New study expects Trump administration to have a limited impact on power and gas prices, but a more extreme “Project 2025” agenda could slash wind, solar, and battery deployment by more than 200 GW by 2040
AUSTIN, TEXAS (AURORA ENERGY RESEARCH)—Ahead of the U.S. presidential election on November 5, 2024, the leading global energy market analytics provider Aurora Energy Research has, today, released a new analysis quantifying the potential impact on gas and power markets. Trump has promised to “drill baby drill,” reduce energy costs for consumers by 50%, and slow the clean energy transition through major cuts to funding allocated to clean technology under the Inflation Reduction Act (IRA). Aurora’s study finds that Trump is likely to have limited success in achieving the campaign’s stated goals, while a Harris administration would largely represent a continuation of current trends.
Energy transition—halt, slowdown, or full steam ahead?
Aurora’s “Trump Presidency” scenario sees only a limited impact on the pace of the energy transition. While the prospect of repealing the Inflation Reduction Act (IRA) is remote, greater support for operational coal plants, weakening Biden-era environmental protections, and scrapping electric vehicle subsidies could reduce wind, solar, and battery deployment by up to 25 GW by 2040 across the major power markets included in Aurora’s study—ERCOT, CAISO, PJM, MISO, NYISO, and ISO-NE. Despite this, wholesale power prices will remain relatively unchanged across the country, with little to no impact on consumer bills. Overall, the energy transition will continue apace, fuelled by rapid demand growth from AI and data centers, continued renewables cost declines, and the centrality of states and regional power markets in setting the policy agenda. Meanwhile, Harris has offered relatively little substantive new policies that would move the needle on power markets compared to Aurora’s “business as usual” case.
Aurora also modelled a more extreme “Project 2025” scenario in which a Trump administration, under pressure to finance a massive $4.6 trillion extension of 2017 tax cuts, ignores opposition from red state communities who have benefitted from IRA incentives and instead moves to scrap tax credits for solar, wind, and batteries from 2025. This would result in a much more significant slowdown in the pace of the energy transition, with 200 GW fewer renewables and batteries projects by 2040. However, this may not prove popular with consumers, since fewer renewables leads to an increase in wholesale power prices up to 22% in the most impacted regions like Texas.
Drill, baby, drill?
Trump has pledged to overturn Biden’s LNG export pause, increase oil and gas drilling on federal land, and scrap Biden-era environmental barriers to oil and gas permitting. However, historical analysis has shown that the President has limited ability to influence oil and gas prices, which are more influenced by macro-economic factors and international markets, as evidenced by Aurora’s scenario modelling.
On the supply side, capital discipline post-pandemic is forcing producers to focus less on increasing output and more on shareholder returns. On the demand side, the report shows that in the “Trump Presidency” scenario—Aurora’s take on the most likely outcome of a GOP win in November—tariffs of up to 50% on Chinese goods and 10% on imports from other countries are expected to increase domestic gas demand around 4% by 2040 as the U.S. manufactures more of its own products. Increased domestic demand puts upwards pressure on gas prices, but this is more than offset by a decrease in U.S. LNG exports of 8% by 2040, resulting in Henry Hub prices remaining largely unchanged. Tariffs are expected to marginally slow global economic growth, particularly in China, leading to reduced global gas demand and further impacting U.S. LNG exports and the bottom line for exporters. The outcome is similar to a “Harris Presidency” scenario in which no new LNG terminals are approved from 2025 onwards.
Lizzie Bonahoom, Associate, Pan-US team, Aurora Energy Research, said:
“Many trends we can expect to continue regardless of which candidate takes office next January—oil and gas production will continue to rise, renewables will continue to make up a growing portion of the power supply, and coal plants will continue to age and retire. If either administration makes energy a top priority, it will be hard to pass meaningful legislation without a House majority and Senate super-majority.
“We have tried to capture all potential outcomes by modelling both what is realistic for either candidate to achieve, and what is possible but less likely; the realistic outcome of either presidency has a more limited impact on long-term U.S. power sector outcomes than we typically see in commentary surrounding the upcoming election. Harris largely represents the status quo, while Trump may struggle to honor his campaign promises.”
Sophie Parsons, Senior Analyst, North American commodities team, Aurora Energy Research, added:
“Trump’s call to ‘slash energy prices’ under his leadership falls flat when you look at the data: a president has limited power over oil and gas markets and Trump’s plan to ‘unleash American energy,’ via additional oil and gas leases and expediting LNG terminal buildout, does not remove the barriers which are currently limiting market growth—it’s all on the demand-side. With gas prices setting power prices across most of the U.S. over the next 10 years, the American consumer is unlikely to experience a meaningful change to their energy bills regardless of who is in the White House next year.”
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Notes to Editors:
The “US elections: implications for gas and power markets” report is available now for subscribers. Get in touch for further information.
Media Contacts:
Zina Fragkiadaki,
Press Officer, EMEA, Aurora Energy Research
+44 (0) 7747 219 913
zinovia.fragkiadaki@auroraer.com
Julia Oswald,
Marketing Manager, NORAM, Aurora Energy Research
julia.oswald@auroraer.com
ABOUT AURORA ENERGY RESEARCH
Established in 2013, Aurora Energy Research is a leading global provider of power market forecasting and analytics for critical investment and financing decisions. Headquartered in Oxford, we operate out of 14 offices worldwide covering Europe, North & South America, Asia, and Australia.
Our comprehensive services include market outlook packages for energy industry participants, advisory support, and innovative software solutions. We foster diversity with a team of over 600 experts with backgrounds in energy, finance, and consulting, offering unparalleled expertise across power, renewables, storage, hydrogen, carbon, and fossil commodities. Our mission is to facilitate the global energy transition through widely trusted quantitative analysis and high-quality decision support.
