Companies report disruptions due to COVID-19 public health crisis, response to address immediate needs, and actions to position advanced energy for economic recovery
WASHINGTON, D.C., March 26, 2020 – National business group Advanced Energy Economy (AEE) has sent an open letter to U.S. congressional leadership and the White House reporting on COVID-19 disruptions to industry, describing companies' response to help address the immediate health care crisis, and proposing actions to ensure the advanced energy industry's ability to contribute to economic recovery. Findings came from a survey of AEE member companies, which are engaged in a wide range of renewable energy, energy efficiency, energy storage, grid services, and electric vehicle businesses, as well as purchasing advanced energy goods and services.
“We are hearing clearly from our members that supply and labor disruptions are happening now and expected to worsen,” said Nat Kreamer, CEO of Advanced Energy Economy. “Nearly 54% of our industry members are concerned by supply-chain disruptions, 43% have halted hiring, and 29% are already reducing their workforce. Yet we are also seeing valiant efforts by our industry to redirect manufacturing and supplies to help address the immediate needs of the healthcare community and its response.”
“Protecting public health is paramount in this crisis, but action is also needed to ensure that the advanced energy industry is able to contribute to economic recovery once the crisis has passed,” said Kreamer. "One quick, no-cost fix would be to convert eligible clean energy Section 48 tax credits to 100% direct payment, and make the change permanent, to ensure projects now on the drawing board will ultimately get built. In addition, projects should not lose their eligibility for financing due to the delays that are rippling through our economy right now.”
The Open Letter provides examples of advanced energy companies responding to COVID-19 needs by adjusting production or using their purchasing power to help address shortages of key medical supplies, including masks and ventilators. For example:
- Elon Musk, founder of Tesla, an electric vehicle and solar company, has committed to producing ventilators and pledged to procure 250,000 masks;
- Apple CEO Tim Cook announced the company was able to source 10 million masks;
- KR Sridhar, CEO of fuel cell manufacturer and marketer Bloom Energy, announced the company will begin refurbishing thousands of out-of-service ventilators; and
- BYD, an electric vehicle manufacturer, has created the world’s largest mass-produced face masks plant, which is able to produce 5 million masks and 300,000 bottles of disinfectants per day.
The survey of AEE members found that companies are already being impacted, and that those impacts are expected to grow:
- Nearly 43% of these businesses have halted hiring; another 21% have slowed hiring.
- Approximately 29% of businesses have been forced to reduce their workforce, and nearly 15% have reduced contract labor.
- Just under 54% are very concerned about supply chain disruptions.
- Almost 43% of companies are very concerned about long-term construction or manufacturing delays.
- Approximately 47% expressed great concern that staff was unable to perform work due to in-person restrictions.
The Open Letter also includes telling comments from individual advanced energy companies:
- Advanced energy employer: “We had to stop all non-essential operations; most employees won’t get paid.”
- Electric vehicle (EV) company: “All procurements in the EV [school] busing space have been put on hold... Missing [the] six-month sales window results in a full year delay.”
- Energy efficiency provider: “Nearly all utility clients have directed us to stop all site work, grinding our entire business to a halt. If the shutdown continues, we will be forced to furlough or layoff much of our 300 direct employees…. the work our team generates feeds an ecosystem of supply chain partners and skilled trade contractors who together dedicate a work force in excess of 5,000 laborers.”
- Solar energy company: “Shelter in place orders are preventing us from constructing projects, which will result in major cash flow issues and potentially furloughs if these delays last longer than 3-4 months... the drying up of tax equity... will prevent us from closing projects that are expected to close in the next 6-18 months.”
AEE also calls for actions fixes to address immediate impacts of public health crisis and enable the advanced energy industry to lead the economic recovery that follows:
- Federal guidance, clarity, and consistency in emergency response.
AEE applauds the rapid response efforts of governors. However, state-by-state approaches are widely inconsistent, creating challenges to help supply essential functions and avoiding disruptions to critical supply chains. Federal guidance is needed to help ensure that our companies are able to do their part.
- Federal action is needed for the crisis and the recovery. Congress should modify tax credits for all eligible Section 48 technologies to receive 100% direct pay, and do so permanently, to ensure their eventual construction. Additionally, Congress should extend “start construction” and “safe harbor” project deadlines to qualify for tax credits to accommodate pandemic-related delays happening now.
- More is needed to address the challenges facing energy efficiency and electric vehicle industries. Energy efficiency providers have been forced to halt their business in residential and commercial buildings, particularly as utilities have ceased their efficiency programs. Electric vehicle manufacturers have been forced to stop operations, utilities have slowed charging infrastructure investment, and an overall downturn in auto sales will hurt investment in electric vehicle models. In response, Congress should enact policies that allow for companies to maintain their workforce in the near term, ensure that investment in these technologies continues, and the workforce can immediately get back to work once it is safe for work to resume.
"Looking ahead, we anticipate a broader economic downturn from the fallout of COVID-19, but the advanced energy industry, which now employs 3.6 million U.S. workers and was projecting 5% job growth this year before the pandemic hit, can serve as a key partner in economic recovery," said Kreamer. "The advanced energy industry creates jobs, reduces costs for businesses, and attracts private capital to multiply the investment of taxpayer dollars. We look forward to working with the Trump Administration and Congress to stem the immediate economic impacts from COVID-19, and to support a rapid economic recovery when the public health crisis is behind us."
Nat Kreamer is available for interviews on industry disruptions, response to the COVID-19 pandemic, and the role of advanced energy in restoring economic growth.
About Advanced Energy Economy
Advanced Energy Economy (AEE) is a national association of businesses that are making the energy we use secure, clean, and affordable. Advanced energy encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. AEE’s mission is to transform public policy to enable rapid growth of advanced energy businesses. Engaged at the federal level and in more than a dozen states around the country, AEE represents more than 100 companies in the $238 billion U.S. advanced energy industry, which employs 3.6 million U.S. workers. Learn more at www.aee.net, track the latest news @AEEnet.