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Shorter “shoulder seasons” mean fewer opportunities for necessary grid maintenance. What could go wrong?
It’s getting hot in Texas. Forecast highs for Tuesday are 89 degrees Fahrenheit in Houston, 92 in San Antonio, and 90 in Dallas. ERCOT, which operates the energy market that covers around 90% of the state, issued an “extreme hot weather event” warning and a “weather watch” due to “unseasonably high temperatures” — and “high levels of expected maintenance outages.”
The whole country, but particularly Texas, is playing chicken with its existing fleet of natural gas-powered electricity infrastructure. While the weather-dependence of solar and wind are both obvious and well-known, gas, too, can be susceptible to nature’s fluctuations. High temperatures mean high demand, while very low temperatures can literally freeze whole gas production, distribution, and generation system, with catastrophic consequences.
Natural gas powers around 60% of Texas’ electricity. While Tuesday’s is far from the hottest weather the state will face this year, it comes at what can be a fragile time for the grid. This is the end of the spring maintenance season, when power plant operators have a window to schedule outages necessary to perform maintenance after winter and ahead of summer, when electricity demand spikes again — what ERCOT calls the “shoulder seasons.”
But weather increasingly does not conform to the plans of market regulators, with temperatures rising earlier in the year and falling later, impinging on that shoulder space. In April, ERCOT had to ask power plants to delay outages they had already planned due to high temperatures in parts of the state.
Shutting down a natural gas power plant can be fraught in Texas, where authorities are wary of destabilizing the grid. Other than 2021’s Winter Storm Uri, which caused days of blackouts and hundreds of deaths, one of the state’s worst-ever blackouts happened in April 2006, when high temperatures coincided with — you guessed it — planned outages for maintenance. Texas is not the only place that gets hot in the summer, of course, but its grid is both isolated from the rest of the country and is dealing with substantial growth in power demand, which means it’s more likely to bump up against its limits.
“We’ve had a couple of pretty hot days and have more hot weather this week,” University of Texas professor Hugh Daigle told me. “What’s happening is that we’ve been operating close to the limit of available supply at peak demand.”
While the grid in Texas has remained stable so far this spring — albeit with some wild price spikes at times — delaying planned outages risks future unplanned power failures if operators fall behind on maintenance. Those failures are most likely to occur during the summer months, when high demand from air conditioning adds to stresses caused by the heat and ERCOT is less likely to allow the plants to come offline. In the best case scenario, a strained grid “only” results in electricity prices spiking. In the worst, it leads to blackouts and deaths from extreme heat.
Along with three of his University of Texas colleagues, Joshua Rhodes, Aidan Pyrcz, and Michael Webber, Daigle recently published a paper showing that as Texas warms, the times when it’s “safe” to have a large number of planned outages may shrink.
Average temperatures in the state rose 0.8 degrees Celsius from 1895 to 2021, and are projected to go up another whole degree by 2036. While that may sound like a small change, this would increase the number of 100 degree Fahrenheit days — which often mean record-breaking electricity usage — by some 40%.
While it may seem like a warming trend could have a symmetric and offsetting effect on the grid — hotter summer days that lead to record air conditioning demand but also warmer winter days that create less strain on electric heat — the researchers found that instead, the shoulder seasons were getting impinged on both sides. Compared to the 1950s, mild spring weather has been starting and ending earlier. At mid-century, spring started near the beginning of March; now it’s closer to the beginning of February. The start of fall, meanwhile, slid from the beginning of November later toward the middle of the month.
If maintenance in the spring shoulder season can just occur just from March to May, “maintenance periods will no longer coincide with periods of low expected demand,” Daigle told me. And if it’s just in the fall season, which could shrink to October and November, “it may be unreasonable to expect power plants to be able to forgo spring maintenance.”
“If you look at climate models and how average temperatures change,” Daigle said, “those two periods” — before the cold of winter and the heat of summer — “could merge into a single period in December and January.”
Just one shoulder season introduces extreme risks, Daigle explained. “We still do get winter storms. It’s December and January and you have a lot of stuff down for planned maintenance, and something like Uri comes through — we’re up a creek.”
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PJM is projecting nearly 50% demand growth through the end of the 2030s.
The nation’s largest electricity market expects to be delivering a lot more power through the end of the next decade — even more than it expected last year.
PJM Interconnection, which covers some or all of 13 states (and Washington, D.C.) between Maryland and Illinois, released its latest long-term forecast last week, projecting that its summer peak demand would climb by almost half, from 155,000 megawatts in 2025 to around 230,000 in 2039.
The electricity market attributed the increased demand to “the proliferation of data centers, electrification of buildings and vehicles, and manufacturing,” and noted (not for the first time) that the demand surge comes at the same time many fossil fuel power plants are scheduled to close, especially coal plants. Already, some natural gas and even some coal plants in PJM andelsewhere that were scheduled to close have seen their retirement dates pushed out in order to handle forecast electricity demand.
This is just the latest eye-popping projection of forthcoming electricity demand from PJM and others — last year, PJM forecast summer peak demand of about 180,000 megawatts in 2035, a figure that jumped to around 220,000 megawatts in this year’s forecast.
While summer is typically when grids are most taxed due to heavy demand from air conditioning, as more of daily life gets electrified — especially home heating — winter demand is forecast to rise, too. PJM forecast that its winter peak demand would go from 139,000 megawatts in 2025, or 88% of the summer peak, to 210,000 megawatts in 2039, or 95% of its summer peak demand forecast for that year.
Systems are designed to accommodate their peak, but winter poses special challenges for grids. Namely, the electric grid can freeze, with natural gas plants and pipelines posing a special risk in cold weather — not to mention that it’s typically not a great time for solar production, either.
Aftab Khan, PJM’s executive vice president for operations, planning, and security, said in a statement Thursday that much of the recent demand increase was due to data centers growing “exponentially” in PJM’s territory.
The disparity between future demand and foreseeable available supply in the short term has already led to a colossal increase in “capacity” payments within PJM, where generators are paid to guarantee they’ll be able to deliver power in a crunch. These payments tend to favor coal, natural gas, and nuclear power plants, which can produce power (hopefully) in all weather conditions whenever it’s needed, in a way that variable energy generation such as wind and solar — even when backed up by batteries — cannot as yet.
Prices at the latest capacity auction were high enough to induce Calpine, the independent power company that operates dozens of natural gas power plants and recently announced a merger with Constellation, the owner of the Three Mile Island nuclear plant, to say it would look at building new power plants in the territory.
The expected relentless increase in power demand, power capacity, and presumably, profits for power companies, was thrown into doubt, however, when the Chinese artificial intelligence company DeepSeek released a large language model that appears to require far less power than state of the art models developed by American companies such as OpenAI. While the biggest stock market victim has been the chip designer Nvidia, which has shed hundreds of billions of dollars of market capitalization this week, a number of power companies including Constellation and Vistra are down around 10%, after being some of the best stock market performers in 2024.
A conversation with Carl Fleming of McDermott Will & Emory
This week we’re talking to Carl Fleming, a renewables attorney with McDermott Will & Emory who was an advisor to Commerce Secretary Gina Raimondo under the Biden administration. We chatted the morning after the Trump administration attempted to freeze large swathes of federal spending. My goal? To understand whether this chaos and uncertainty was trickling down into the transition as we spoke. But Fleming had a sober perspective and an important piece of wisdom: stay calm and remain on course.
The following conversation has been lightly edited for clarity.
How are you seeing the private sector respond to all of this news?
My view is, you can read a lot into what people publish in the EOs and what’s written and what’s issued and you can sometimes read a good deal into what hasn’t been issued and what hasn’t been said. In the executive orders that got first issued in a flurry we saw a few that got pointed directly at onshore wind, some on offshore wind, but solar and standalone storage – as predicted – remained pretty much intact.
We were under the impression and we stood by it that we had the guidance in hand, bankable guidance, from the IRS prior to the change in administration and prior to any look-back window that people had been transacting on over the past year at kind of a record pace. Standalone storage has just had a breakout year. Solar continues to go, to continue to be put on the grid. And we also have manufacturing of solar panels, the domestic supply chain. This year we stood up is nowhere near what we need to fulfill our requirements to get everything we need to do domestically to fill our generation requirements [but] its a pretty great step in the right direction. And those credits have been pretty good to the economy and Republican states.
The way I’ve seen people react is, I’ve probably been busier than ever the past two weeks, not only fielding questions like that but also for tax credit transfers, all of the corporates we work with. We work in both the buy and the sell side of all these credit transfers. We’re working with a lot of solar module manufacturers to sell the credits under the IRA. We’re working with a lot of buyers to purchase those credits. And we’re working with the buyers and sellers under the generation of these projects.
All of the buyers have come out and continued with their 2025 strategy to buy more of these credits, if not more so. And all of the developers we represent continue to produce more of these credits. So I haven’t seen a hiccup or slowdown in actual transactions. If anything, I’ve seen stuff pick up in the solar space and in the manufacturing space. I continue to be very optimistic about those two fundamental parts of the energy transition, because if you need to go be an energy superpower, you wouldn’t want to turn off solar, turn off storage –
Is that argument that if you were trying to deal with “energy security,” you wouldn’t turn off solar and storage – is that enough to assuage uncertainty in the investor space?
I think it’s helpful. If you’re a private equity investor or you’re any sort of lender or a developer, you’re probably not going to base your whole model on the hopes that our energy security strategy syncs up with what most people think it should look like. But when you layer it on top of some of the fundamentals… I want to say that solar did not go away eight years ago. When Trump first came in, we saw more renewables deployed in his administration. At times, we saw more beneficial guidance, issuance of tax guidance under that administration, than we would hope for from some more favorable administrations.
The fact that the IRA has disproportionately benefited red states is just a fact that can’t be overlooked. I met with a group of about two dozen lawmakers a few weeks ago to talk about the IRA and there’s quite a few of those folks in the room that say, “Whatever we do, we can’t dismantle the IRA.”
But how has the chaos in the last week and a half impacted investment in renewable energy, though?
I think the renewable energy industry is used to a lack of predictability. It’s kind of a lawyer’s job, our team’s job, to help folks mitigate risk [and] to see what potential pitfalls there may be and to structure and draft around those.
You might see as things get more unpredictable, as folks go out to investors to raise capital, you might see a little bit of tightening around different portfolios or different types of companies based on their pipelines or how they’re put together. But I think one investor’s look on a project or pipeline may vary widely from another investor who’s got a different project or pipeline. There’s a lot of capital out there to be deployed. I think people are looking to invest.
I think you just need to partner the right developers with the right investors.
Are you seeing any slowdown in solar investment though?
I don’t see folks taking a hardline approach or stopping any time soon.
This is not an existential crisis while the ITC [investment tax credit] and PTC [production tax credit] exist. It’s not even, could you go back in time to unwind these credits. It’s moreso, going forward, what will the IRA look like? Will there be additional technologies added to the IRA? That’s possible to help stand up other technologies. Will the runway for the credit, instead of it being unlimited for at least 10 years, will [it] be pared back a bit? There’s potential, but it’s unlikely.
Okay last question and it’s a fun one: what was the last song you listened to?
I’m not going to lie, I’m an Eagles fan. And I’m from Philly and a huge Meek Mill fan. So “Uptown Vibes” by Meek Mill is in the car.
1. Freeze, don’t move – The Trump administration this week attempted to freeze essentially all discretionary grant programs in the federal government. A list we obtained showed this would halt major energy programs and somehow also involve targeting work on IRA tax credits.
2. Sorry, California – The Bureau of Ocean Energy Management canceled public meetings on the environmental impact statement for offshore wind lease areas in California, indicating the Trump wind lease pause will also affect pre-approval activities.
3. Idaho we go – Idaho Gov. Brad Little this week signed an executive order dubbed the SPEED Act aimed at expediting all energy projects, including potentially renewables, transmission, and mining projects.