renewables can make electricity cheaper," he said. "Electrification upgrades the everyday technologies households rely on — cars, heating and control systems — and delivers savings." Read the full version of this story and Bloomberg Green's series on bottlenecks to the energy transition (Part 1 and Part 2) on Bloomberg.com. An existential threat for solar and wind | By Michelle Ma As Senate Republicans debate President Donald Trump's tax and spending bill, renewable energy companies are reeling at what looks like a worst-case scenario for the industry. The latest version of the Senate bill includes a new excise tax on wind and solar projects with certain Chinese components, a late addition that stunned renewable advocates. Given China's dominance of the solar supply chain, developers would struggle to find ample equipment, including wafers, from other countries. A wind turbine at CS Wind in Pueblo, Colorado, in 2023. Photographer: Daniel Brenner/Bloomberg The bill would also roll back clean energy tax credits sooner than the House version of the package. It would require wind and solar projects to be fully operational by the end of 2027 to qualify for incentives. Many observers had expected the Senate to ease the phaseout — not accelerate it. The moves by the Senate, as it seeks to cut spending to offset trillions of dollars in tax cuts, "came out of left field" and shocked the industry, according to Ben King, an associate director with research group Rhodium Group's Energy & Climate practice. If passed in its current form, the "One Big, Beautiful Bill" would threaten billions of dollars of investments, hobbling energy development at a time of skyrocketing power demand. It would also risk causing household energy bills to spike higher. "The willingness of the Senate to suggest policy changes that will dramatically increase cost of energy to their consumers and sacrifice significant job growth is very surprising," said Jason Grumet, chief executive officer of the American Clean Power Association, or ACP, an industry trade group. "It suggests that the effort to repolarize this debate is now taking precedence over their actual constituent interests." Republican Senators Joni Ernst and Chuck Grassley of Iowa, along with Lisa Murkowski of Alaska, worked Monday to advance an amendment to soften the clean electricity tax credit phaseout and jettison the proposed excise tax. The tax is "unprecedented," and "the extremity of the proposal may motivate key Senators to support excise tax repeal," analysts for research provider Capstone LLC wrote in a note Monday. Read more: Senate Republicans Seek to Ease Solar and Wind Tax Credit Cutoff ACP estimates the new tax would raise costs on American clean energy companies by $4 billion to $7 billion in the next 10 years, while Rhodium projects it will result in a 10% to 20% increase in the cost of building wind and solar. That cost increase would "drive down deployment" and, for some new solar and wind facilities that would otherwise be economically competitive with natural gas, push them "out of the sweet spot," said King. Because this kind of policy has never been implemented before, the uncertainty it introduces would have a "chilling effect" on investment in renewables, he added. Read the full story on Bloomberg.com. |
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