Economic Eclipse: Congress Tries to Block the Sun with SEIA's Sean Gallagher & Daniel Giese
Energy Capital Podcast · Nathan Peavey and Texas Energy & Power Media
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Show Notes
Texas is adding solar at a faster pace than any other state. Solar and storage are powering Texas’ manufacturing renaissance, creating jobs, and lowering customers’ bills; even the state’s oil and gas sector is an eager consumer of solar power.
And renewables are also pumping tens of billions of dollars into local — mostly rural — economies in the form of landowner payments and tax payments.
We’re on track to add another 8-10 gigawatts in 2025, after adding about that much in 2024.
In this week’s episode, I sat down with Sean Gallagher, Senior Vice President of Policy at the Solar Energy Industries Association (SEIA), and Daniel Giese, SEIA’s Director of State Affairs for Texas. We unpack the forces behind this record-breaking growth and what could help keep it going — as well as what could stop it in its tracks.
The federal budget bill would cripple the boom.
Texas is seeing historic levels of investment, in large part because of the 10-year certainty provided by the IRA. These tax credits are bringing down capital costs, reducing risk, enabling longer-term project planning, and driving investments in solar manufacturing.
As Sean points out, this policy clarity has helped drive a wave of new solar and battery projects. And Texas is leading the pack, thanks to our land availability, pro-development bent, and robust demand growth.
But the same projects that are thriving today could be lost tomorrow if federal tax policy changes too abruptly.
Policy risk is rising. And it’s already hurting deployment.
Federal tariffs. Delays in domestic manufacturing. A growing push in some counties to ban solar outright. It’s all adding up. SEIA recently reported that more than 5 GW of solar capacity in Texas was delayed or canceled just this spring due to trade policy and market uncertainty.
Add in the threat of repealing or rolling back the IRA, and the fragility of this moment becomes clear. Developers aren’t panicking, but they are cautious. And that’s enough to slow the pace of deployment at exactly the wrong time.
Storage is the backbone of reliability and we’re just getting started.
Storage is no longer a “nice-to-have.” It’s essential. It’s one of the main reasons ERCOT’s summer grid outlook improved from a 12% chance of outages in 2023 to less than 1% this year.
Daniel and Sean both emphasized how solar + storage is becoming the new standard and how distributed storage, especially, can help strengthen resilience while reducing strain on transmission.
If Texas wants to keep growing solar and maintain reliability, batteries aren’t optional. They’re the glue that binds the new grid together.
Final thoughts
The clean energy transition is already underway, but the friction between policy and politics on the one hand and markets and technology on the other, is starting to slow it down.
Texas has the fundamentals to lead the next chapter of America’s energy story: land, load, labor, and sun. But the national and state-level decisions we make in the next two years about policy, infrastructure, and transparency will determine whether we keep that lead or fall behind.
This conversation with SEIA was timely given all the activity in Austin and Washington DC. Timestamps and relevent links are below.
This was a free episode but your contributions support this podcast and the newsletter. If you’re already a subscriber, thank you! If you’re not yet a subscriber, please become one today and please recommend the pod to friends, family, and colleagues.
The Texas Energy and Power Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.
Timestamps
* 00:00 – Introduction
* 02:00 – Breaking down the recent Texas legislative session
* 03:30 – Rural benefits of renewables, why some legislators vote against their districts
* 07:00 – How Texas rates nationally on solar & storage
* 8:30 – Solar’s meteoric rise in Texas
* 11:00 – Good bills that passed in the recent legislative session
* 13:30 – How industry supported bills addressing recycling, consumer protection
* 15:45 – The federal budget bill and its potential impact on manufacturing
* 18:00 – Data center and AI companies’ support for renewable energy
* 20:00 – Without solar & storage, the economy will slow
* 23:00 – Winning the competition w/ China for electricity supply chain dominance
* 27:30 – The three incentives that support domestic manufacturing
* 29:30 – The impacts of the budget bill on Texas
* 34:00 – Grid operators and regulators say we need continued solar development
* 37:00 – Where will tax credits go from here
* 39:00 – Problems with the budget bill: abrupt end of tax credits instead of ramp and Foreign Entities of Concern (FEOC)
* 44:00 – Prospects for residential solar / distributed generation in Texas
* 46:00 – Initiatives SEIA will be engaged with at the PUC
* 48:00 – Support for solar power and SEIA’s call to action & how to get involved
Resources
Get Involved: Solar Powers America
SEIA Resources
* Solar and Storage Industry Statement on Proposed U.S. Senate Finance Committee Reconciliation Text
* Solar Market Insight Report Q2 2025
Other Podcasts, Articles, Websites Mentioned
* Pakistan’s Solar Boom. Volts.
* Energy Submission. Texas Energy & Power Newsletter
* Impact of Limiting Solar and Wind Development in the ERCOT Market. Aurora Energy Research
* CPS boss says taking away renewable tax breaks will just shift the costs. San Antonio Express News.
* Energy Capital is produced by ClarityForge Studios.
Transcript
Doug Lewin (00:05.816)
Solar was under attack in the Texas legislative session that recently ended. Now it's under attack in Congress. Why is this happening for resource that has delivered so much benefit? We dive into that in this episode of the Energy Capital Podcast. I'm your host, Doug Lewin, and this week I was joined by not one but two guests, Sean Gallagher, Senior Vice President of Policy for the Solar Energy Industries Association, and Daniel Giese, Texas State Director for SIA. A quick note, we recorded this pod last
Doug Lewin (00:35.436)
week before the Senate version of the reconciliation bill, the budget bill was released. So we got into what happened in the House bill. We talked a whole lot about what happened during the Texas legislative session. We talked about the meteoric rise of solar and what that has meant for the state of Texas. We got into all kinds of things, but not the Senate version of the bill. We will put in the show notes. You will be able to find there, a statement on the Senate bill, but we will not discuss it in this episode.
Doug Lewin (01:04.728)
This was a great episode. Really enjoyed talking with Sean and Daniel. think you're going to learn a lot from this. As always, please become a subscriber to the Energy Capital podcast and the Texas Energy and Power newsletter at douglouen.com. Please leave a five star review wherever you listen and please enjoy the show. Thanks for listening.
Doug Lewin (01:27.608)
Sean Gallagher and Daniel Giese. Welcome to the Energy Capital Podcast.
Daniel Giese (01:31.256)
Thank you Doug. Good to be here.
Sean Gallagher (01:32.76)
here.
Sean Gallagher (01:33.175)
Thanks for having us.
Doug Lewin (01:34.872)
You guys are doing great work at SIA on behalf of the solar industry. And obviously it is a fascinating time, too fascinating in my view, what's going on in the solar industry. Let us start with Texas. We are definitely going to jump to talking about federal and what's going on in Washington, DC, but it's energy capital podcast and I cover Texas. So Daniel, we'll probably start with you and maybe just kind of introduce yourself very briefly, but talk to us. You're obviously,
Doug Lewin (02:04.62)
leading things in Texas. Why in a state where solar is delivering so much value in the state are we still seeing these legislative attacks? I get asked this all the time and I feel like I'm really struggling to explain it. So maybe you could help me, Daniel.
Daniel Giese (02:19.032)
Sure.
Daniel Giese (02:19.352)
Yeah. So we had a, you know, session just ended this month. And, know, like you said, there's obviously going to be challenges in a legislative session. There's no limit on, you know, what types of bills, how many bills legislators can file. You know, this year we saw over 8,000 filed. At end of the day, only about 1,200 of those actually passed, but you have to keep them all serious. And so there was probably over 200 bills that, you know, I was personally tracking people in the industry tracking that dealt with, touched on our issue.
Daniel Giese (02:47.252)
Unfortunately, a lot of those were negative, but we made it out okay. It was actually a pretty good session for clean energy, for energy in general. Nothing bad happened to us. Other like past legislative sessions, there's been some more challenging legislation passed. This time around though, think cooler heads prevailed and legislators just looked at, they just did simple mathematics that you cannot meet the demand that this state is seeing. That's through population growth of people, growth of businesses moving in, the types of businesses moving in that are using incredible amounts of energy.
Daniel Giese (03:17.038)
They're going to need energy when they get here. They can't sit around and wait. So the simple supply and demand won out at the end of the day. And legislators, the cooler head prevailed and they just saw that the only way to meet the demand that's coming is through clean energy growth, energy growth in general, and all of the above.
Doug Lewin (03:32.226)
think that's right. And I just continue to wonder because, you know, and I put together a podcast and video that's on YouTube with some of the testimony during Senate Bill 819, right? You just see so many folks, particularly from rural, deep red districts, talking about what solar and wind, but we heard a lot of testimony very specific to solar, what it means for them thinking to the gentleman from Nacogdoches County, who's like, I'm paying for my kids' college with lease payments out of solar. Like, these benefits are...
Doug Lewin (04:01.742)
very, very real. mean, we're seeing landowners get millions and tens of millions of dollars in payments. We're seeing school districts getting huge amounts of tax base. But then you have some, and I appreciate the way you're putting this, and like, cooler ads prevailed and most people realized it's good. But there is this vocal minority that even when their districts are benefiting so much, seem to be very stridently anti-solar. Like, how do you explain where that's coming from?
Doug Lewin (04:29.58)
The answer I've been giving lately is algorithms. think people are spending too much time on Twitter and their feeds are giving them a bunch of misinformation. like, is that your answer or where do think that's coming from?
Daniel Giese (04:39.938)
You've kind
Daniel Giese (04:40.328)
of seen the issue wrapped up in, historically, you know, Texas has been in all the above state, gone all in on all types of energy. And that's just simply because it's good for the economy. Lower bills for constituents is popular with their elected officials. And, know, we've kind of been wrapped up maybe in some of the culture wars of to be this type of legislator, you need to be against this type of energy. You know, I think a wide majority of people don't see that, but obviously it's challenging when you're wrapped up in that. So we did a study.
Daniel Giese (05:07.948)
along with some other stakeholders at the beginning of session on the economic impact of renewables in Texas and found that nearly $30 billion in landowner payments coming from clean energy, $20 billion in local taxes paid. And these are taxes not going to the state. These are taxes staying within local counties, the county commissioner's court, the county hospital districts, local schools going to roads, and just infrastructure that's needed.
Doug Lewin (05:32.756)
is,
Doug Lewin (05:33.347)
I'm sorry to cut you off, I just want to emphasize that that is billion with a B. Tens of billions of dollars of benefit to the state and it still just baffles me that there's like opposition.
Daniel Giese (05:37.934)
That's with a B,
Daniel Giese (05:47.662)
And that's a lot of the clips that you put together on the hearing you mentioned on SB 819, which is really an amazing hearing and sort of not the traditional type of hearing you see in a Senate business and commerce hearing for people that follow the legislature. Just a vast diverse coalition of people, people who call themselves environmentalists, people who call themselves conservationists, people who don't care about that issue at all, but host these projects on their property. So it's just important that you private property rights.
Daniel Giese (06:15.246)
played out, and that the legislators heard from the constituents who that would affect, you know, that type of...
Doug Lewin (06:20.814)
I just want to read really quickly a quote you guys had put out as was on a press release you guys had put out, but it was a gentleman who I featured in that very video, Michael Looney, VP of Economic Development at the San Angelo Chamber. San Angelo is in Tom Green County and he says, this is a quote from Mr. Looney, the Western part of the county is challenging even for grazing, given the lack of water, trees and how rocky the terrain is. However, we have three massive solar farms that have been able to make it work.
Doug Lewin (06:47.722)
And there was a fellow from Armstrong County talked about we're dry land farmers. We don't have oil and gas. Like we really need this. Well, I guess we'll continue to puzzle over why it's actually happening. But I think the point you made is the right point, which is cooler heads did prevail. There were more legislators that understood this is actually a really good thing for our state. Sean, I want to go to you. You obviously are with CIA at the national level.
Doug Lewin (07:15.212)
You look around the country and see all the different states and what's happening in solar. I've talked about it on this podcast a bit, but it'd interesting to hear from your perspective. Like how does Texas actually rate nationally for what's going on with solar in this country?
Sean Gallagher (07:30.574)
Well, Texas has become hugely important to us. And one of ways we demonstrate that is we hired Daniel a year or so ago so that we've got someone on the ground there. Texas has been the fastest growing solar state in the country the last several years. Texas has installed more utility-scale solar than any other state, including California, which was a longtime leader. And I think Texas now has the most utility-scale solar capacity of any state. think if you add rooftop in California, may still be slightly ahead.
Sean Gallagher (07:57.71)
Texas has also been the fastest growing energy storage state in the country over the last several years and has among the most energy storage capacity in the nation. And that's been super important in meeting energy demand. mean, the peak demands you had even a couple of weeks ago. And I think what's also relevant is that the discussion nationally is very similar to the discussion in Texas, right? If you want to achieve energy dominance, if we want to meet
Sean Gallagher (08:23.192)
growing energy demand, if we want to do it reliability, we've got to do it with resources that are available, the resources that are affordable, the resources that can be brought in line in a timely fashion. So those are some of the points that we're trying to make to the Congress as we have that discussion.
Doug Lewin (08:37.453)
Yeah, you guys had actually put out some information that we are seeing a huge uptick in solar that is paired with batteries. And I think it's always important to point out that they don't actually have to be paired, right? They can be, you could have batteries on the system somewhere soaking up that solar power when prices are low and putting it back. It doesn't have to be co-located, but we are seeing, this is actually about residential, but I think the numbers, I've got a slide on the-
Doug Lewin (09:07.342)
screen for those that are listening that in 2019 it was what a couple of percent and now it's looks like it's somewhere around 30 % on the residential side. I think we've seen pretty similar on the utility scale side too. That's right. So that solar and storage pairing is pretty perfect.
Sean Gallagher (09:23.254)
Yeah, and you're right on both counts, right? Co-located solar and storage, very useful, particularly to the project developer who can sort of take advantage of putting out that power on the grid when it's needed the most. Storage, whether it's co-located with solar or elsewhere on the grid, super useful to the system and to its reliability because, as you say, it can soak up power either from the co-located solar or from elsewhere on the grid and deliver it when it's needed most.
Doug Lewin (09:49.366)
Yep. You guys also put out some information. Texas installed the most solar capacity first quarter 2025, 2.7 gigawatts. To put that in perspective, the entire Austin Energy Service Territory is about three gigawatts. So basically an entire Austin worth of solar in one quarter. That was 92 % more than the second rate state. We will have all sorts of links to these different reports in the show notes.
Doug Lewin (10:16.056)
Highly encourage folks to check out, see his materials. They're really great. I'm putting up on the screen for those that are on YouTube that we had a total consumption in Texas from solar reached just about 13 % in the first five months. That's compared to 9 % the same time period last year. So in the first five months of this year, basically one out of every eight units of power consumed on the Texas grid were
Doug Lewin (10:43.424)
Solar, that's 50 % more than one year ago. I mean, this is just like meteoric rise. And it's just continues to sort of, it confounds me that anybody wouldn't be just like celebrating this fantastic thing that is going on. Daniel, I want to come back to you, because I definitely like, there's all kinds of attention. And I obviously have talked about it a lot here about the bad bills.
Doug Lewin (11:08.974)
humans, have this thing, right, of negativity bias. I'm not immune to it. But there were actually some really good bills passed in the legislature too, and that, you know, it's like if it bleeds, it leads, right? So you just don't see as many news stories about the good stuff. Can you talk about some of the good stuff that just happened in the Texas legislative session?
Daniel Giese (11:26.752)
Right. And you know this, but sometimes you're judged on, you know, what doesn't pass, like sort of the most popular thing and people don't focus on the good stuff that did pass. But like really one of the bright spots of this past session was the popularity of DG rooftop solar. There was some good legislation to streamline solar permitting for backup power systems, know, batteries and solar on your house. We've seen, you know, a lot of red tape around different areas of the state, which puts up barriers to.
Daniel Giese (11:52.814)
allowing people to put their own energy independence into their own hands and do what they can to lower their electricity costs by putting backup power systems on their house. So Senate Bill 1202 will streamline the local permitting and gets rid of lot of that local red tape. I think that goes hand in hand as well with legislation SB 1697 to direct the PUC to create a consumer guide for homeowners that are going solar. Sort of similar to how the DOE has a guide to going solar pamphlet on their website.
Daniel Giese (12:21.792)
Unfortunately, we saw over the past couple of years some bad actors in the rooftop solar industry, but know, sort of what's different about our industry is we took that into our own hands and tried to get out bad actors and showed that the industry is really doing things to make things right. we SB 1036, which will strengthen consumer protection in the state requiring solar cells people to register with TDLR. Cause you know, these are products that people in Texas really want. So they need to be able to one, they need to be able to get it on their house.
Daniel Giese (12:50.478)
in a reasonable timeline. And they also need to be able to get into relationships with businesses, you know, that are reputable at the end of the day. Kind of going on that a lot of good decommissioning and recycling legislation, HB3228 and 3229, which will require recyclers to keep a database on what components they have and what plan they have to recycle these components. That's to ensure that there's not a lot of graveyards of devices that we've seen around. Additionally, HB3809 will create
Daniel Giese (13:19.95)
decommissioning standards for battery energy storage systems, and then HB3824, which will require battery systems to have fire safety plans. So it's just a lot of proactive steps, which, you know, a mature industry takes, responsible industry takes. So some people could see that and say, well, why are you doing these things, which make you do something, but that's what, you know, good actors do. And that's really what you saw this session was problem solving.
Doug Lewin (13:43.17)
Yeah, you know, it's interesting, Daniel, there's some folks out there, some legislators that say industry will come in and meet with them and try to work through things. But we really see on issues where legislators do reach out to industry and say, Hey, there's a real problem here and I want to solve that problem. think the evidence and the data suggests that regardless of anybody's opinion, you can look at the track record because all those things you mentioned were just this session, but there was wind decommissioning.
Doug Lewin (14:10.094)
2021, I think, and then solar decommissioning passed in 2023, battery decommissioning in 2025. The added recycling bills you just mentioned by representative Lambert, like those were all bills that I don't know the details. You guys probably didn't get everything exactly the way you wanted it, but you engage. That's what the process is about. And you reach some kind of conclusion that makes the bad actors come up. I mean, that's what I kind of look at on the residential side, but clearly there's some bad actors out there and nobody denied that. So let's, let's address that.
Doug Lewin (14:39.65)
but you do it in a way that addresses the problem and doesn't hurt the businesses out there, which is the vast majority of them that are doing things the right way. Most wind and solar companies are recycling their stuff where you have ones that don't, that's where you pass a bill, but make sure that you don't cause all kinds of collateral damage while you're doing it,
Daniel Giese (14:59.15)
Right, and I mentioned, you know, only 1,200 bills passed, 8,000 filed. So obviously it's easier to kill a bill than pass a bill. So a lot of bandwidth. And I'd mentioned a good amount of bills. That's a lot of bandwidth. That was a long list. Yep. Yep. A lot of bandwidth spent by the industry to get stuff done.
Doug Lewin (15:13.538)
Yeah. Sean, I want to switch back and talk about national stuff, but anything you want to add on Texas as far as what passed or what didn't pass?
Sean Gallagher (15:20.75)
Well, aside from the fact that Denny did a great job, I think what was clear in Texas this year was it was a real team effort. We've worked with a lot of organizations down there. I think we've done a nice job of aligning interest. And it was that kind of work that led to the hearing you mentioned earlier where we had landowners from West Texas coming in and telling their stories. And that was meaningful. So I'm really proud of the work that we've done and with the coalition that we built in Texas to try to educate lawmakers on the realities of these projects.
Doug Lewin (15:48.866)
Yeah. And I think that's actually a good segue to talking about the federal, cause I'm curious, Sean, like how is that playing out at the federal level? Like we did see in Texas, a very, very broad coalition that was inclusive of, like you said, lot of farmers and ranchers, but a lot of economic development, right? We saw a lot of economic development corporations, the statewide chamber of commerce, Texas association of business through to like manufacturers and oil and gas, like all kinds of different folks involved because everybody benefits from
Doug Lewin (16:17.046)
low cost power, think a lot of times in the sort of some of the way, not always, certainly, maybe not even a majority of the time, some of the time in the media it's presented as oil and gas versus renewables, but in the real world, it's not really, I don't think the way it's playing out. I'm not following what's going on in DC nearly as much as I follow what's going on in Texas. What's that dynamic like in DC right now, particularly in the context of the one big, beautiful bill act, as I believe is officially called?
Daniel Giese (16:31.502)
Yeah.
Sean Gallagher (16:44.642)
That is the official name of it. And yeah, we're working with a wide array of stakeholders at the national level as well. Of course, we're working with our member companies, with other clean energy trade associations. We're also working with, and I'd say very prominently, the tech companies and other large businesses that have shown over the last decade that they're real big customers of clean energy. So the Clean Energy Business Association we're working very closely with.
Sean Gallagher (17:11.874)
You might have seen the other day the data center coalition put out a letter to the Congress saying, you know, these clean energy tax rates are important to us. We need power. We need it soon. And we want to be able to procure this power. We're working with some manufacturing groups and others. And so I do think there's a similar breadth in the kinds of voices that the Congress is hearing from because it is an economic development issue. It's an economic security, it's an energy security, it's a national security issue. This isn't just about
Sean Gallagher (17:39.2)
our industry, although it is about our industry, it's about jobs. Doug, as you know, we've successfully ensured solar and storage manufacturing over the last three years, kind of in an incredible way. had over the prior decade lost a lot of that manufacturing capacity, primarily to Southeast Asia. In the last three years, we've seen tens of billions of dollars invested across the US, mainly in the Southeast, a lot of it also in Texas.
Sean Gallagher (18:05.614)
to build solar modules, to build solar cells, wafers, the racking equipment, steel, inverters, sort of you name it, all that manufacturing has come back to the US as a result of this sort tax credit ecosystem that we have. And that's been good for communities, it's been good for jobs, it's been good for the economy, and it's been good for energy.
Doug Lewin (18:26.67)
It's so fascinating because just here all the time for people that really don't like renewable energy, they'll say, you can't power the modern economy with renewables. You can't power data centers with renewables. They're 24-7 loads. But then when you actually listen to the folks that are developing the data centers and operating the data centers, they say, no, no, we really want renewables. Now, they won't say we're going to operate on 100 % renewables, but they want to operate with renewables as much as they possibly can.
Doug Lewin (18:54.808)
for the obvious reasons, it's a zero marginal fuel cost and you're insulated from the price shocks that happen with gas from time to time, right? And for other reasons too. like there's certainly sustainability reasons, but in my mind, I think with the data center folks, it's like cost is right up there near the top. It continues to confound me that people say you can't operate a data center on it. And then I talked to data center folks and they say, well, sure we can and we're doing it.
Sean Gallagher (19:17.762)
Well,
Sean Gallagher (19:17.962)
Daniel and I, in fact, were down at a ribbon cutting for a large solar facility north of Austin. It's a 900 megawatt solar project that's powering a Google facility outside of Dallas. So the proof's in the pudding. These kinds of projects are powering data centers, and these are the kinds of projects that those companies want.
Daniel Giese (19:38.412)
Yeah, just read the news. There's a story on PPAs being signed between these companies every day, a lot here in Texas as well.
Doug Lewin (19:46.22)
Absolutely. Especially in Texas, we're seeing this. And this is like, again, just sort of astounding because I hear all the time, and this is, think, cross-partisan, but you hear it a lot, particularly in Republican circles, that we really want to dominate AI race. And I just don't see how that's possible, particularly over the next three to five years. I could squint and say maybe in the mid 2030s, like maybe nuclear and geothermal and some of these things start.
Doug Lewin (20:14.966)
even gas carbon capture and some things like that start to pan out. like in the next five years with a turbine crisis and the other technologies I just mentioned not quite there yet, getting there rapidly, but not there yet and not going to be there in the next three to five years. This is what folks are building, solar and storage.
Sean Gallagher (20:30.87)
I think it's important for us to say and for your audience to hear like we're for all forms of energy sources. You know, we're advocating for solar and energy storage, but we're not against anything. But you're absolutely right. I mean, if we want to win the data center race, that we want to win the artificial intelligence race, we want to win the manufacturing race like the time is now. Data centers and artificial intelligence companies don't want power five years from now. They want power tomorrow. They want power next year. And as you've noted in some of the things that you've written,
Sean Gallagher (20:58.382)
80 some percent of all the new energy resources that came online last year nationally were solar and energy storage. 80ish percent of all the new resources in the queue that are most advanced, that are most ready to get built are solar energy storage resources. And you know, yes, you're right. There are challenges with gas turbines, high chain. If you don't have it on order, you're not going to get it for four or five years. And that's not the same thing against gas power plants. It's just that they can't scale at the pace that the economy wants.
Sean Gallagher (21:28.108)
power. So why would you do something to suppress or depress or repress the installation of energy resources when the economy is clearly demanding more power and more power quickly?
Daniel Giese (21:39.424)
That's what I would hope that Congress emulates what Texas did this past session is, know, we knowing what I know about our state leaders, our state legislature, it's they want growth and they want it now. And you're not going to sit around and wait and put economic development on hold to wait five, 10, 30 years. You're going to use what you can now to power and keep the Texas miracle going.
Doug Lewin (22:00.846)
And that is what the house budget bill would do. wouldn't, you know, I do think we would continue to see solar and storage built, but it would be less of it. It would be at a higher cost and that would slow down the economy. would set us back in the race to develop these AI data centers and all kinds of other things we need for the economy. It really would, if not put on hold, at least significantly not tap the brakes, but kind of slam the brakes on economic development.
Sean Gallagher (22:27.362)
You know, the implications of that tapping the brakes or slamming on the brakes is that, as you said, energy costs are going to go up. So customers are going to spend up to $50 billion more on energy costs as a result of the bill that's in the Congress right now, if it passes as it's currently written. Tens, or if not hundreds of thousands of people are going to get thrown out of work, and that's all avoidable.
Doug Lewin (22:48.334)
So I think where I want to go next is to something you were just talking about a couple minutes ago, Sean, is the manufacturing piece and see as an institution not being against other forms of energy production. It's something I've been thinking a lot about lately and just wrote an article called Energy Submission about that China as the Financial Times, I think they created this term. Nobody's told me I'm wrong yet. If somebody else created it, find me in the comments and let me know and I'll give whoever deserves credit credit.
Doug Lewin (23:15.256)
But they called China the world's first electrostate, right? Obviously we're familiar with the term petrostate, right? A Saudi Arabia or an Iran or a Russia, like, you know, deriving their wealth from oil and gas resources. China made a very conscious decision a little over 10 years ago, like we are going to dominate the electricity supply chain. So you were talking a minute ago, Sean, about over the last three years, a significant uptick in manufacturing of lots of different components in the solar and storage supply chain.
Doug Lewin (23:45.42)
What kind of baffles me is that people, know, so we've got some in the administration that say, well, we're just going to dominate oil, gas and coal. Well, fine. We're already dominating oil and gas, particularly in Texas. The Permian now is the largest producer of oil on the planet. Why not dominate both? Why have only one half of the equation? Like we're on this trajectory. I just, it seems to me, and I'm wondering if you're hearing this in conversations in DC.
Doug Lewin (24:13.762)
particularly if any Republicans are thinking this way, right? Like this can be their success too, right? I think there's too much of a perception that like, well, if any of this stays in place, it's all Biden's thing. Biden's gonna get all the credit. Like they have all the levers of government now. Everybody realizes that. If we continue to get an increase in manufacturing, they're going to be able to claim a whole lot of the credit for that too. It would be their success too. And maybe this is just old fashioned and hopelessly naive.
Doug Lewin (24:41.602)
But like, I would hope it would be like an American thing, right? Like truly America first, Republican and Democrats, this is something we should all agree on is like, we want to win these economic competitions. The 21st century is good for all of us.
Sean Gallagher (24:56.238)
Yeah, well, I think it's clear that the president and the leadership in the Congress do want to win this race against China, particularly around data centers and artificial intelligence. And look, we want to work with the Congress to give them a win that will enable them to say, yeah, this is our success, right? So we're not advocating to keep the Affiliation Reduction Act, every word, every comma. We want to work with Republicans to give them a bill that allows the industry to meet the needs of the economy, to meet the needs of national security.
Sean Gallagher (25:25.422)
And also allow them claim some credit because there is credit to be claimed. You're right. And what we want to see is these factories. We've got tens of billions of dollars of factories that are right now sitting and saying, do I build this thing or not? Right? Because one of the things that we were aiming for with tax credits a couple of years ago is let's bring solar module manufacturing to the U.S. first. Module manufacturing gets established. Then we got solar cell manufacturing. Cell manufacturing gets established. Wafers next. Palli's next.
Sean Gallagher (25:53.696)
Everybody's waiting in line to make sure that their customers are there so they can build the factory to sell those customers. And we can keep that going if we make some modifications to the bill that came out of the house.
Doug Lewin (26:04.686)
I just want to like double click on that a little bit more as to why that is so critical, right? Because regardless of what you think this country is going to do in terms of its energy policy going forward, it'd be hard to overstate like the rest of the world is moving to solar too, right? I mean, like the stories in 2024, Dave Roberts at Volts did a whole podcast on this. If I'm not mistaken, if I am mistaken, we'll edit this out. But I think, but I think I'm not mistaken. I think it was his podcast.
Doug Lewin (26:31.104)
It was Pakistan, right? It was like the fifth largest in the world for solar and they're getting like cheap Chinese panels. The world is going to demand this stuff. And if they're the only ones producing it, think of the power that gives China that we don't have an answer to. It's kind of terrifying.
Sean Gallagher (26:52.046)
That's why keep saying it's a national security issue as well as an energy security issue. You don't want the ability to produce electricity or energy to come from China any more than you want it all to come from the Middle East when it was oil, right? So we need to diversify the manufacturing base. We need to have at least a portion of it here in the US domestically. We've got the policies in place that have demonstrated over the past couple of years that we can do that. We don't want to shut that off. And it's important to note, Doug,
Sean Gallagher (27:18.926)
It's not just the 45X manufacturing tax credit that sustains those factories. It's the 48E, 45Y, and 25D installation credits that sustain those factories also because that's what creates the market for those factories to sell into. It's not enough just to have the manufacturing tax policy. You got to have the whole ecosystem.
Doug Lewin (27:37.154)
So Sean, to be clear, those different provisions you just said, those require domestic content in order to get, so it's not specifically a manufacturing provision, but to get the tax credit, you have to show you have the domestic content. Is that right?
Sean Gallagher (27:52.59)
Well, let me just put a slight modification of the way you said it. Sure, please. It's sort of a three-legged stool, all right? And what we did in 2022 is we created industrial policy for the first time in decades in the United States to sustain manufacturing. Three parts of it are there's the 45X production tax credit. So if you produce a solar panel, you get a specific tax credit for each solar panel or inverter or whatever you produce. There's the domestic content bonus credit, which means if you're a solar powered developer,
Sean Gallagher (28:22.606)
get an extra tax credit on your project if you buy domestically produced content. So that's the incentive for the installer to buy the domestic product. 45X is the incentive to the manufacturer to make the product. Domestic content bonus credit is the incentive to the installer to buy the product. And 48E and 45Y and 25D are the installation credits that help support the whole market so there's a market to sell those products into.
Doug Lewin (28:48.482)
Got it. So that's kind of the whole kind of wrap around it. You guys put out some stats recently. Daniel, I won't ask you to this from memory, but I'll say the stats and then you can add in other stats if you have some top of mind or put some context around this. So nationally, you guys did a study and said, if the, believe this was specifically based on the house passed bill, if the Senate were to pass it in that form. And I think I want to talk about this more. we'll come back to this after Daniel speaks here in a minute, but like,
Doug Lewin (29:18.156)
It's not going to pass in its current form. How exactly it's going to change, we don't know, but it seems highly likely, almost certain the Senate's going to change in some ways. But if it were to pass in its current form, $286 billion in lost investment. So that's a quarter trillion dollars in investment, over 300,000 American jobs, 330 factories shuttered, 51 of those factories in Texas. So that is like, what, 15, 20 %?
Daniel Giese (29:41.153)
in Texas.
Doug Lewin (29:44.942)
of the factories that would be closed are in Texas. That would include 34,000 Texas jobs. And then an additional $50 billion in consumer electricity costs. You could put any additional context or add any additional stats you want in there. I'm also just interested, Daniel, like, what are you hearing around the state from members, non-members, know, big consumers? Like, are we starting to see some of this activity already?
Doug Lewin (30:13.08)
go away because of the uncertainty? Are folks kind of hoping that cooler heads will prevail in DC and they're still moving forward with investment? Like, what are you seeing out there?
Daniel Giese (30:22.454)
You know, whatever happens, this is still a state that is going to have to meet demand by something. So I think you're still going to see energy growth happening. You just saw an announcement here. It's kind of near the solar facility that Sean mentioned, but T1 Solar Cell Factory manufacturing just announced $850 million investment in Milam County, know, a rural county, which is a big deal. And, you know, right now there's over 12,000 people in Texas that work in the solar.
Daniel Giese (30:49.55)
storage industry, like you said, by the end of the decade, if this bill passed as written, 34,000 jobs by the end of the decade would be lost, 51 factories closed. So it's a big deal. I mean, like I said, this is still going to be a growing state. And so we have to meet that energy demand somehow.
Doug Lewin (31:07.158)
Yeah. And I want to, for the folks that are watching on YouTube, pull up another, this is a chart that comes from Aurora Energy Research that shows the growth in solar. And we are seeing already, as a point I like to make a lot, Daniel, and I know you know this, but I want to make sure our listeners know it too, that we are already experiencing this demand growth. A lot of times the load growth stuff is talked about as a futuristic thing. In a lot of states it is futuristic. In Texas, it's not.
Doug Lewin (31:34.734)
Our load growth is over 5 % per year over the last three years, and it's 7.5 % so far this year. If it stays at 7.5 % this year, that'll be a 6 % growth rate over the last four years, which is territory we haven't been in since the 1960s. And I still just think one of the main questions that just has to be asked and answered by folks who are defending this bill is where is the power going to come from?
Doug Lewin (32:04.074)
not going to be building solar in Texas, and you've got hotter summers and AI data centers coming and got industrial electrification happening. You've got oil and gas wanting to hook up to the grid. Where are you going to get it from if not from solar and storage? I still haven't heard an answer to that. I don't expect you to answer it, but you can if you want.
Daniel Giese (32:24.78)
Yeah, we're waiting here too.
Doug Lewin (32:26.998)
Yeah, yeah. Sean, anything you want to add to that? Otherwise, I'm going to shift gears a little bit, but definitely don't want to cut this short if you have anything else to add.
Sean Gallagher (32:28.043)
Exactly.
Sean Gallagher (32:34.914)
I'd just say you're exactly right. look, 6 % low growth annually. Think about it. The last 20 years, we've been in 1 % low growth territory. this is unprecedented. It's the worst possible time to slow down deployment of new energy resources.
Doug Lewin (32:49.122)
Yeah, exactly. And by the way, less than people listening are like, well, this is just people that like solar talking. We have had a number of different times, and he continues to say this. fact, so ERCOT CEO Pablo Vegas was in San Antonio, I think it was this week, Serra di Natale, San Antonio Express News had some good reporting on this, that he's saying, look, we have to have more renewables on our system. The load is rising too fast to not have it. Chairman of the PUC in Texas, Thomas Gleason said,
Doug Lewin (33:17.612)
Solar and storage are key for reliability in this state. We need them to be successful. There's enough sort of validation out there. If the folks who are running your grid are telling you you need it, you probably need it.
Daniel Giese (33:29.506)
Yeah, they're the people tasked with balancing the demand and the load and everything. And they don't have the luxury here in Texas to, you know, I like these electrons, but I don't like these electrons. They need every electron that they can get on the grid to do their job. So, you know, that makes sense that they would say that.
Doug Lewin (33:45.482)
Exactly, and I don't want to misrepresent their position because they are also saying we need more gas, right? But you guys are saying that too. You're not saying we're opposing any gas plant. You're just saying solar's growing. Let it grow.
Daniel Giese (33:56.078)
Yeah, especially in the shoulder months where there's a lot of planned, unplanned outages of thermal generation. can see, you know, in the past there would have been conservation calls, like in 2022, people that lived here remember that. And nowadays summer's boring. And that's really because of the growth of.
Sean Gallagher (34:10.158)
Boring is good.
Doug Lewin (34:12.792)
Boring is so good. I love boring. It's great. Like I would love to not have conservation alerts and it's good for my newsletter subscriptions, but I will be the first to say I'd rather not have the energy emergencies and rolling outages. I'll take the lower subscriptions and the lack of drama any day of the week, twice on Sunday. Sean, you were trying to say something, go ahead.
Sean Gallagher (34:33.111)
Well, I was going to add that you've seen some similar comments from Jim Robb, is the CEO of NERC is the Nationa