Energy

National Rural Electric Cooperative Association

Russell Tucker, Chief Economist

Electric cooperatives are not-for-profit utilities serving an estimated 42 million people in 48 states, over 20 million businesses, homes, schools, churches, and farms, including 93 percent of the nation’s persistent poverty counties. In 2019, electric cooperatives maintained a strong financial position. However, in 2020 and continuing into 2021, the COVID-19 pandemic is having disparate impacts on electric cooperatives and the communities they serve.

Electric cooperatives serve more than 18 million of the nation’s residential electricity consumers. Hardest hit during the pandemic have been lower-income residential communities with a significant concentration of service sector jobs put at risk due to social distancing. Many consumers working in brick and mortar retail, leisure and hospitality, and recreational activities have seen reduced income due to shut-downs, lay-offs, and reduced hours of work. As a result, it has been difficult for some consumers to pay their utility bills. Moreover, disconnect moratoriums for non-payment have allowed unpaid balances to mount as payments are missed over consecutive months. Even though most electric co-ops are not directly rate regulated by their states, many co-ops work closely with regulatory authorities to foster coordinated policy responses. As a result, many electric co-ops are experiencing increases in payment delinquencies as consumers struggle to pay their bills.

The pandemic has also impacted the economic health of large commercial and industrial (C&I) customers, leading to lower kilowatt-hour sales. However, prolonged stay-at-home practices, such as telework and long-distance learning, have positively impacted residential electricity use, partially offsetting reductions in C&I sales. Combining the estimated loss in C&I load with the projected increase in residential load results in a net loss in electric co-op retail kilowatt-hour sales of more than 2 percent in 2021 when compared to pre-pandemic projections.

For some cooperative utilities, unpaid bills and reduced load growth has restricted revenues required for day-to-day operations. The combined revenue impacts of delinquent bills and load loss is expected to exceed $1 billion in 2021.

COVID-19 impacts are heightened in rural areas that do not have ubiquitous high-speed connectivity. The effects of the pandemic have highlighted the diminished quality of rural health care. Rural broadband connectivity is essential to support telework, distance learning, telemedicine and improved quality of life for rural communities.

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Solar Energy Industries Association

Abigail Ross Hopper, President and Chief Executive Officer

The state of the American solar industry is strong but could be stronger. COVID-19 initially hammered the industry, resulting in tens of thousands of job losses and project delays. However, due to several economic factors, we believe the solar industry will add a record 19 gigawatts (GW) of electricity generating capacity in 2020, enough to power the equivalent of more than 3 million homes.

It became clear in 2020 that solar could be an important part of America’s economic recovery, but it isn’t a guarantee. Even with the expected record in 2020, we ultimately did not grow as much as we could have because of tariffs on solar products, a tightening tax equity market and the devastating effects of the pandemic.

The last decade set the stage for the 2020s to be the Solar+ Decade, one where we reach 20% of U.S. electric generating capacity by 2030. Since 2010, solar has grown at an average annual rate of 49% and there are now nearly 89 GW of solar capacity installed nationwide.

The cost to install solar has dropped by more than 70% over the last decade, leading the industry to expand into new markets and deploy thousands of systems. Prices as of Q3 2020 are at their lowest levels in history across all market segments. An average-sized residential system has dropped from a pre-incentive price of $40,000 in 2010 to roughly $20,000 today, while recent utility-scale prices range from $16/MWh to $35/MWh, which is competitive with all other forms of generation.

Homeowners and businesses are increasingly demanding solar systems that are paired with battery storage. While this pairing is still relatively new, the growth over the next five years is expected to be significant. By 2025, more than 25% of all behind-the-meter solar systems will be paired with storage, compared to under 5% in 2019. The utility-scale market is also recognizing the benefits of pairing solar with storage, with over 8 GW of commissioned projects including storage, representing nearly 1 in 5 contracted projects.

This growth is apparent in dozens of red and blue states. It can happen faster with policies that support projects without sufficient access to tax equity, with streamlined project permitting and with modernized infrastructure.

We are facing 2021 and the coming decade from a point of abundance and growth potential. Bipartisan members of Congress supported a two-year extension of the solar investment tax credit, which President Trump signed at the end of 2020. Public support for solar remains at close to 90%, and we believe that there is a strong inclination among leaders in both parties and in all levels of government to advance policies that support economic recovery, create jobs and address climate change.

We are forever mindful of the tragedy that has been visited upon so many Americans and their families. We are saddened by the pandemic and hopeful that solar energy can play a role in fueling the recovery of our great nation.

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American Petroleum Institute

Dean Foreman, Ph.D., Chief Economist

Oil markets currently lag their pre-COVID-19 demand and price levels, and the U.S. Energy Information Administration (EIA) expects this to remain the case through 2021. However, if viewed through the lens of single-year growth, 2021 could become a historic year based on the economic recovery that is broadly anticipated by the IMF, World Bank, EIA, IEA and others. As the economy goes, so generally do oil and natural gas markets, and the 2020 COVID-19 recession has reinforced the fact that the economy and energy demand – especially oil and natural gas -- go hand-in-hand.

The question becomes who will serve those markets if they recover as expected. EIA’s view is that every producing region will supply greater output in 2021. While 2020 has been an especially challenging year and business climate, what we’re seeing is that the U.S. natural gas and oil industry has resiliently increased its productivity to record levels, lowered its costs and expanded critical infrastructure to reposition for growth in a potential recovery. Based on recent infrastructure increases, the Permian basin appears well positioned to participate in a recovery, both for oil and natural gas.