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Why isn’t rooftop solar cheaper in America? In Australia in 2024, a standard rooftop system can cost as little as 90 cents per watt. In the U.S., a similar system might go for $4 per watt. If America could come even close to Australia’s rooftop solar prices, then we would be able to decarbonize the power system much faster than we are now.
Mary Powell has the answers. She is the chief executive officer of Sunrun, a $2.6 billion company that is the country’s largest rooftop solar and battery installer. Sunrun has set up or managed more than 900,000 rooftop systems across the U.S. Powell previously led Green Mountain Power, Vermont’s largest investor-owned power company.
On this week’s episode of Shift Key — a continuation, of sorts, to one of our most popular early episodes — Rob and Jesse talk about how the rooftop solar business works and what’s driving America’s higher costs. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
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Here is an excerpt from our conversation:
Jesse Jenkins: And so, just some stats to start off the conversation. The latest quarterly solar update from the Department of Energy notes that the average cost of a 2 to 10 kilowatt residential rooftop system in the U.S. is roughly $4 per watt, DC, installed. That’s the full installed system costs, not just the modules.
I just looked up solarchoice.net.au, the Australian site that tracks bids and costs in Australia, which has one of the most vibrant rooftop solar industries in the country. There, you can now install a rooftop solar system in Sydney for just under $1 U.S. per watt, which is quite remarkable — you know, dramatically cheaper than it was a few years ago, but also dramatically cheaper than the U.S residential solar market, by a factor of four.
And so obviously, if we could knock the cost of rooftop solar in the U.S. down by another 75%, it would be an incredible value proposition all over the country. So, how do we get there, Mary? What explains why solar in the U.S., rooftop solar, is much more expensive than it is in places like Australia — I should say, it’s not just Australia. It’s also, you know, the U.K. and Germany and Belgium and other places. Why is it so much more expensive here now than it is in these other countries? And how do we drive down the cost of residential solar installations in the U.S. so that we can unlock that potential here, too?
Mary Powell: Yeah, for sure. I mean, that is so exciting when you think about it, Jesse. What gets me so excited when you say that is I think, ‘Oh my gosh, we are selling all across America now with savings against what people are paying for utility power.’ So customers — even at our current costs. So back to your question on how I see the future, just think about how powerful that will be as we continue to innovate and figure out ways to drive down the cost.
Now, that said, the biggest driver of the cost difference is the way the American energy system is built. And not just that, but we have 40,000 AHJs in the United States that each have their own distinct solar process and rules. And in Australia they have fewer than 600.
Robinson Meyer: And those are like cities?
Powell: It’s housing jurisdictions. It’s like — let me give you an example. In DuPage County, Illinois, we have to have a full time employee pull permits all day. Only one permit at a time.
You know, the other big thing in the U.S. is our whole energy system, as we know, it is very much driven by state and regional rules. Like rules of the road, a lot of regulatory differences from one jurisdiction to another, a lot of massive differences from one utility to another. So, you know, interconnection for residential is still costly, time consuming, and is even prohibited in some areas. Interconnection fees for home solar systems from utilities range from $100 to $10,000. So, one of the bright spots is the work that Sunrun was involved in, a lot of players were involved in, and that Secretary Jennifer Granholm is really focused on, which is SolarAPP+. So, that is one way to drive down the cost, Jesse.
Back to the difference: So really, I would say, the biggest difference is bureaucracy. When you talk about Australia and you talk about the U.S., that’s the biggest difference.
This episode of Shift Key is sponsored by…
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Music for Shift Key is by Adam Kromelow.
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Current conditions: A large storm is roaring across the Northeast that will shower Michigan and Upstate New York with rain and snow by tomorrow • AccuWeather declared an early end to the 2026 Atlantic hurricane season, which saw 10 named storms and only one hurricane in October, breaking a 121-year record for the latest first hurricane • It’s a mild, cloudy day at the Rethondes Clearing in France’s Forest of Compiègne, where the armistice that ended World War I was signed 108 years ago today.
Inflation is ticking up again, and faster than expected. That’s my colleague Matthew Zeitlin’s read on the latest numbers from the Bureau of Labor Statistics. Preliminary data from Heatmap and MIT’s Electricity Price Hub shows that electricity prices in particular spiked nearly 8% to 19.9 cents per kilowatt-hour in October from 18.5 cents in the same month last year. But that’s largely due to a change in the timing of a bill credit in California. Without that, the year over year price jump was just under 4%.

Ontario Power Generation, the state-owned utility in Canada’s most populous province, admitted in a public filing Wednesday that its megaproject to build the first small modular reactor in the rich world is costing a lot more than planned. The company is constructing the world’s first BWRX-300, the flagship reactor from GE Vernova Hitachi Nuclear Energy, at its Darlington plant. The project is an attempt to revive construction of atomic power stations in North America, Europe, and Japan by building the inevitably costly first-of-a-kind unit that can then be replicated at what the developers say will be a decreasing price. Using billions in Canadian ratepayers’ money to essentially de-risk an American-Japanese technology ruffled some feathers among the country’s nuclear boosters, who told me last month they want to see Ottawa approve construction of more of the Canucks’ homegrown reactor. In its latest earnings report, OPG said the BWRX-300, known as DNNP Unit 1, “is no longer expected to achieve the previously disclosed commercial operation date target of October 2030 or be completed with the previously disclosed estimated cost of $7.7 billion.”
Amid a flurry of funding cuts in the early days of the current Trump administration, the Department of Energy canceled an $87 million grant to the green cement startup Sublime Systems. In response, the company sued for damages. This week, the Somerville, Massachusetts-based firm filed legal documents accusing the agency of “refusing to comply with its basic discovery obligations and the schedule” for the case.
“The government has repeatedly delayed responding to Sublime’s discovery requests, and now the government is refusing to even meet and confer with Sublime until some indefinite date in the future,” read the joint status report filed with the U.S. Court of Federal Claims. “The upshot is that, as of today, the government has not produced a single document in response to Sublime’s requests for production (served nearly two months ago), it has provided no timeline by which productions will be completed, and it is refusing to search for core documents related to the May 2025 mass termination at the heart of this case.”
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The Energy Department’s Office of Energy Dominance Financing, formerly the Loan Programs Office, closed a $480 million loan for a Texas-based company’s effort to modernize and boost production from 22 offshore oil and gas platforms in the Gulf of Mexico. Arena Energy, the Woodlands, Texas-based company behind the initiative dubbed Project Elkhorn, said that the initiative will add 38,600 barrels of oil per day and up to 77 million cubic feet of natural gas per day to U.S. energy output.
“The United States is the world’s largest producer and exporter of oil and natural gas, and thanks to President Trump, American energy production will continue to grow,” Secretary of Energy Chris Wright said in a statement. “By providing financing for projects like Project Elkhorn, the Energy Department is expanding domestic production and strengthening our energy security to power American prosperity for decades to come.”
QuantumScape emerged years ago as the frontrunner in the race to commercialize solid-state batteries that last longer, charge more quickly, and function better under harsh conditions than liquid-based lithium-ion packs. On Wednesday, the San Jose, California-based startup unveiled what it called in a press release its “next-generation open platform for all-solid-state batteries.” Dubbed Osprey, the cells “deliver the world’s first public data demonstrating a sulfide-based cathode cycling 1,000 times under just one atmosphere of pressure.” In other words: “an unmatched capability that is necessary for automotive solid-state batteries.”
“Osprey is a next-generation platform that is built on our same core technology, the ceramic separator and anode-free design,” Siva Sivaram, QuantumScape’s chief executive, told me in an email last night. “It will allow us to provide the unique benefits of our ceramic separator to developers of all-solid-state batteries using sulfide-based cathodes.” The company plans to start mass producing its cells in 2028, he said.
Bill Gates boasts that he has committed more of his fortune to fighting climate change than virtually any other rich man in the world. But a new investigation by ProPublica found that he’s ramped up his investments in a landfill company, Republic Services, that spews millions of tons of greenhouse gases into the atmosphere. “It seems very likely that Bill Gates has the power to influence Republic’s behavior to make it more climate-friendly, even if that costs the company profits,” Ann Lipton, a legal scholar who studies corporate governance at the University of Colorado, Boulder, told the outlet.
One of the bill’s Democratic co-authors speaks about the bill’s outlook in Congress, what it means for clean energy and data centers, and why the president it helps most won’t take office until 2029.
The bipartisan permitting reform bill took a big step toward becoming law last night, when more than 70 senators voted to advance it past a key procedural hurdle.
About 12 hours later, I sat down at a Heatmap breakfast event in Washington, D.C. with one of its Democratic coauthors: Senator Martin Heinrich of New Mexico.
Heinrich and I have spoken about permitting and power lines repeatedly over the past year, but what were once niche issues in the space — such as when and whether a president can revoke an energy project’s permits — have turned into major disagreements within and between environmental groups, the clean energy industry, and liberal lawmakers.
At the same time, Heinrich is on the verge of a major climate policy victory with the bill, which would finally create a one-stop shop for large-scale power line approvals in the federal government. The bill would put transmission lines, which can carry zero-carbon electricity, on a more equal footing with natural gas pipelines, which already enjoy fast-track federal approval.
“My goal here is to take the politics out of permitting,” Heinrich told me at the event. “If you’ve done everything right — and you get your final permit to actually construct — you should be able to take that to the bank.”
We discussed the bill path to passage and his replies to some of critics’ biggest arguments against the bill, including whether it will push data centers to build more behind-the-meter natural gas power plants. We also discussed whether Congress should restore the wind and solar tax credits, how this bill was informed by the Biden administration’s struggles, and why Heinrich believes lawmakers should take this deal, now, even though some of his colleagues have urged waiting until the new Congress starts in January.
This conversation has been edited for readability and concision.
How are you feeling? And how are you feeling about the number last night?
Seventy-three is a great number. It suggests we’re on track to get this done. And I think we just need to be patient and let the process play out.
We were talking in the green room a little bit. I think one of the things that worries me about today’s politics is that we’re having this really substantive discussion here, and with members, with the House and Senate back and forth, which is super healthy, and that hasn’t really happened often enough in recent years. And then there’s the algorithmic, online, like, light-everyone’s-hair-on-fire [conversation]. Those two things are completely divergent streams, and they make me worry about democracy as a whole.
Not to mention the fact that we need to be able to build big things in this country, and that’s what this legislation represents. How do you actually deliver on the affordability question that was central to the election we just had? How do we make sure that our country competes in the world? All of those things. But the gap between those two conversations is something that we have to solve for in the politics of today. And there were people who should have been with us [last night] who weren’t, and I think it’s indicative of that gap.
As someone who’s been reporting on the bill, and knows the policy, and knows, for instance, where the fault lines in the policy are, it has been striking how much the social media discussion of the bill has been focused on creating sufficiently plausible lies that go just viral enough to poison the politics. And make it so you can’t even talk about the bill, because, why would you ever even consider such a horrible thing?
It’s been interesting — I’ve got a 23-year-old who’s in graduate school in New Mexico, and he has a really good sense of who I am and what I care about. For him to see protests on his campus, or protests on the overpass in Albuquerque — and how divergent that is from the goals of this legislation — those conversations have been really interesting. I think if I wasn’t so comfortable in what I actually care about, and what I want to get done in my time in Washington, D.C. — which like, this is not my identity, it’s a path to making a change. I think it would be really hard to do this if I weren’t so comfortable in what we need to do on this issue.
In the run-up to last night’s vote, there were a number of endorsements of the bill or the motion to proceed. What was the biggest whip victory for you or Senator Whitehouse?
When you hit above 70, your caucus is taking your work very seriously, and given the attempts to poison the well early on, I was just very encouraged by the fact that in our caucus — we had a caucus meeting over the weekend on this, and then we obviously had the vote last night — there’s a certain implicit trust in a number over 70.
People want to get to yes. They understand that at the end of the day, the American people really do want us to make life cheaper. Like, this election is not a mandate, it’s a job interview, right? And if we can’t deliver on it, and we can’t do the things that make people’s lives better, we’re gonna — it’s going to be very fleeting.
The outside assessments of the bill report numbers anywhere from power grid cost savings in the hundreds of billions to single-digit percentage reductions of power bills in a decade or so. Do you feel like those estimates capture the benefits of the bill, or are the benefits largely unquantifiable?
No, I think they’re quantifiable. I think the emissions reductions are quantifiable.
I think if all we did in this bill was the data center provision, that says you can’t keep exporting your costs onto customers, you actually have to pay your own freight — and that’s not something that the data center developers are all aghast at, I blame some of the utilities for passing those costs along to customers. That’s outrageous. Just because you can ratebase things doesn’t mean you should ratebase things, and the public is fucking pissed off, and they should be — but if all we did is transfer that $35 billion from data center developers into the pockets of consumers, I would be enthusiastic about this bill.
But we do a whole lot more than that, right? There’s almost no conversation right now about the value of virtual power plants and distributed energy resources, and all the changes in leasing for geothermal. There are things that I’ve been working on my entire career that we couldn’t get — well, we still, I guess, haven’t gotten — the public to focus on. But if we can get them done, it really opens up a future for the power grid that looks so different from the power grid I grew up with. I grew up around the kitchen table with an IBEW dad, and we would talk about the power grid all the time. And it was a one-way deal. You had a dam or a coal-fired power plant, and then [electricity] would go out across the big wires, and then it would get into the little wires, and then people in homes and businesses would consume that power. We’re now talking about a two-way power grid that is so much more complicated and efficient than that, and that’s what’s getting lost in this conversation. But it’s also what I’m really excited about.
Let’s talk about the criticism of the bill. You mentioned the data center ratepayer protection policies, which we’ve covered at Heatmap. They are quite substantive. I have begun to hear a concern that they are so substantive that they’ll push data centers even further away from using the grid — that they’ll push data center developers to be like, Oh, this is raising the cost of power, I’m going to build more offsite gas than I would.
I don’t know a single hyperscaler who’s saying that, and we’ve had all these conversations about off-grid behind-the-meter generation. It is so much more expensive. It is so much more difficult to operate and maintain. It’s insane to build a data center that is not connected to the grid. Like, these people now talking about repurposing airplane engines to run data centers — that’s nuts. If you want to put the cost of maintaining that kind of operation, go for it, because it’s going to fail.
It makes sense to have stuff connected to the grid because you don’t have to pay the full freight of the worst day of the entire year, and spread that over the rest of the year. That’s why we have a grid. I just don’t see that as a viable business plan for anyone.
This bill makes it easier to build federal infrastructure projects. I’ve seen people say, ‘Look, if we do this now, then the president gets two years to build whatever he wants, and that includes ICE detention centers.’
No. We have walked through the legal cases in places like New Jersey to make sure that we’re not facilitating that.
I don’t think this bill will measurably change what this president can accomplish because it’s going to take multiple years … Like right now, it takes two decades to build a really important interregional transmission line. It’s still going to take five years after this bill. This is not some magic wand. It’s way better. It makes us much more competitive against China and our near-peer competitors around the globe. But you’re still going to take multiple years to do an [Environmental Impact Statement]. So this is not going to impact this president measurably one way or the other.
But it is going to measurably impact the next president. And I can tell you, as someone who was around for the Biden administration, we passed incredible legislation. The Bipartisan Infrastructure Law and the [Inflation Reduction Act] were huge lifts in terms of legislation. But the president of the United States could not deliver on those promises because the permitting regime was a 10-year-plus regime. So even though he had all the funding you could imagine, and you had [the Department of Energy] and the Department of Interior all lined up, President Biden could not deliver on those promises in a time frame that the American people could appreciate.
Is that because of procedure or because of staffing? Because some people have responded to this bill by saying, ‘Well, we know we have to staff up these agencies, and this bill doesn’t do that.’ If Biden had been able to staff those agencies, would they have been able to move a lot faster?
They would have been able to move measurably faster, yeah, but it would not be sufficient. I’m all for restaffing those agencies. We authorize a lot more funding for things like Tribal and state historic preservation officers in this legislation, but it wouldn’t have been sufficient. It just wouldn’t have.
And you look at — I mean, the fact on SunZia, which, you’re as educated on that transmission line as anybody I’ve met in the press. It took, what, 17 years [to permit]? That’s one of the best projects that I’ve ever interacted with. It was 3.6 gigawatts of clean power. They did a great job of doing mitigation. They bought property that had enormous environmental value in my state. They engaged with stakeholders as well as any developer I’ve ever seen, like 17 to 18 years [to permit it]? That’s nuts. We can’t iterate on that kind of a timescale. I mean, John Podesta came back into the White House under the Biden administration and was like, ‘Didn’t we do this? I thought we already did this.’ It took two records of decision. That’s just not a recipe for success.
You mentioned [Biden’s former climate adviser] John Podesta. We reported on comments he made saying this bill would not allow a president to reverse a permit that had been granted illegally.
No, that’s not true. If you don’t follow the law, the permit can be overturned. So first and foremost, you have to have fidelity to the actual underlying statute. So if you violate the Mineral Leasing Act, or you violate some other statute that determines how you get that permit, you’re done. That’s real jeopardy.
Second, you can overturn anything up to the final permit. So if there’s a lease along the way, the next administration can overturn that.
But if you’ve done everything right — and you get your final permit to actually construct — you should be able to take that to the bank. In what world can you do everything right and then you get a legal right to proceed, and anybody, for politics, can pull that out? I know that some in the environmental space think that it should be that way, and we should be able to ping-pong back and forth between Trump and Biden. My goal here is to take the politics out of permitting. So if you do everything right — by the book and by the law — at the end of the day, if you get your permit, you can actually take that to the bank.
One of the big arguments for this bill was this permitting certainty provision. Ending the back-and-forth, and making it so a future president couldn’t do what Trump has done to wind energy. It’s been interesting watching the politics of this bill develop, though, because what’s become clear is — as you just hinted — not everyone actually wants permitting certainty.
No, and it cuts both ways. That is both a positive, depending on your perspective … and if your business model is litigating projects, it’s going to be harder. You can still litigate, but you can’t wait six years to do it.
I have heard folks say, ‘Look, it’s a big bill. It’s 400-something pages. It makes changes to NEPA and the National Historic Preservation Act. It makes changes to the Clean Water Act. The Supreme Court is controlled by conservatives at the moment, and they have been willing to improvise with big new doctrines such as the major questions doctrine. How can we be sure — and how can you be sure — that you’re not writing traps into these laws that courts will come along and use in the future?’ Republican judges may not agree with your aims, but they’ll be able to say, ‘Look at this recent and specific law, it lets presidents do X.’
We need to be able to legislate. I think the more we actually assert our political potential and mandate in legislation, the more we take power from the Supreme Court and from the judiciary in general. I think we need to be very careful and specific about our language. But the more you can’t get things done in Congress, the more power just sort of shifts over to the judiciary and to the administration. We need to claw that back, and we need to show that America can do stuff, that we can build big things again.
And to the extent that we’re not willing to do that, that power is going to shift to other places, and I’m not comfortable with that. I don’t think that’s good for democracy. I don’t think it’s good for our country. I don’t think it’s good for building things. We need to get [a project] to yes, or if it’s going to fail, if it’s a bad project, fail fast. Move on and to the right. This is not about greenlighting bad projects. It’s honestly about getting the projects into the right places.
What’s something you’re excited about in the bill that you feel like hasn’t been discovered yet?
Virtual power plants. I mean, I hate the term “virtual power plants” because they’re not virtual; they’re real. If you’ve got a gigawatt that you can you can contract with someone to say, ‘Hey, when I need this power, it’s there,’ and they can produce on that based on whether they like turn off half the lights in in a Walmart, or tap into the batteries in a bunch of electric vehicles, that is real power, and it has enormous value to the grid.
I know how conservative utility culture is, because I grew up in utility culture. I saw it every day in those conversations with my dad around the dinner table — but that is real demonstrable technology that we all know works at this point, and yet most of the utilities in the country have not embraced it. So if we get this done, we’ll be able to respond to the wholesale markets and [they] can’t be blocked, that’s a huge change.
One of the interesting things about this midterm is that almost all the incoming Democrats, I think certainly in the Senate, have pledged to restore the solar and wind tax credits. Have you done any work on what this bill would mean if those tax credits were back on the books?
I think we need to have a really robust discussion around that. I say that from the point of view that, we don’t have the [tax credits] right now, and yet we have tons of viable projects in wind and solar. So what that says to me is, maybe that money is more valuable someplace else.
We’re doing a really good job in this country of decarbonizing the electric generation sector with wind, solar, and batteries. I think we’ve won that battle, and if we have a level playing field, which is what this bill is all about, we’re going to decarbonize the power sector. We have not decarbonized the transportation sector. We have not decarbonized the industrial sector, which is dependent on, in many cases, chemical processes.
The question for me is not, do I want the wind sector, or the solar sector to move faster? I think if we get out of the way, they’ll move faster. The question is, would those dollars be more valuable in another sector of the economy?
Because when I look around back home, we are in the new normal. We’re in the part of climate change that I didn’t think would happen in my lifetime. In New Mexico, we’ve been the driest we’ve ever been in 1,200 years. And then once El Niño kicks in, we’ve had two of the word floods in recorded history in the last month. That’s where we are today. That’s what our grandkids are going to know for their entire lives. We’ve got to solve for that, and limit the worst cases of that, and we’re not going to do it by doing the least effective, least efficient thing. We have to invest in the places that make the biggest differences.
Senator Merkley voted no yesterday, as you know, and in his statement he said that the bill is very interesting, we should pick it up next year in the new Congress.
How many times has that worked?
I think one argument has been —
I’ve seen that over and over again. I’ve been here since 2008. How many years is that? Almost 20 years. When is that a real thing?
We should do a lot more in the next Congress. Let’s do that. Let’s get this as the floor, and then let’s raise the floor everywhere we possibly can.
And you don’t think passing this now will exhaust the president’s willingness to work on permitting reform?
I will take a win with the president wherever I can get one because it is fleeting, and he is what he is. He did not help last night. My phone blew up. The White House was like, you know, ‘Sorry, he just says stuff.’
[laughter in the room]
We have an alignment right now — the House, the Senate, and the White House — that has real value to making energy cheaper and putting more clean energy online. We should just take that because it also creates uncertainty for other folks. When we have that opportunity, don’t kick it to the curb. It is what it is.
Do you think the president needs to approve these projects for the bill to make sense?
No, because I think the greatest value is for the next president. But we are seeing real progress on real projects right now. We have seen dozens of projects approved that were stalled out. We’re having constructive conversations about many additional projects. That has its own value, but the value of this bill, in my view, is for the next president of the United States — whoever they are — and I will do everything in my power to make sure that that’s a Democrat — but if it’s not, they still need to be able to govern and compete with the rest of the world, and so the value is really for the country and the next president.
Give us a sense of what the amendment process will look like.
I don’t know what the amendment process is going to look like because that typically gets negotiated between the majority and the minority leaders. My view is that amendments are helpful. I think we’ve gotten away from amendment processes in the Senate, and that has not served legislation well. So I’m perfectly comfortable. I’ve told a number of members who want amendments that I’m supportive of them getting those amendments, because I think it lets people make their case about what they care about, and that creates buy-in for eventual legislation. And whether we win over those members or not, I think it has value.
The downside is we let things hang out there at a time when much of the conversation is still governed by these social media algorithms. But I still think it’s the right thing to do.
What does the path in the House look like, as you’re thinking about it today?
In the House, it’s the coalition of, one, the White House actually wants this, and they’re communicating with Republicans in the House, many of which won’t be there next year. So, like, go out on a win. Then on the Democratic side, you have the New Dems and the Problem Solvers Caucus and the Blue Dogs, and like, We’re not going to get all of the Democrats, but we’re going to get enough of the Democrats who believe in governing and who want the lessons of this election cycle to actually be manifest in law. I think we very much have a viable path in the House of Representatives.
That almost certainly means another rate hike in December.
Just about everything is getting more expensive — and it’s doing so faster than expected.
Overall prices rose 0.4% in October from September, according to the Bureau of Labor Statistics, compared to the 0.3% analysts were expecting. Helping lead the way was energy, which got 0.7% more expensive overall in October, thanks largely to gasoline (a 1% hike), electricity (a 0.9% hike), and fuel oil (2%).
Because of the government shutdown, the BLS did not have full year-over-year price change data other than for gasoline, which was 37% more expensive now in October of this year compared to last year. Meanwhile, in Maine specifically, heating oil prices rose a shocking 80% from last October to this one.
Electricity prices went up from 18.5 cents per kilowatt-hour in October of last year to 19.9 cents this year, according to preliminary data from Heatmap and MIT’s Electricity Price Hub. That’s a jump of over 7.5%, though one largely due to a change in the timing of a bill credit in California. Stripping out that change, the year over year price hike was around 3.8%.
Economy-wide prices are up just over 4% compared to this time last year, according to estimates from Bloomberg. The October price jump surpassed expectations even after stripping out changes to the price of food and energy, leading investors to conclude that the Federal Reserve will likely raise interest rates in December. That would follow a hike in September — the first since 2023 — and a decision in October to leave rates unchanged.
While newly installed Fed Chair Kevin Warsh has been averse to previewing his own expectations for future rate hikes, other members of the Federal Open Market Committee have been less reticent.
Speaking before the release of the inflation numbers Tuesday, Chris Waller, a member of the Federal Reserve board of governors, said that if core inflation had risen more than 0.2% from September to October, he was open to a half-point increase instead of the quarter-point many analysts expected.
Lorie Logan, the president of the Federal Reserve Bank of Dallas and a member of the Fed’s rate-setting committee, said in a speech Tuesday that interest rates were “adding to inflationary pressures,” and that rate hikes would likely be necessary.
The yield on the 10-year Treasury bond, a common benchmark for borrowing costs throughout the economy, rose to right around 5% Tuesday.
“We remain confident that they will raise rates again” by at least a quarter point, “and unless there is significant progress in negotiations with Iran and a consequential decline in energy prices, they will position themselves to raise rates again as soon as the next meeting or in March 2027,” Jefferies analyst Thomas Simons wrote in a note to clients Tuesday.
The economic and monetary policy situation has put the renewables energy industry into something of a pickle. High electricity prices are generally a boon to anyone selling power, including wind and solar developers, while higher interest rates are a burden to anyone who has to finish a big construction project funded with borrowed money before generating any revenue, like wind and solar developers.
Higher inflation also affects developers as input costs rise for projects that can take months or years to complete. And when interest rates rise, the value of future payments from electricity sales falls.
That’s what happened to the Danish wind developer Orsted, who reported a $500 million impairment on its U.S. wind operations “as a result of the 75 basis points increase of the long-dated U.S. interest rates during the third quarter,” its chief financial officer Trond Westlie said on the company’s November 5 earnings call.
The residential solar company Sunrun, which also reported earnings last week, illustrated the peril and opportunities of higher rates and higher prices.
“To the extent interest rates are sustained at current levels, our capital costs would increase from levels realized throughout 2026,” Danny Abajian, chief financial officer of Sunrun, said on the company’s earnings call. “We expect to increase prices further in 2027 as utility rates continue to rise.”