Innogy chief plays down Trump risk to US renewables

European clean power group led by Peter Terium has big plans to invest in the country

Donald Trump’s election will have no effect on the growth in US renewables despite his claim that global warming is a “hoax” and his opposition to the Paris climate accord, says the boss of one of Europe’s biggest clean power companies.

Peter Terium, chief executive of Innogy, said the company had big plans to invest in wind power in the US, and these had not changed since Mr Trump’s victory. He said he expected his election to have “no major impact” on wind and solar in the US.

The Dutchman noted that Congress had already extended production tax credits for renewables until 2021 and many states have laws that require utilities to sell or produce a certain share of their electricity from clean energy sources.

Meanwhile, Mr Trump’s promise to unleash “hundreds of years in clean coal reserves” was unrealistic because “compared with the price of shale gas, coal is just too expensive”.

In an interview with the FT at Innogy’s headquarters in Essen, Mr Terium said US utilities would continue to shift from coal to cheap domestically-produced shale gas in power generation. “The fact that the market supports this policy means it’s not going to stop,” he said. “Even the US president can’t stop the market.”

During the US election campaign, Mr Trump described climate change as a hoax invented by the Chinese and threatened to “cancel” the Paris accord on combating global warming. Last week he appointed Scott Pruitt, attorney-general of Oklahoma and a big opponent of President Barack Obama’s plans to cut carbon dioxide emissions from power generation, as his chief environmental regulator.

Share prices of wind and solar companies in Europe and the US fell sharply the day after Mr Trump was elected, while diplomats gathered in Morocco for a climate summit worried that his victory could unwind global efforts to keep CO2 emissions in check.

But some argue that it will have little impact. US carbon emissions have been trending downwards over the past decade, largely because of the drop in economic output after the financial crisis, the weakness of the ensuing recovery and the coal-to-gas shift in the power sector, and many believe they will continue to fall regardless of who occupies the White House.

In a report published last month by the Breakthrough Institute, an environmental think-tank, Ted Nordhaus and Jessica Lovering wrote that as long as Mr Trump keeps America’s nuclear fleet online, retains tax incentives for wind and solar and “stays out of the way of the shale revolution”, “the US might outperform the commitments that the Obama administration made in Paris”.

The Solar Energy Industries Association, a US trade body, is still predicting that by 2020, solar installations in the US will triple, despite Mr Trump’s victory. “There is no benefit for any administration or Congress to stand in the way of that kind of growth,” said Dan Whitten, SEIA’s spokesman.

Innogy comprises the networks, retail and renewables operations of German utility RWE, and debuted in October in an initial public offering that was Germany’s largest since 2000. The company has both onshore and offshore wind farms in Europe but so far none in the US.

Mr Terium said Mr Trump would be incentivised to leave the current pro-renewables policies in place because the states that benefit most from onshore wind “are almost all Republican”. Also, “the world market leader in onshore wind is General Electric, and most of the value creation is local,” he added.

Meanwhile, green energy is becoming more economical as costs continue to fall. He noted that in August solar developers bid a record low of 2.91 cents per kilowatt-hour at an electricity auction in Chile, breaking the previous record of 2.99 cents/kWh set in Dubai earlier this year.

“You can’t build a gas power plant for that,” Mr Terium said.