The changes and ramifications of a second Trump term for the power industry will likely be significant. However, the energy industry has always demonstrated resilience in the face of political and economic changes. Life and business go on, and we will adapt to the changes as our industries always do. Let's take a pragmatic look at what the highest probability changes are likely to be:
The direction of energy policy will shift significantly, but not absolutely, with the Trump administration. Only some things from the Inflation Reduction Act and other previous legislation will be impacted (congress likes the jobs created and doesn’t want to cut them). Still, the rate of change and any new funding for clean energy will probably be affected.
The U.S. (and the rest of the world) needs all the power we can create to meet demands. Fossil fuel usage will grow, and many plants currently scheduled for retirement will instead have their serviceable lives extended. However, clean energy programs will continue both in the US and globally. If it adds megawatts, it will not only survive, it will thrive, reaffirming the importance of clean energy in our future.
New technology changes, such as AI, smart grids, high-frequency switching, and other technologies drive the power grid's efficiency and scale. We will accelerate because they help increase efficiency, scale profits, and maximize current investments.
EV tax credits seem to be on the top of the list for repeal. Elon Musk and Trump's desire to beat China might keep them in place to reduce the impact on jobs, but this a point of debate at the moment.
Gas/diesel vehicles will get a reprieve from emission requirements, and the production life of these products will be extended to protect jobs.
Regulation reductions will likely allow the energy business to move faster and be more competitive. We have already seen some changes in power line construction and other infrastructure accelerations that will help address growth issues.
The U.S. and the rest of the world need more power generation, and it would be better if this energy were also cleaner and cheaper. The U.S. also needs energy independence, and fusion energy should be a significant part of that strategy. Ignition Research predicts that global power demand will grow by 79% through 2050, presenting significant opportunities for growth in the energy industry.
Here are the top 10 potential changes a Trump administration could mean for the power grid in 2025 and beyond:
Increased Fossil Fuel Production - Trump plans to boost oil and natural gas production, potentially lowering liquefied natural gas (LNG) prices for electricity generation. He has vowed to cut taxes, reduce debt, and increase drilling on federal lands to achieve "energy dominance.” This push for fossil fuels could impact the power grid by slowing the transition to renewable energy sources. However, market forces favoring clean energy and existing investments in renewable infrastructure may limit the extent of this shift.
Clean Energy Policies - Trump's likely rescinding or scaling back of climate and renewable energy policies, potentially dismantling parts of the Inflation Reduction Act (IRA), could significantly impact the energy industry. His opposition to several renewable energy initiatives, which he claims are unreliable and costly, could slow down the transition to renewable energy sources. However, the repeal of the IRA may face challenges, as its benefits are flowing heavily to red states. Trump's oil and gas industry allies also benefit from the law's tax credits for carbon capture, advanced biofuels, and hydrogen. The extent of new federal investments in clean energy during the next four years will be a key factor in shaping the future of the energy industry.
Support for Grid Expansion - Trump may slow down or halt the Biden administration's efforts to expand and modernize the power grid, potentially impacting the integration of renewable energy sources. The Department of Energy's (DoE) grid support program, which awarded $7.6 billion to 104 wire projects for adding 50,000 megawatts of new power transformer capacity, should go forward to provide power for reshoring manufacturing. Many experts believe that a larger, more robust grid is critical to expanding energy delivery and enabling neighboring regions to share more power in extreme weather emergencies.
Relaxed Environmental Regulations - The Trump administration's expected aggressive dismantling of federal environmental and climate regulations could have significant implications for the power sector's emissions regulations and the overall environmental impact of electricity generation. This includes potentially eliminating a new federal charge for methane emissions from certain facilities – the first attempt by the U.S. government to impose a fee or tax on greenhouse gas emissions. The regulatory rollbacks could increase emissions and have a more significant environmental impact on electricity generation. However, the effectiveness of these rollbacks may depend on legal challenges and the specific implementation processes.
Tariff Impacts - Trump's proposed tariffs, especially on Chinese imports, could inflate prices for crucial grid components and impact energy infrastructure. This could have ripple effects throughout the power sector, potentially increasing costs for grid modernization and renewable energy projects. The full extent of these impacts would depend on the specific tariffs implemented and how they interact with existing supply chains and manufacturing capabilities in the energy sector. The potential increase in costs could slow down the pace of grid modernization and the transition to renewable energy sources, impacting the future of the energy industry.
Easier Permitting Processes - Trump will likely streamline permitting for fossil fuel projects while potentially complicating approvals for renewable energy infrastructure. This could affect the pace and direction of new power generation and transmission projects. The specific impacts would depend on the details of any new permitting processes implemented and how they interact with existing state and local regulations.
Increased State-Level Influence - With reduced federal support for clean energy, states may play a more prominent role in shaping their energy policies and grid development. This could lead to a more fragmented approach to nationwide grid planning and renewable energy integration. Some states may continue to pursue ambitious clean energy goals, while others may align more closely with Trump's fossil fuel-focused agenda. This could result in significant regional differences in grid composition and operation.
The Musk Factor - While renewables are not likely to be as in vogue as they were under the Biden administration, Elon Musk may counter many of the more stringent constraints on solar energy, battery storage, and EVs, given his significant investments in these technologies and his new role as the nation’s “Chief Science Officer.” Photovoltaic (PV) technology is set to play a pivotal role in meeting rising electricity demand. The IEA predicts that solar PV alone will meet roughly half of the global electricity demand growth in 2025. The rest of the globe still buys solar energy at record levels, and Elon can make billions here.
Nuclear’s Renaissance - Nuclear power and AI data centers are in a significant bromance. AI and data centers' voracious appetite for power has generally led to a “nuclear renaissance.” Trump's approach to nuclear power will likely be part of a broader "all-of-the-above" energy strategy that aims to support various energy technologies without favoring specific ones. Mark Menezes, former deputy secretary of energy under Trump, suggests that this could be good news for proponents of nuclear technology, including both traditional and advanced nuclear power. The Trump administration may view nuclear energy as critical to energy security and technological leadership.
The Future of Fusion Energy - China will become this century’s version of the Soviet Union - the U.S.’s archenemy in many endeavors. Fusion gives Trump a real legacy-building opportunity. It is a chance to build an “America First” and allied nation supply chain for energy, a new opportunity for this administration. Fusion can power the Space Force and SpaceX partnership, and Elon Musk will need fusion-propelled space travel to allow our Space Force to compete with and beat China’s space program. The fusion energy ecosystem leverages vast amounts of petrochemical-based products that will help oil companies.
The Brookings Institute indicates that the second Trump administration's energy policy will likely prioritize national security, energy independence, and economic growth through an "all-of-the-above" energy strategy. This approach would leverage America's diverse energy resources, including fossil fuels, nuclear power, and renewables, to meet growing energy demand while reducing reliance on foreign energy sources. Trump's policy would focus on streamlining regulations and permitting processes to accelerate domestic energy production and infrastructure development, potentially leading to increased job creation and economic stimulation in the energy sector.
The administration would likely emphasize expanding oil and natural gas production, including lifting the pause on LNG export permits and easing regulations on drilling and fracking. As Mark Menezes, former deputy secretary of energy under Trump, suggests, the administration could take a more technology-neutral stance, potentially benefiting various energy technologies, including nuclear, hydrogen, and fusion. This balanced approach could help ensure energy security while also promoting innovation in emerging energy technologies.