Colorado is on track to phase out the last of its coal-fired power plants by 2031, or less than a decade from now. If successful, that would be a truly remarkable feat.
In 2000, coal generated 80% of the state’s electricity. Today it still generates around 40%, according to preliminary 2021 data from the U.S. Energy Information Administration.
The big shift away from coal to lower-carbon and zero-carbon sources has two main drivers.
First: Market forces. Cheaper and cleaner energy sources have rapidly eroded coal’s share of the U.S. electricity market.
And second: Years of careful planning and intense negotiations involving power generators, communities with coal-fired power plants and coal mines, state energy regulators, labor unions, environmental groups, lawmakers and many others.
But let’s be clear: Colorado’s coal phaseout hasn’t happened yet – and it won’t happen without the continued construction of new power sources to take the place of old power sources when they are due to shut down. Actions that slow down or stop these construction projects, however well intentioned, only increase the risk of failure.
Case in point: A new inquiry by the U.S. Commerce Department has slammed the brakes on the construction of new solar power projects across the nation.
In April, the Commerce Department announced an investigation into imported solar cells and panels, which could trigger steep new tariffs on those products.
The investigation was demanded by a single, relatively small company – Auxin Solar – based in San Jose, Calif. The company argues tariffs first imposed by former President Trump against China’s solar industry should be expanded to include products imported from four other Asian countries: Malaysia, Thailand, Vietnam and Cambodia.
Auxin Solar claims manufacturers in those four countries are circumventing the original tariffs, in violation of the Tariff Act of 1930, because they use “parts and components from China” to build solar products that are ultimately used in the U.S. power sector.
The Commerce Department’s investigation into expanding the tariffs will likely take almost a year to complete. A preliminary decision is expected in late August, with the final call to be made next January. According to President Biden’s team, Commerce is legally required to investigate Auxin Solar’s allegations..
No question, America needs a stronger domestic supply chain for clean-energy technologies and the raw materials needed to build them. There is considerable debate, however, about whether hiking tariffs on imported clean energy products will actually deliver the mining, processing and manufacturing infrastructure needed to achieve that outcome.
We also need to dramatically update antiquated 1930s trade laws that result in these kinds of actions, and leaders in the growing U.S. solar industry face the challenge of working with an increasingly diverse set of companies.
But no matter where you stand on clean energy tariffs, the immediate impact of the Commerce Department’s investigation is clear and indisputable: A massive contraction in U.S. solar construction right when power companies are planning to ramp up their use of solar energy.
Already, the solar industry has reported a 46% reduction in planned new construction between now and the end of 2023. With the threat of expanded tariffs looming, many solar developers don’t know how much their projects will cost and therefore can’t move ahead.
This is directly impacting Colorado’s largest utility company, Xcel Energy, as it prepares to shut down the last of its coal-fired power plants in our state by 2031.
“The uncertainty of the investigation and the adverse impact on potential tariffs has resulted in the cancellation or delay of certain domestic solar projects,” Xcel officials told investors and financial regulators in an April 28 filing.
Those tariffs could increase the price of solar panels between 50% and 250%, and as a result, a number of planned solar projects in Colorado are now at risk, Xcel warned.
“Some developers have indicated difficulty delivering the projects at the contract price and at the scheduled in-service date,” Xcel said. The utility is now working on “contingency plans” to find other sources of electricity if those projects don’t come through as planned.
Delayed or cancelled solar projects are the last thing Xcel needs right now. By 2030, the utility is counting on the construction of 5.6 gigawatts of new renewable energy and energy storage projects to be able to “exit coal” and slash its carbon emissions by 85%.
This is a massive undertaking. Supporters of the energy transition – in Washington D.C., in Colorado and elsewhere – should be finding ways to make it easier, not harder.
Good intentions don’t matter much when they slow down the transition to cheaper and cleaner energy sources instead of speeding it up.
Simon Lomax, of Arapahoe County, is editor-at-large for the Payne Institute for Public Policy at the Colorado School of Mines. Morgan Bazilian, of Golden, is director of the Payne Institute.