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On an important endorsement, Ford’s earnings report, and tree bark
Current conditions: Typhoon Gaemi made landfall in Taiwan with the force of a Category 3 major hurricane • Large hailstones pelted Verona, Italy • Tropical Storm Bud formed in the Eastern Pacific, but is expected to dissipate by the weekend.
The blade that snapped off an offshore turbine at the Vineyard Wind project in Massachusetts on July 13 broke due to a manufacturing defect, according to GE Vernova, the turbine maker and installer. During GE’s second quarter earnings call yesterday, CEO Scott Strazik and Vice President of Investor Relations Michael Lapides said the company had identified a “material deviation” at one of its factories in Canada and would “re-inspect all of the blades that we have made for offshore wind.” At a public meeting in Nantucket last night, Roger Martella, GE Vernova’s chief sustainability officer, said there were two issues at play. The first was the manufacturing issue — basically, the adhesives applied to the blade to hold it together did not do their job. The second was quality control. “The inspection that should have caught this did not,” he said. Two dozen turbines have been installed as part of the Vineyard Wind project so far, with 72 blades total. GE Vernova has not responded to requests for clarification about how many of them originated at the Canada facility, reported Heatmap’s Emily Pontecorvo. Nantucket representatives are going to meet with Vineyard Wind next week to negotiate compensation for the costs incurred as a result of the accident.
Vice President Kamala Harris got a little boost for her 2024 presidential bid yesterday with an endorsement from the American Federation of Government Employees Council 238. The group is the largest Environmental Protection Agency union – of the 750,000 government employees it represents, about 8,000 of them are with the EPA, accounting for just under half the agency’s permanent workforce. Last month the union issued its first-ever political endorsement, for President Biden’s re-election, saying he “supports and values the work of federal employees who are working tirelessly to face the climate emergency.” Shifting support to Harris “reaffirms” that endorsement. Former President Donald Trump rolled back many EPA rules during his time in office, including emissions regulations and environmental protections. He also gutted workplace protections for federal workers. Judging by the infamous Project 2025 playbook, Trump would seek to dramatically “restructure” and “streamline” the EPA to “reflect the principles of cooperative federalism and limited government,” and many workers reportedly fear their jobs will be on the line if he wins.
Ford’s stock is down about 13% in pre-market trading after yesterday’s disappointing Q2 earnings report. The automaker reported adjusted earnings of 46 cents per share, far below analysts’ expectations of 68 cents per share. The company cited unforeseen costs for repairing problems on slightly older vehicles that are still under warranty. But its EV losses grew, too, reaching $2.5 billion through the first half of 2024. CEO Jim Farley remained bullish in the earnings call, telling investors the company is committed to reducing the losses on EVs but basically said the market has been tough and turbulent, and Ford is honing its strategy. That includes expanding its hybrid portfolio and prioritizing smaller, more affordable EVs. He said Ford “must do a much better job in educating our customers” about the advantages of owning an EV. “Overall, the EV journey has been humbling,” he said, “but it has forced us to get even more fit as a company.”
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Firefighters are battling hundreds of wildfires in Canada’s Alberta province, one of which is nearing a crucial oil pipeline. The Trans Mountain Pipeline carries 890,000 barrels of oil per day from Edmonton to Vancouver. Its operator is reportedly using sprinklers to protect the pipeline, which was still operating normally yesterday. Some oil producers with operations in Canada’s Fort McMurray oil sands region have pulled staff as a precaution and reduced production. “While wildfires have already forced some producers to curtail production, these fires still threaten a large amount of supply,” ING Group analysts said.
Microbes living in tree bark are surprisingly effective at removing methane from the atmosphere, according to a new study published in the journal Nature. Up until now, soil was the only known “terrestrial sink” for methane, a potent but short-lived greenhouse gas that’s responsible for about one third of the global warming since the pre-industrial age. But the research suggests tree bark may be just as effective as soil when it comes to methane removal. Trees are already climate champions because of their ability to remove carbon from the atmosphere, and the authors think these new findings boost their overall climate contribution by about 10%. Another fun tidbit from the study is that, if all the bark from all the trees on Earth were laid flat, it would cover the planet’s entire land surface.
The Irvine Police Department is adding Tesla’s Cybertruck to its fleet. The vehicle reportedly won’t be sent out on patrols, but will instead be used for “community relations.”
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On the energy secretary’s keynote, Ontario’s electricity surcharge, and record solar power
Current conditions: Critical fire weather returns to New Mexico and Texas and will remain through Saturday • Sharks have been spotted in flooded canals along Australia’s Gold Coast after Cyclone Alfred dropped more than two feet of rain • A tanker carrying jet fuel is still burning after it collided with a cargo ship in the North Sea yesterday. The ship was transporting toxic chemicals that could devastate ecosystems along England’s northeast coast.
In a keynote speech at the energy industry’s annual CERAWeek conference, Energy Secretary Chris Wright told executives and policymakers that the Trump administration sees climate change as “a side effect of building the modern world,” and said that “everything in life involves trade-offs." He pledged to “end the Biden administration’s irrational, quasi-religious policies on climate change” and insisted he’s not a climate change denier, but rather a “climate realist.” According toThe New York Times, “Mr. Wright’s speech was greeted with enthusiastic applause.” Wright also reportedly told fossil fuel bosses he intended to speed up permitting for their projects.
Other things overheard at Day 1 of CERAWeek:
The premier of Canada’s Ontario province announced he is hiking fees on electricity exported to the U.S. by 25%, escalating the trade war kicked off by President Trump’s tariffs on Canadian goods, including a 10% tariff on Canadian energy resources. The decision could affect prices in Minnesota, New York, and Michigan, which get some of their electricity from the province. Ontario Premier Doug Ford estimated the surcharge will add about $70 to the monthly bills of affected customers. “I will not hesitate to increase this charge,” Ford said. “If the United States escalates, I will not hesitate to shut the electricity off completely.” The U.S. tariffs went into effect on March 4. Trump issued another 30-day pause just days later, but Ford said Ontario “will not relent” until the threat of tariffs is gone for good.
There was a lot of news from the White House yesterday that relates to climate and the energy transition. Here’s a quick rundown:
The EPA cancelled hundreds of environmental justice grants: EPA Administrator Lee Zeldin and Elon Musk’s so-called Department of Government Efficiency nixed 400 grants across environmental justice programs and diversity, equity, and inclusion programs worth $1.7 billion. Zeldin said this round of cuts “was our biggest yet.”
Transportation Secretary Sean Duffy rescinded Biden memos about infrastructure projects: The two memos encouraged states to prioritize climate change resilience in infrastructure projects funded by the Bipartisan Infrastructure Law, and to include under-represented groups when planning projects.
The military ended funding for climate studies: This one technically broke on Friday. The Department of Defense is scrapping its funding for social science research, which covers climate change studies. In a post on X, Defense Secretary Pete Hegseth said DOD “does not do climate change crap. We do training and war fighting.”
Meanwhile, a second nonprofit – the Coalition for Green Capital – filed a lawsuit against Citibank over climate grant money awarded under the Inflation Reduction Act but frozen by Zeldin’s EPA. Climate United filed a similar lawsuit (but targeting the EPA, as well as Citibank) on Saturday.
A new report from the Princeton ZERO Lab’s REPEAT Project examines the potential consequences of the Trump administration’s plans to kill existing EV tax credits and repeal EPA tailpipe regulations. It finds that, compared to a scenario in which the current policies are kept in place:
“In other words, killing the IRA tax credits for EVs will decimate the nascent renaissance in vehicle and battery manufacturing investment and employment we’re currently seeing play out across the United States,” said Jesse Jenkins, an assistant professor and expert in energy systems engineering and policy at Princeton University and head of the REPEAT Project. (Jenkins is also the co-host of Heatmap’s Shift Key podcast.)
REPEAT Project
The U.S. installed nearly 50 gigawatts of new solar power capacity last year, up 21% from 2023, according to a new report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie. That’s a record, and the largest annual grid capacity increase from any energy technology in the U.S. in more than 20 years. Combined with storage, solar represents 84% of all new grid capacity added in 2024.
SEIA and Wood Mackenzie
Last year was “the year of materialization of the IRA,” with supply chains becoming more resilient and interest from utilities and corporate buyers growing. Installations are expected to remain steady this year, with little growth, because of policy uncertainty. Total U.S. solar capacity is expected to reach 739 GW by 2035, but this depends on policy. The worst case scenario shows a 130 GW decline in deployment through 2035, which would represent $250 billion in lost investments.
“Last year’s record-level of installations was aided by several solar policies and credits within the Inflation Reduction Act that helped drive interest in the solar market,” said Sylvia Levya Martinez, a principal analyst of North America utility-scale solar for Wood Mackenzie. “We still have many challenges ahead, including unprecedented load growth on the power grid. If many of these policies were eliminated or significantly altered, it would be very detrimental to the industry’s continued growth.”
Tesla shares plunged yesterday by 15%, marking the company’s worst day on the market since 2020 and erasing its post-election stock bump.
Turns out, when you reduce electricity rates for heat pump owners, more people buy heat pumps.
One of the most significant actions a person can take to fight climate change is to swap out their fossil fuel-fired furnace or boiler for electric heat pumps. But while rebates and other subsidies can help defray the up-front cost of the switch, the price of electricity relative to natural gas is still a major deterrent in many places. Lower emissions for higher monthly bills is not much of a tradeoff.
Could the solution be as simple as utilities giving heat pump users a discounted rate in the winter?
There’s a growing consensus among climate and clean energy experts that this is a crucial and urgent step toward decarbonizing, at least in the near term. A number of recent reports make the case not just that discounted rates for heat pump users will help spur adoption of the technology, but also that these customers are currently being overcharged.
The reason why is that today, most utilities operate in “summer peaking” systems, where electricity demand is highest on the hottest days of the year. Utilities spend lots of money on infrastructure like power plants, substations, transformers, and wires to make sure they can deliver power reliably on those days. But in the winter, a lot of that stuff sits unused. So it doesn’t increase overall system costs for people to use more electricity in the winter.
In fact, “it’s less expensive to offer electricity in the winter in summer peaking systems,” Matthew Malinowski, who directs the buildings program at the nonprofit American Council for an Energy-Efficient Economy, told me. And yet a lot of utilities charge customers a flat rate, no matter the time of year. “It seems only fair to charge people less for the electricity they use in the winter,” Malinowski said.
Some utilities are already starting to do this. Malinowski and his colleagues published a study on Tuesday that used real utility rates to examine the current cost of operating heat pumps in four cold-weather states. Their modeling illustrates how heat pump-specific rates can make the technology much more attractive compared to natural gas-fired heating. (Households switching from fuel oil or propane heating to heat pumps will almost always save money.)
The first state they looked at, Maine, has famously had a lot of success getting residents to switch to heat pumps. It turns out favorable rates may have been a big part of that. The cost of electricity there is not much higher than natural gas, so when a household there switches to heat pumps, its annual bills remain roughly the same. Additionally, Maine’s biggest utility recently ran a pilot program where it offered customers the option to sign up for a “heat pump rate,” giving them discounted electricity in the winter and slightly higher than normal electricity in the summer. The study estimated that an average household in Maine using this rate would save just over $200 per year compared to one that heats with natural gas.
Just 6% of households in Maine used heat pumps a decade ago, before the state began offering incentives. As of last year, that number had grown to 26%, although many homes still use natural gas boilers and furnaces as back-up systems.
The other three states the study focuses on — Minnesota, Colorado, and Connecticut — have much higher electricity rates relative to natural gas, and simply switching to a heat pump would not be economic. But Minnesota has a winter pricing program similar to Maine’s. The utility Xcel offers a deeply discounted rate to customers who heat their homes with electricity through the colder months, whether they use heat pumps or less efficient electric resistance systems. The report estimates that heat pump users who opt-in to this rate will save about $400 per year compared to if they heated their homes with natural gas.
Xcel is also the largest utility in Colorado, where it does not yet offer a winter discount rate. There, the authors calculate that heat pumps currently cost about $500 more per year than natural gas heating. But a new law in Colorado requires utilities to submit new heat pump-specific electric rates to regulators for approval by 2027. If Xcel offered the same discount as it does in Minnesota, that would bring heat pump operating costs roughly on par with gas heating.
Colorado isn’t the only state actively pursuing heat pump-specific rates to spur adoption. In Massachusetts, which the study did not look at, a small utility called Unitil began offering a discounted heat pump rate on March 1 of this year, and regulators are requiring National Grid, which serves about 15% of the state, to offer one beginning next winter.
Meanwhile, in Connecticut, electricity prices are so much higher than gas prices that the authors conclude that “rate interventions are ultimately not enough” to make heat pumps competitive. “The state needs deep investment in making electric power more affordable to its residents,” they write, such as “taking on some costs of grid maintenance and upgrades, putting a price on carbon, or implementing clean heat standards.”
One caveat to the study is that it uses electric rates in 2024 but meteorological data from 2018. Since the world was notably warmer last year than in 2018, the authors’ cost estimates are likely conservative. In reality, heat pumps may already be more affordable than the study makes them seem.
Another is that heat pump-specific rates are only really a solution for the next five to 10 years. As more households adopt heat pumps, the electric grid will begin to shift toward a winter-peaking system, and there won’t really be a case to charge heat pump users less. Massachusetts regulators have acknowledged they will need to monitor this and re-evaluate heat pump rates regularly as the situation evolves.
“We’re just responding to the situation today,” Malinowski told me. “Heat pump penetration is very small, and those users are overpaying based on the service they're demanding of the grid, and what they're providing to the grid, which is revenue during off-peak times when electricity is cheaper to provide.”
This is the first story in a Heatmap series on how clean energy has fared under Trump.
The renewables industry was struggling even before Donald Trump made his return to the White House. High interest rates, snarled supply chains, and inflation had already dealt staggering blows to offshore wind; California turned hostile to the residential solar market; and even as deployment of utility-scale solar accelerated, profits haven’t necessarily followed. (Those were still reserved for the fossil fuel industry.)
Then Trump came into office, issuing a barrage of executive orders that, at best, didn’t help, and at worst threatened to choke off the industry’s remaining avenues for growth. Now, Republican legislators are eyeing the Inflation Reduction Act for red meat to feed their tax cut machine; Elon Musk — himself the richest green tech entrepreneur of all time — is captaining an effort to slash the size of the federal government, particularly environmental programs; and the federal regulatory apparatus has essentially ground to a halt.
The early days of the Trump presidency have turned a clean energy slump into a kind of green freeze, with projects being cancelled and clean energy investors in many cases fixating on hypothetical policy changes, as opposed to the ins and outs of any given quarter. This creates a kind of trap for green energy companies, which are being punished in the immediate term for bad results while investors sit on the sidelines until the final resolution of the IRA comes into focus.
Speaking about the solar industry specifically, Morningstar analyst Brett Castelli told me that near term viability is not going to be about the specifics of any given company’s financial performance. “It’s going to be about how much the IRA is potentially changed.”
That’s likely the case across the green energy sectors. The iShares Global Clean Energy ETF, which tracks a number of renewables companies, is down 14% since November 5, and down 20% in the past year. “All businesses like certainty,” Castelli said. “The renewables market right now is facing a high degree of uncertainty in regards to what changes are coming to the IRA.”
But not every company has been affected equally. Those that were already flagging have been quick to blame the political environment, while others have gamely tried to explain to investors and the public how their lines of business align with the Trump administration’s priorities.
Executives at the residential solar company Sunnova — whose stock has fallen to below a dollar a share since it issued a “going concern” notice, essentially notifying investors that its existence as a company was under threat — mentioned “policy” or “political” or “politicians” six times in its earnings call last week. Chief Executive John Berger told an analyst that the reason for the going concern notice was that “the overall environment is terrible. I mean, it’s the political environment, the capital markets,” and that the company “struggled to close some things after the election.”
Berger stepped down Monday, and Sunnova’s former chief operating officer Paul Mathews immediately took over. Mathews “will focus on disciplined growth, stronger cash generation, cost efficiency, and enhancing the customer experience,” the company said.
Other companies have told investors and the public that they’re scrapping expansion plans, in many cases due to a policy change or a market change running downhill from policy.
“Manufacturing is probably where we see the biggest concern,” Maheep Mandloi, a stock analyst at Mizuho Securities, told me. “A lot of solar and battery projects are getting pushed out.”
Among them, battery manufacturer KORE Power, said in February that it was canceling a $1 billion battery project in Arizona. The Arizona facility was going to be supported with federal financing, specifically a loan from the Energy Department’s Loan Program Office for up to $850 million, but the conditional commitment never turned into cash in hand before the end of the Biden administration. Its new chief executive, Jay Bellows, told Canary Media that the company wanted to retrofit an existing facility into a battery plant instead.
Aspen Aerogels, which makes thermal barriers for batteries in electric vehicles, told investors in February that it wouldn’t move forward with a planned new plant in Statesboro, Georgia, and would instead “maximize capacity” at its Rhode Island plant. The company’s chief financial officer noted that it had already “decided to right-time” its Statesboro project in early 2023, “pre-empting a reset in EV demand expectations.”
And just last week, Ascend Elements, a battery materials company, said it was scrapping plans to manufacture cathode active material at its Hopkinsville, Kentucky plant, the Times Leader reported Thursday. Ascend said that it had agreed with the Department of Energy to cancel a $164 million grant that would support cathode active material (a key battery component) manufacturing, although a separate, $316 million grant for cathode precursor technology “remains active.”
But optimism still abounds — and it has nothing to do with any hopes about the fate of grants and tax credits under the IRA. Regardless of the law’s fate, the exuberance over artificial intelligence may prove to be an even greater subsidy.
In contrast to Sunnova, Sunrun — another residential solar company whose stock price has flagged since the election, but whose ability to stay in business has not been questioned — put a much more neutral spin on the political environment. Chief Executive Mary Powell told investors during the company’s earnings call in late February, “The fundamental long-term demand drivers for our business are incredibly strong and unrelated to any political party affiliation. Americans want greater energy independence and control of their lives and their pocketbooks. The country also needs more power from all sources to fuel rapid growth in electrification and data centers, and our growing fleet of energy resources will be part of the solution.”
Where once executives focused their rah-rah optimism on the declining costs of renewables, today they’re talking up their products’ quick path to deployment. The speed with which renewables can be built and switched on — especially solar and storage — compares favorably to the four-to-five year development timelines for new gas-fired plants. NextEra chief executive John Ketchum told analysts in a January earnings call “you can build a wind project in 12 months, a storage facility in 15, and a solar project in 18 months.”
That’s either the light at the end of the tunnel or the pot of gold at the end of the rainbow, depending on your level of fatalism or skepticism.
This oncoming demand could reignite the renewables industry even if it potentially loses access to generous IRA subsidies, Ben Hubbard, the chief executive of the infrastructure advisory firm Nexus Holdings, told me.
“The hyperscale datacenter demand is pretty massive, and when you have to really start massively upgrading your transmission and distribution infrastructure, those rates get passed on, unfortunately, to the average ratepayer like me and you and everybody else.” With higher rates, renewables could become profitable and investable on their own, without IRA subsidies, Hubbard said.
NextEra, a major renewables developer that also operates a natural gas fleet, has been one of the main promoters of the “speed to power” narrative. In its January earnings call, Ketchum told analysts, “We’re expecting load demand to increase over 80% over the next five years, six-fold over the next 20 years. And if you think about generation types and needing all of the above, they’re not all created equally in terms of timing.”
Although the Trump administration is seeking to unleash fossil fuel development, power plants don’t build themselves. They need, at the very least, turbines, and those gas turbines are not easy to get your hands on. As Heatmap has reported, manufacturer GE Vernova has only modest plans to increase capacity, and is already getting reservations for turbine slots in 2027 and 2028.
“With gas-fired generation, the country is starting from a standing start,” NextEra CEO Ketchum said on the earnings call. “We need shovels in the ground today because our customers need the power right now.”
Developers and investors hope this means that data center developers and utilities will become both voracious and omnivorous in their power demand.
“I think what you’re going to see is the big tech companies, especially, are going to just have to eat the cost if they want to win the AI race,” Hubbard told me. “They’re going to take natural gas fuel, and they’re going to take biomass power, and they’re going to take solar. They’re going to take it all, because it’s almost insignificant relative to getting ahead of AI demand.”
Most of the industry, however, is gamely working through an environment where their day-to-day business may be fine, but their investors are still in wait-and-see mode.
“The common feedback we hear from a lot of investors is, ‘I’ll just probably come back once the dust settles and I know exactly what things are going to change,” Mandloi told me.
That’s even as executives point to a glorious future of AI-driven electricity demand. But investors may be waiting to count their chips from the IRA before they’re willing to take a flyer on powering data centers that are yet to be built.
And there’s nothing certain about the AI boom, either. More computationally efficient Chinese models have thrown that energy narrative into doubt, driving down the share price of Nvidia, which makes the chips that consume all that data center power (along with the share prices of power companies with large natural gas fleets). That stock is down by almost 20% so far this year. If the chip designer’s AI profits are less than previously thought, the electron providers may have to settle for less, as well. Renewables companies are hoping the data center boom will be a case of “if you build it, they will come,” but investors aren’t yet quite willing to buy it.