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On PJM’s inflexible giants, another wind attack, and a Sino-Russia mega deal
Current conditions: In the Pacific, Tropical Storm Kiko has strengthened into a hurricane on its way toward Hawaii • Unusually cool air in the Upper Midwest and Appalachians could drop temperatures to as much as 20 degrees Fahrenheit below average • Nearly one million people are displaced in Pakistan’s most populous state as Punjab suffers the biggest flood in its history.
The Trump administration’s plan to kill a $20 billion clean energy financing program got the green light from a federal appeals court on Tuesday. The Greenhouse Gas Reduction Fund, housed under the Environmental Protection Agency, was designed to provide low-cost loans for solar installations, building efficiency upgrades, and other local efforts to reduce planet-heating emissions. The three-judge panel overturned a lower court’s injunction temporarily requiring the EPA to resume payments, ruling that most of the plaintiffs’ claims were contract disputes and belonged in the Court of Federal Claims. If the case now moves to that court, Heatmap’s Emily Pontecorvo wrote, “the plaintiffs would only be able to sue for damages and any possibility of reinstating the grants would be gone.”
Before leaving office, the Biden-era EPA finalized awards to eight nonprofits that would “create a national financing network for clean energy and climate solutions across the country.” The move was meant to insulate the program from cuts, but it stirred the new administration’s ire. The Trump EPA called the move a scam to give taxpayer-funded slush funds to nonprofits stacked with former Biden administration appointees. The recipients could still appeal the decision, which experts told Emily could still have significant ramifications. Watch this space.
The country’s largest electrical grid, the PJM Interconnection, put out a conceptual proposal in August for a plan to ask large electricity users such as data centers to voluntarily reduce their power consumption when there’s a shortage of electrons on the grid — and potentially require them to do so if too few step up. The plan is largely in line with what the Data Center Coalition, a trade association representing server companies, recently backed in a legal filing in North Carolina, as this newsletter previously reported. Yet big tech companies balked at the proposal, according to comments submitted in response. Microsoft warned that imposing curtailment undermines investor confidence. Amazon said targeting large power users to cut back on demand is discriminatory. Talen Energy, an independent power producer, said the 13-state-spanning PJM has no authority to make such a rule, and that individual state law governs load. The Data Center Coalition itself criticized the rule’s assumption that big power users have on-site back-up generation as overly broad and not reflective of reality.
The idea itself derives from an influential paper released by Duke University researchers in February that found the U.S. could add gigawatts’ worth of additional demand from new data centers without building out an equivalent amount of power plants if those facilities could curtail electricity usage when demand was particularly high. Heatmap’s Matthew Zeitlin described the strategy as “one weird trick for getting more data centers on the grid,” boiling down the approach simply as: “Just turn them off sometimes.”
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The Trump administration said it would reconsider the permit for SouthCoast Wind, a Massachusetts offshore wind farm approved last year by the Biden administration, according to legal filings seen by Reuters on Tuesday. In a motion filed to the U.S. District Court for the District of Columbia on Friday, lawyers at the Department of Justice said the Department of the Interior would review the project’s construction and operations plan.
The move came a week after Trump yanked back approvals for the nearly-complete Revolution Wind project off Rhode Island’s coast. It’s just the latest escalation in what Heatmap’s Jael Holzman called “Trump’s total war on wind.” As I reported yesterday in this newsletter, the Department of Transportation was the most recent agency to join the effort this week, axing $679 million in funding for infrastructure to support offshore wind development. But the Interior Department has led the charge with a witch hunt against policies that favor wind power, the de-designation of millions of acres of federal waters for offshore turbine construction, and a new investigation into bird deaths near windmills. The Department of Commerce tapped in last month by teeing up future tariffs with its own probe into whether imported turbine components pose a national security threat. The assault is prompting pushback. On Monday, the Democratic governors of five Northeastern states called on Trump to “uphold all offshore wind permits already granted.”
The BRICS brothers. Suo Takekuma - Pool/Getty Images
In spite of Trump administration pressure aimed at convincing countries around the world to reject Russian oil, the Kremlin netted an energy deal with the world’s second-most populous nation on Tuesday in a sign of what Russian President Vladimir Putin called an “unprecedentedly high level” of good relations between Moscow and Beijing. Under the new agreement, China will buy Russian gas through a new pipeline from Siberia. Once complete, the Power of Siberia 2 pipeline will carry 50 billion cubic meters of gas through Mongolia to northern China every year.
The deal came at the tail end of a summit in China between Putin, Chinese President Xi Jinping, and Indian Prime Minister Narendra Modi. The trio of hardline leaders, who represent the three biggest economies in the world, came together for a photo depicting a friendly three-way handshake widely interpreted as a show of unity and defiance against Washington’s attempts to impose its will through economic sanctions.
The Tennessee Valley Authority is broadening its effort to remake itself as the testing ground for new American small modular reactors. On Tuesday, the federally-owned utility announced plans to buy 6 gigawatts of reactors from NuScale Power, the first and only SMR developer whose design has won approval from the Nuclear Regulatory Commission. Shares of NuScale — which has struggled since the high-profile failure of what was supposed to be the nation’s debut SMR power plant in Utah two years ago — surged nearly 8%.
The TVA had already planned to build the first U.S. units of GE Vernova-Hitachi Nuclear Energy’s 300-megawatt reactors, and last month became the country’s first utility to sign a power purchase agreement with a fourth-generation reactor developer, the Google-backed Kairos Power. The deals come amid what Heatmap’s Katie Brigham called a “nuclear power dealmaking boom.” On Tuesday an industrial standard-setting group that includes Exxon Mobil, Chevron, Shell, Rio Tinto, and IBM launched a new consortium to streamline processes around building advanced nuclear reactors. On Wednesday, Kairos inked a deal with nuclear fuel producer BWXT to work together on producing the rare type of uranium fuel the reactor company needs for its plants.
Wind turbines are notoriously not always recyclable. But they are reusable. Just ask Jos de Krieger, the co-founder of a Dutch company called Blade Made that purchases used turbines and transforms them into sleek, minimalist tiny homes. “Everything in the built environment — everything that you see around you — has an end of life,” Krieger told CNN. “And we need solutions besides waste or landfill, incineration or something without value… Changing that perception is really something that has to happen in the eyes of everyone,” he added, calling for “processes that create stories, instead of waste.”
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On Crux’s growth, Tesla’s slow ‘death,’ and a carbon storage warning
Current conditions: In the Pacific, Hurricane Kiko has strengthened into a Category 2 storm, and is on track to reach “major storm” status • In the Atlantic, moisture is moving into an area with a lot of dry air, posing a “high risk” of developing into a tropical storm • Northern India is facing intense monsoon winds and deadly landslides.
The White House has taken what The New York Times described as “the extraordinary step” of ordering half a dozen agencies to draft plans to thwart the country’s offshore wind industry. Helming the effort are White House Chief of Staff Susie Wiles and Deputy Chief of Staff Stephen Miller. While the assault on the wind industry has largely taken place at the Department of the Interior, the departments of Transportation and Commerce joined the effort in the past two weeks, as this newsletter reported yesterday. Now the Trump administration is tapping in even more agencies, including those that traditionally have little jurisdiction over marine energy production. The Department of Health and Human Services has begun a study into whether wind turbines emit electromagnetic fields that could damage human health. The Department of Defense, meanwhile, is probing whether the projects pose a risk to national security. “We’re all working together on this issue,” Robert F. Kennedy Jr., the secretary of health and human services, said during a cabinet meeting last week.
Heatmap’s Jael Holzman has been following the administration’s increasingly outlandish efforts to squelch wind projects in her newsletter, The Fight. Last week, discussing the potential redesignation of incidental bird deaths as purposeful under the Migratory Bird Treaty Act, she wrote, “It’s worth acknowledging just how bonkers this notion is on first blush.” The move would make operating a wind farm effectively illegal, depriving numerous states of a major source of electricity. “Even I, someone who has broken quite a few eye-popping stories about Trump’s war on renewables, struggle to process the idea of the government truly going there,” she said.
Until earlier this year, clean-energy finance startup Crux was a digital marketplace exclusively for buying and selling tax credits made available by the Inflation Reduction Act. When Republicans in Congress threatened to eliminate tax credit transferability in March, however, the company moved into debt financing, a market that CEO Alfred Johnson told Heatmap’s Katie Brigham was seven times bigger. Now, in an exclusive interview Katie published yesterday, Crux said it’s expanding yet again into the tax and preferred equity markets. “The tax equity market was a $20 billion market before the IRA, and is now a $32 billion to $35 billion market,” Johnson told Katie, citing numbers from the company’s forthcoming mid-year market intelligence report. That’s a 10% to 20% increase over last year. Crux’s overall goal is to make itself a one-stop shop for project financing.
Australian rooftop solar is roughly half the price of Americans pay. Tesla
Tesla’s energy division released a new white paper warning that U.S. regulations were imposing “death by a thousand cuts” on the rooftop solar industry. In a post on LinkedIn, Tesla’s senior director of residential solar Colby Hastings said the “regulatory landscape slows progress, and we need more than one rule change to solve this.”
“Solar insiders have long lamented that residential deployments in the U.S. are too expensive compared to overseas. With the passage of the OBBB and tax credits expiring, it is imperative that we take a hard look at how the industry will navigate the next decade,” she wrote. “We must ensure that consumers have competitive choices for energy. This means affordable solar and storage at home.” Among the changes she proposed were enacting national code standards “that simplify rules, keep pace with hardware innovation, and limit regional variation.” She also called for reducing tariff on imported components to lower the cost of hardware. “Bottom line — we see an opportunity to cut ~40% from the cost stack, reducing average solar + storage installation from > $5/W today to ~$3/W.”
More than 85 climate scientists signed onto a line-by-line critique of the Department of Energy’s recent report sowing doubt over the severity and causes of rising global temperatures. The analysis pointed out that the federal report was written by a “tiny team of hand-picked contrarians” known for “often writing outside their areas of expertise.” The controversial government study had “no peer review of transparency,” they wrote, “unlike legitimate assessments,” and relied on “cherry-picked evidence and miscitations” to reach a “predetermined outcome.”
It’s far from the only criticism Secretary of Energy Chris Wright is attracting. In a Tuesday post on X, Wright claimed that “if you wrapped the entire planet in a solar panel, you would only be producing 20% of global energy,” arguing that “one of the biggest mistakes politicians can make is equating the ELECTRICITY with ENERGY!” A community note X users appended to the agency chief’s post pointed out that this wildly undercounted the potential to capture energy from the sun, which covers the planet in enough solar potential to meet “3,000x global energy use.” Yet even that failed to capture how “funny and sad” Wright’s “silly and unsophisticated” post really was, said electricity analyst David Fishman. In particular, Fishman noted, Wright seemed to underestimate how much total energy usage worldwide could be converted to electricity. “That's thinking like a guy who spent his whole career drilling for gas, but never learned much about physics, electricity, industry, or energy systems,” he wrote. “Really not what you want to see from someone in such a position.”
The amount of carbon emissions that the world can safely store is just a 10th of industry estimates, according to a Bloomberg writeup of a new study in the journal Nature. Researchers at the International Institute for Applied Systems Analysis and Imperial College London found “a prudent global limit” of around 1.46 trillion tons of CO2 that can be safely stored in geologic formations. That’s “almost 10 times smaller than estimates proposed by industry that have not considered risks to people and the environment.” Utilizing all the practical areas to store carbon would curb global warming by 0.7 degrees Celsius, compared to industry estimates of 6 degrees Celsius or higher.
Cooling data centers consumes a huge amount of electricity, and nearly half of that energy is lost as low-temperature waste heat that’s simply vented into the air. But a new study from Rice University found a way to close the loops and channel that heat into more electricity. “There’s an invisible river of warm air flowing out of data centers,” Laura Schaefer, the chair of the mechanical engineering program at Rice and co-author of the paper, said in a press release. “Our question was: Can we nudge that heat to a slightly higher temperature with sunlight and convert a lot more of it into electricity? The answer is yes, and it’s economically compelling.”
Climate policy strategist Justin Guay has a populist pitch for our warming world.
There’s a famous saying in management circles: Culture eats strategy for breakfast.
In a warming world marked by populist politics, the climate equivalent might be: Culture eats climate policy for breakfast.
As air conditioning becomes the latest front in the culture wars, climate hawks would be wise to avoid the culture war trap being set. Instead we should meet the world where it is with a simple, culturally relevant, and popular approach that keeps people cool on a warming planet — a heat pump populism for the masses.
As the climate warms, increasing numbers of cities, regions, and countries are being faced with an uncomfortable new reality — their built environments weren’t built for this environment. Heat waves like the “once in a millennium” Pacific Northwest heat dome of 2021 or this year’s “warmest summer on record” for the UK — which has kept track of such things since 1884 — are driving the need for air conditioning in places it hasn’t historically been required.
The new air conditioning units installed in response to these heat waves drive up already significant electricity consumption — and greenhouse gas emissions in the process. Air conditioning emissions alone account for 3% of global emissions, and are projected to grow significantly as AC unit sales triple by 2050. In China, which also saw heat records fall this summer, air conditioner sales doubled from June to July.
The climate community has responded with concern about the climate doom loop this represents. The impacts of climate change — most pertinently in this case, increased temperatures — unleash more air conditioning usage, which only exacerbates the underlying problem of climate change, itself.
But there’s another, far more sinister doom loop climate hawks should fear — a doom loop that undermines the political resilience necessary to respond to climate change at all.
This doom loop begins with climate impacts that directly harm average people, generating resentment towards existing institutions — notably the ruling government — that anti-climate populist politicians seize on to aid their rise to power. That in turn leads to anticlimate policymaking that exacerbates the underlying problem, climate change, unleashing yet more impacts. And on and on the cycle goes.
Take for example what happened following the historic flooding in Spain’s Valencia region last fall. Rather than looking to address the underlying causes of the catastrophe, including climate change, populist anti-climate parties seized on the perceived inability of mainstream politics to deal with the situation. They instead sought to sow distrust and climate denial by painting the government as inept and incapable of helping people in their time of need, thereby bolstering their case to overthrow the powers that be.
That appears to be a page from the same playbook populists all over Europe are now using after heat waves gripped a region where air conditioning use is projected to grow by 40% by 2050, compared to the historical average from the last decade. From France to the UK, anti-climate populists are seeking to paint the political left — particularly climate-minded parties — as out of touch radicals bent on denying the sweaty masses their relief. As Nicolas Bouzou, the French liberal economist and essayist, put it recently: “The left is against air conditioners, and the right is in favor.”
In other words, the anti-climate right is actively laying a climate doom loop trap — and it appears that at least some members of the climate community are walking right into it. In the UK, 58% of Green Party voters support discouraging AC installation to cope with heat waves. Meanwhile, in France, the head of the French Green party reportedly “scoffed” at Marine Le Pen’s proposal to deploy air conditioners as part of her policy platform, instead, he offered more energy-efficient buildings as a solution. France’s left-wing daily Liberation called AC “an environmental aberration that must be overcome.”
But what if climate hawks attempted some political jiu jitsu instead? What if we decided to make some lemonade out of these lemons? What if, and hear me out, we decided to scold a little less and push abundance a little more? What if, in a hotter world, we stood for something cool?
May I present: the humble heat pump, otherwise known as a two-way AC, i.e. just the opportunity climate advocates should be looking for. The heat pump is essentially an AC unit that can heat as well as cool. Most AC companies don’t unlock the heating capability because it adds to their manufacturing costs — generally $200 to $500 — to do so. If that modest cost were not an issue, AC manufacturers could not only help deploy desperately needed relief from extreme temperatures and rising costs, they could also deploy cheaper, clean and fossil fuel-free heating at the same time.
That’s the argument Nate Adams and the team at the Collaborative Labeling and Appliance Standards Program — otherwise known as Clasp, a nonprofit organization focused on improving the efficiency of everyday appliances and equipment — made when they called for a supply-side intervention to make heat pumps affordable and universally available. Rather than subsidizing heat pump purchases and hoping homeowners take advantage, we should incentivize AC manufacturers and distributors to exclusively sell two-way air conditioners moving forward — no more one-way AC.
Under such a policy, participating manufacturers or distributors would receive a few-hundred-dollar incentive for every two-way AC (i.e. heat pump) sold. That subsidy would decline over time as manufacturers convert production lines and costs come down. Crucially, any participating company would have to commit to stop producing one-way ACs. In addition, governments and participating manufacturers would be wise to invest in training and education programs for HVAC contractors to speed deployment and support consumer education.
The Clasp team calculates that a program like this would cost somewhere between $3 billion to $12 billion in the United States and result in 45 million new two-way ACs deployed, which would save citizens $27 billion in direct energy costs and $80 billion in indirect societal benefits — such as, yes, mitigating climate change.
As I’ve argued previously alongside Nate, the shift in policy focus from consumers to manufacturers and suppliers is really, really important. Most AC replacement purchases are driven by existing equipment breaking down — and now by historic heat waves setting in — which causes panic-buying. That almost always leads people to buy the first replacement they can find, and that’s almost never a heat pump.
If we instead incentivize manufacturers to ensure that heat pumps and only heat pumps are on hardware and home goods store shelves and make it easy for average people to buy and install them by educating HVAC installers around their benefits then we solve this problem. Heat pumps become the default.
Now map that policy onto the political landscape. Imagine that instead of climate-oriented politicians being perceived as out of touch radicals who want to ban air conditioning, we have political leaders using the next inevitable heat wave to announce a new policy of abundant air conditioning for all. That alone won’t win the culture war — it will still require savvy salesmanship to make the pitch land with voters, not to mention digital acumen of a sort the left seems woefully behind in developing. But the ingredients are there, if only our leaders are willing and able to seize on them.
Ironically, as wildfires now ravage Spain, the country’s center-left prime minister is now calling for a national climate pact. His call is a beacon of hope that the climate doom loop can indeed be broken by forward-looking politicians who realize that we must address the underlying cause of these impacts before it’s too late.
It’s time others follow his lead and use these moments of visceral climate impact to drive climate policy forward with an unabashedly populist policy agenda. That’s how we take the bite out of the air conditioning culture war before it even begins. And maybe, just maybe, it’s how we begin to reclaim our politics.
In a Heatmap exclusive interview, CEO Alfred Johnson discusses the clean energy financing marketplace’s latest big move.
Crux is expanding again.
Until earlier this year, the clean energy finance startup was a digital marketplace exclusively for buying and selling tax credits unlocked by the Inflation Reduction Act. But in March, as Republicans in Congress briefly threatened to eliminate tax credit transferability, the company moved into debt financing, a market Crux CEO Alfred Johnson told me later on is more than seven times bigger.
Now, in its quest to become a one-stop shop for efficient project financing, Crux has told Heatmap that it’s growing once more into the tax and preferred equity markets, two additional funding avenues for clean energy projects that could certainly stand to be organized, standardized, and digitized as they grow in importance. “The tax equity market was a $20 billion market before the IRA, and is now a $32 billion to $35 billion market,” Johnson told me, citing numbers from the company’s forthcoming mid-year market intelligence report. That’s a 10% to 20% increase over last year.
Johnson said that Crux’s platform will ameliorate some of the complexity and high costs that have historically made tax equity financing so difficult to access. In these deals, clean energy developers partner with tax equity investors, typically banks, which provide them with cash in exchange for an equity stake in their project — and the associated tax benefits.
In one way, it’s a funny move for Crux. Before the IRA passed, tax equity was essentially the only way for project developers with low tax burdens to monetize their credits, and transferability itself was billed as a solution to these kludgy deals. But even though the transferable tax credit marketplace has proven to be a valuable option for many developers, there are reasons why some still prefer tax equity financing.
For one, tax equity partnerships can actually be the cheapest form of project financing for large developers overall. That’s in large part because tax equity is such a scarce but critical form of capital that if a developer can secure it, they can often then raise other forms of funding, such as bridge loans, more easily. Tax equity deals also serve to establish the fair market value of a project, which thus ensures that project developers can maximize the value of their tax benefits.
Lastly, Johnson explained that tax equity financing allows project developers to capture the value of a tax benefit known as “accelerated depreciation,” in which a large percent of a project’s asset costs can be deducted in the first few years of operation as opposed to evenly over the project’s useful life. Unlike with tax credit transferability, there’s no direct way for developers to monetize accelerated depreciation benefits other than via tax equity partnerships.
These types of partnerships will, in all likelihood, still only make sense for well-capitalized projects deploying proven technologies such as solar, wind, and storage. More novel tech such as advanced nuclear, long-duration storage, or next-generation geothermal will probably continue to rely primarily on the tax credit transfer market. But as Johnson told me, “for the developers that have really strong financials, have large projects, are able to secure tax equity, that is often preferred as a way of monetizing their credits to selling directly in the transfer market.”
At the same time, the markets for tax equity and credits are increasingly converging. That’s because it’s become more common for tax equity investors — or the partnership itself — to sell the credits they now hold into the transfer market, Johnson told me. This provides the investor or partnership with immediate liquidity, which can then be invested into other projects. This type of hybrid structure has thus far made up over 60% of tax equity commitments in 2025, according to the company’s mid-year market report.
Crux is also expanding into preferred equity, a type of financing that allows project developers to raise additional capital closer to the start of commercial operations. Then, once operation commences, preferred equity investors typically receive fixed, priority returns before any distributions are made to common equity holders. This structure reduces risks for preferred investors, giving them a more predictable income stream. It’s a smaller market than tax equity financing, but still an important piece of the puzzle, Johnson said.
And then there’s — what else? — artificial intelligence.
As developers and investors that have used Crux’s tax credit marketplace “graduate” into new, often more complex forms of project financing such as tax and preferred equity, Johnson told me there are “huge opportunities” to make these deals more efficient. As he sees it, this will involve integrating the company’s current workflow management and documentation tools with AI language models designed to streamline document organization and synthesis, along with other administrative processes. The idea is to save time “without any deterioration in the quality of the underwriting,” Johnson said.
These latest expansionary moves will be far from Crux’s last, Johnson told me. There’s all sorts of equity financing Crux could theoretically help to facilitate, along with transactions between equipment manufacturers and project developers or project developers and utilities.
It’s all on the table, Johnson said. “I think we will continue to find that this mix of liquidity, efficiency, and intelligence makes sense in lots of different categories.”