COVID-19 slows progress on clean energy, electric vehicles

Wind and solar energy companies wait in limbo and electric vehicle advocates expect a hit much like the rest of the automotive sector as the coronavirus causes uncertainty across the clean energy industry.

“We have heard from some members that there are concerns about things like supply chain interruptions, permit decision delays, and cancellations of orders. In general, I think the uncertainty is a big challenge for every business,” said Laura Sherman, president of the Michigan Energy Innovation Business Council, a trade group for advanced energy companies.

Like the rest of the economy, the outlook for clean energy remains fluid. Some advocates and lawmakers had pushed for extended wind and solar tax credits in the most recent stimulus package from Congress, although critics blamed the move — at least in part — for stalling negotiations.

Meanwhile, the state’s two large investor-owned utilities have taken divergent paths when it comes to building new generation projects after Gov. Gretchen Whitmer’s stay-home order, which lasts from March 24 through April 13. As MiBiz previously reported, DTE has halted all non-critical infrastructure projects, including its $1 billion natural gas plant in St. Clair County, while Consumers continues plans for new wind and solar.

How smaller scale energy projects, such as residential rooftop solar, fare remains to be seen.

Mark Olinyk, president and CEO of Jackson-based Harvest Energy Solutions LLC, said generally customers and suppliers are “more cautious and on a wait-and-see mode.” Also, it’s more difficult to move on public infrastructure projects and obtain permits and inspections.

“Certainly, it still has a huge effect on this sort of business,” Olinyk said.

Harvest Energy will maintain operations as an essential business under Whitmer’s stay-home order, but the company has had to scale back in multiple states, including Michigan. Olinyk confirmed layoffs, but declined to say how many across its 70-employee workforce.

“Our plan is this is temporary,” he said, noting that federal action on solar tax credits could change the calculus. “I just don’t like to see people not only slowing down or laid off but being affected by this whole thing. It’s nothing we did, the state did or the industry did. It almost feels like 9/11 all over again. The recovery feels like it might be the same slow comeback.”

Instead of reinstating full federal tax credits for wind and solar, Olinyk and other experts have suggested that the federal government could simply push back the phase-down schedule because of the disruption.

Rob Rafson, founder of Muskegon-based Chart House Energy LLC, said construction has halted on a series of solar installations on property owned by the city of Muskegon Heights. Rafson said the city directed him to stop work.

“Everyone wanted to continue, but we’re limited by the customer,” Rafson said, noting that with outdoors-based work, it would be relatively easy to maintain social distancing. “Really all of our work is pretty much stopped.”

In the longer term, Rafson thinks the widespread closures may spur interest from cities to generate their own power. Municipalities are of “particular focus” for Chart House, he said.

“People are already reaching out to us to push forward on solar projects they were only sort of marginally considering,” Rafson said. “I expect that to sort of accelerate no matter how long this goes.”

Electric vehicles

The role of coronavirus in driving down gasoline prices and halting production from U.S. automakers is expected to negatively affect the nascent electric vehicle market. Michigan, in particular, has taken an active role in supporting the buildout of EV charging infrastructure and distributing millions in settlement funds from the Volkswagen emissions scandal.

But with auto dealerships closed aside from providing vehicle maintenance work, “We feel like the pain will be spread pretty evenly,” said Charles Griffith, director of the climate and energy program at the Ann Arbor-based Ecology Center. He also believes low gas prices will be relatively short-lived, adding that gas prices are a decreasing factor in EV-buying decisions.

Griffith advocates the EV sector be included in some form of federal stimulus program, particularly for charging infrastructure, extending EV tax credits or a form of a vehicle buy-buck program.

“It’s worth considering all of these different ideas as part of a stimulus program,” Griffith said. “We might as well if we’re going to try and trigger spending in the economy and meet another social good by encouraging some of the cleaner technologies we want to promote.”