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The end may be in sight, but it’s not here yet.

Are interest rates going to go down? The market will have to wait.
Following a Tuesday report showing steady consumer prices in May and prices overall only rising 3.3% in the past year, the Federal Reserve held steady on interest rates, releasing a projection Wednesday showing just one rate cut this year.
If rates do indeed fall this year (or next, when the Fed is projecting four cuts), that would be a big relief to renewable developers. There’s been an unprecedented flow of money into the sector in the past few years — whether from tax credits from the Inflation Reduction Act or power purchase agreements from utilities and corporations that want to decarbonize, you name it — but it’s come at the same time as projects have gotten more expensive to undertake. That’s in terms of labor and supplies, but also the most important part of any project: money.
“In the near term, investors are looking for market rates to fall to reduce financing costs — the Fed cutting the base rate could greatly help this along,” Srinivasan Santhakumar, senior research analyst at Wood Mackenzie, told me in an email.
Interest rates don’t affect every project equally. Renewables tend to be capital intensive, meaning that a higher portion of their costs are in building them as opposed to operating them. For an offshore wind turbine project, almost 70% of the expenditure comes from capital, whereas with a combined-cycle natural gas turbine plant it’s less than 20%, according to Wood Mackenzie data.
That’s because, in the case of wind and solar, the “fuel” is free, unlike with natural gas and other fossil-based energy sources. This means that developers have to fund more of the project upfront with borrowed money, which means a bigger hit from higher interest rates. According to an analysis by the investment bank Lazard, when the cost of debt is 5%, the levelized cost of an offshore wind project is $88 per megawatt-hour; when the cost of debt rises to 8%, the levelized cost rises to $118. For a combined cycle gas plant, the levelized cost per megawatt-hour rises from $66 to just $76.
“You’re really sensitive to interest rates” as a renewable developer, as Tim Latimer, the chief executive officer of the geothermal startup Fervo, explained to me. “That’s a big investment up front.”
In some sense, renewables economics have been a victim of their own success, Latimer said. Because there are lots of buyers for 15 years’ worth of renewable electricity and no risk of fuel costs surging or falling dramatically, the “spread” that renewable projects demand over risk-free rates is much smaller than for natural gas projects. But that means as rates rise, the spread shrinks more with renewables. “That has a much bigger relative impact on the economics,” Latimer said.
Geothermal projects have similar economics to other renewables, Latimer said, and being able to sell power to offtakers has helped protect the finances of Fervo’s projects.
Democratic Senators Sheldon Whitehouse and Elizabeth Warren have pressed Federal Reserve chair Jerome Powell on the high rates, citing the effect on renewable investments. “Your decision to rapidly raise interest rates beginning in 2022, and the potential that they may remain too high for too long, has halted advances in deploying renewable energy technologies and delayed significant climate and economic benefits from these projects,” the two wrote in a letter to Powell in March.
Executives from some of the world’s biggest renewables companies have been singing this song, as well. “Renewable energy in general is very, very susceptible to rising interest rates and offshore wind, even the most of all of the renewable energy sectors because it's so capital intensive. Our fuel is free, we say, but our fuel is really the cost of capital because we put so much capital out upfront,” Orsted Americas chief executive officer David Hardy told Bloomberg.
In a May earnings call, Orsted’s global chief executive, Mads Nipper, told investors, “It’s impossible to say whether [costs] have peaked yet, and on the way down, as that will hinge, very much, on the macroeconomic factors, and the rates, specifically.”
The premium renewables can yield over government debt has shrunk dramatically since 2020, BloombergNEF analyst Atin Jain said. In response, developers have increased prices for power purchase agreements, knowing that they can do so thanks to the demand for their clean electrons. But that also means more expensive power when the deals are struck, and in the case of several offshore wind projects in the Northeast, price increases can sometimes mean the deals never get done at all, even in spite of generous IRA tax credits.
“Higher interest rates are driving up project costs and [power purchase agreement] costs as well,” explained Michael Arndt, the president of Recurrent Energy, at a forum hosted by the American Council on Renewable Energy. “Being able to bring in more tax equity is a big offset to a higher interest rate environment.”
According to BNEF data, developers have tried to shorten the term of their borrowing, aiming to avoid getting locked into higher rates for a long time, while also going to the bond market for financing as opposed to bank loans, which typically means paying a lower rate. This then advantages longer tenured and more established developers who are better able to access the bond market. As Esper Nemi, the chief financial officer of the green energy giant Brookfield Renewable Partners, said in a May earnings call, “Our access to scale capital means we can execute on large opportunities where there are fewer viable partners and risk adjusted returns can therefore be very attractive.”
“Where possible, if you’re a creditworthy issuer and you’re more financially stable and have the ability to make regular interest payments, you have been viewed attractively by the bond market,” Jain told me. Bond issuance by utilities and renewable developers has more than doubled since before the pandemic, according to BNEF data. “That’s how people are navigating this environment: cutting loan tenors, doubling down on bonds. Everyone is hoping that though they have to tap more expensive debt now they’ll be able to refinance those loans,” Jain said.
How many people will be able refinance remains to be seen. “Developers with deeper balance sheets are able to navigate this a little bit better than smaller or midsize companies,” Jain added.
Latimer said that higher rates could be particularly challenging to first of a kind projects. Investors have a return they want a new project to generate and that figure moves up with interest rates.
“The return hurdle that you need to hit to entice capital that views your project as a new development and new technology moves up with interest rates,” Latimer told me. “Your project economics have to be that much better relative to what your baseline was before because everyone has higher return expectations.”
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That means it’s also buying natural gas — but by storing the emissions, the company says, it can still meet its climate goals.
Google is buying gas. The hyperscale tech company — which invented the power purchase agreement as a way to support renewables development in the 2010s and has been a leader in setting standards for and procuring renewable power — announced on Thursday that it is agreeing to buy the majority of the power generated by a planned natural gas-fired plant in Decatur, Illinois. Here’s the twist: The plant will also capture and store its carbon emissions, a first of its kind installation at commercial scale.
The Broadwing Energy Center will be developed by Low Carbon Infrastructure on a site owned by agribusiness giant ADM. The facility features an existing ethanol plant with carbon capture and storage nearby, including the Class VI wells necessary for carbon dioxide sequestration. The plant will provide 400 megawatts of power, as well as steam for the ADM facility.
“We’re going to work with LCI to hopefully have it all up and running by early 2030,” Michael Terrell, Google’s head of advanced energy, told me.
While CCS has not yet been developed at anything like a commercial scale, it is already both a bogeyman and a panacea in the decarbonization debate — or as my colleague Emily Pontecorvo has called it, “an oil exec’s fantasy, an environmentalist’s nightmare, and an energy expert’s object of fascination.”
Natural gas with CCS promises the dispatchability of natural gas — power produced exactly when and in the exact amounts the grid needs — without the greenhouse emissions of traditional gas plants. The problem is that the technology is expensive, meaning that its development has largely been seen to depend on emissions regulations that would essentially force generators to build or install CCS.
Those regulations were finalized during the final year of Biden’s presidency and, unsurprisingly, are no longer happening. That leaves the private sector to bear the cost and technological uncertainty of CCS development, with little obvious financial incentive to do so.
While this is Google’s first gas deal, it is not entirely unexpected. Google hit its initial goal of matching its worldwide energy consumption with renewable energy generation on an annual basis in 2017, upgrading that goal in 2020 to aim at generating clean power on a 24/7 basis in the same area that its energy consumption occurs by 2030.
This meant going beyond wind and solar and procuring power from generators that worked in all weather and at night.
In the same 2020 whitepaper where Google set out its hourly matching goal, it specifically mentioned CCS as one of “a number of emergent technologies” that “appear to be making good progress.”
In another 2023 whitepaper, Google affirmed its commitment to clean firm technology beyond wind and solar, adding that “we must also develop and commercialize new technologies to fully decarbonize electricity systems quickly and cost-effectively while maintaining reliability.” Once again it called out “power generation with carbon capture and storage” by name.
Since then Google has struck a number of deals to support clean firm development, including a development agreement with the advanced nuclear company Kairos and a “clean transition tariff” agreement with utility NV Energy to pay for geothermal power in Nevada produced by the enhanced geothermal company Fervo.
But carbon capture and storage remained in the picture as something that would be key for Google to meet its goals. “We set 24/7 carbon free energy as our North Star,” Terrell told me. “The other critical piece to that is CCS.”
At the same time, Google — and the rest of the technology industry — has been on a data center building spree, moving as fast as it can to put up bigger data centers that turn electricity into artificial intelligence. This has meant rising power usage and emissions. In 2024, Google reported that its emissions had gone up almost 50% over the previous five years, following a similar announcement from Microsoft.
“We’re still committed to those goals. They’re extremely ambitious, and we’ve never been shy about sharing that. 24/7 carbon free energy is a moonshot, but we are pushing very, very hard,” Terrell said.
The turn to CCS is not just driven by the advantages gas has over renewables — namely dispatchability — but also by the current political environment.
Google has a long track record of buying the output from renewables projects, including wind, in the broader Midcontinent Independent System Operator grid, where the Decatur project sits. But on a national basis, Terrell noted, “we’re seeing headwinds in the market due to policy changes” for renewables.
Solar and wind have now lost some of the incentives that spurred huge growth in both sectors in recent years, while projects that can pass the regulatory gauntlet have to linger in interconnection queues to get approved by electricity markets and often require transmission that can be expensive and challenging to build. The Trump administration has specifically targeted renewables — especially wind — for regulatory scrutiny, which will likely hinder renewable development in MISO, which gets 15% of its power from wind — far more than from solar, and about comparable with its nuclear generation.
“The markets are tough because of some of the changes in policy, interconnection rules, and lack of transmission,” Terrell said. “That’s certainly affecting our ability to procure with speed and scale.”
Google and LCI claim that the Broadwing plant will be able to capture and store over 90% of its carbon dioxide emissions.
The project started, LCI chief executive Jonathan Wiens told me, in 2020, primarily as an industrial decarbonization project to provide low-emissions steam to ADM for its food processing efforts, with the rest of the power going to the grid.“In the midst of this development,” Wiens said, “there were data centers that were 40 megawatts. Now they’re aspiring to be a gigawatt-plus, and it’s totally changed the power end of this.”
Of Google, he said, “they put their money where their mouth is and they’re willing to participate in a project.”
Both Terrell and Wiens confirmed that Google wanted to work with LCI beyond developing and purchasing power from the Broadwing facility. “It’s not just this one plant,” Wiens said. “It’s a much broader approach to deploying this in as many places as we can.”
Google did not disclose the terms of the PPA, but Terrell said, “We believe that CCS can be competitive at scale with other generation technologies, and certainly other low carbon or zero carbon generation technologies.”
Over time, he added, LCI and Google should be able to drive down prices as they work on more power plants. “That’s certainly something that we’re hoping to do.”
On Tesla’s profit plunge, Josh Shapiro’s battery win, and TVA staying public
Current conditions: Tropical Storm Melissa is now forecast to strengthen into a hurricane, with the potential to dump 30 inches of rain over parts of the Caribbean and blow winds of up to 50 miles per hour • Waves brought on by Tropical Storm Fengshen are big enough to rip up sidewalks in Vietnam • Myanmar broke an October heat record with temperatures of nearly 98 degrees Fahrenheit in the southeastern resort town of Kyeikkhame.

Rhode Island Senator Sheldon Whitehouse, the ranking Democrat on the Environment and Public Works Committee, threatened to withhold votes on permitting reforms he endorsed unless the Trump administration backs off what Heatmap’s Jael Holzman dubbed the “total war on wind.” At an unrelated hearing on Wednesday, Whitehouse said that “unless these illegal acts stop and unless offshore wind is included, there will be no permitting deal,” Politico reporter Josh Siegel reported on X. The remarks came two days after Secretary of the Interior Doug Burgum said the administration would not halt its attempts to block construction of offshore turbines in exchange for a bipartisan bill to overhaul federal permitting. “I hadn’t thought about the idea of trading something that makes sense for everybody in America for something that makes no sense — and that’s sort of how I view offshore wind,” Burgum said at an American Petroleum Institute event.
As I wrote in yesterday’s newsletter, US Wind warned in federal court this week that, if the administration wins its court case to revoke the project’s construction and operating permits, the Baltimore-based developer will likely go bankrupt. While Secretary of Energy Chris Wright dismissed the wind assault as a “one-off exception, or one-off complication,” the oil industry doesn’t see it that way. As I wrote earlier this month, Shell’s top U.S. executive spoke forcefully against the administration’s anti-wind crusade, warning that Democrats could use the precedents being set against oil and gas companies in the future. That isn’t slowing the administration’s plans to expand offshore oil drilling, however. A document leaked to the Houston Chronicle this week shows that the White House aims to open broad swaths of both the east and west coasts to offshore drilling, months after the administration rescinded designations for millions of acres of federal waters to serve for seaborne wind turbine development.
Tesla’s profit tanked 37% to $1.4 billion from a year earlier despite a revenue hike of 12% to $28.1 billion, the company reported in its latest quarterly earnings Wednesday evening. The automaker sold more cars in the last quarter than it did in the same period a year prior but still lost money on price cuts and low-interest loans. Elon Musk’s electric automaker rolled out stripped-down versions of its Model Y sport utility vehicle and its Model 3 sedan earlier this month, effectively matching the prices that buying an entry-level Tesla came out to before Trump rescinded the $7,500 federal tax credit for battery-powered cars last month. “In other words, you can still buy a Tesla in the $35,000 to $40,000 range,” Andrew Moseman wrote in Heatmap. “It just won’t be as good a Tesla as you used to be able to get for the money.”
Meanwhile, at the opposite end of the market, Tesla rival Rivian’s micromobility spinoff, Also, debuted a product meant to capture a share of the luxury segment that wants a $4,500 electric bicycle.
Last week, the Department of Energy confirmed plans to revoke $700 million in grants to American battery manufacturers, as I reported here on Monday. This week, Pennsylvania made up for a small part of that lost funding. Democratic Governor Josh Shapiro announced plans to give Eos Energy Enterprises roughly $22 million in grants and capital funding to lure the nation’s leading manufacturer of zinc-based battery storage systems to relocate its headquarters from Edison, New Jersey, to Pittsburgh, and open a new factory in Allegheny County. Combined with the money the company is spending, the total investment will come to just under $353 million and create 735 new permanent positions. “Pennsylvania is positioning itself at the forefront of America’s energy transition — enabling us to bring America’s battery to scale,” Joe Mastrangelo, the chief executive of Eos Energy, said in a statement.
Meanwhile, in another electorally crucial northern state, OpenAI announced plans for yet another data center in its Stargate network. On Wednesday, the ChatGPT maker and software giant Oracle unveiled plans for a data center campus outside Milwaukee in Port Washington, Wisconsin, to be built with hyperscale developer Vantage Data Centers.
Trump’s nominees to serve in the empty seats on the Tennessee Valley Authority’s board of directors all pledged to oppose any privatization effort of the nation’s largest government-owned utility, the Chattanooga Times Free Press reported. Selling off all or portions of the TVA, a remnant of the New Deal-era electrification of the South, have come up frequently since the mid 20th century, including under former President Barack Obama. Trump revived the debate in his first administration, proposing to sell off the TVA’s transmission and distribution business, but the effort went nowhere. In July, the White House abruptly moved to fire the remaining three members of the TVA’s board that Trump hadn’t yet dismissed unless they forced out the chief executive. The move was interpreted by insiders at the TVA as the first step toward a new privatization effort. But outcry over the potential to disrupt what has been a steady source of cheap electricity for the region appears to have tempered those ambitions.
An ounce of beef requires roughly 7,600 times more energy and 1.1 million times more water than a single prompt on ChaptGPT, a University of California academic recently calculated. Yet nearly two-and-a-half times more Americans are concerned about the environmental impacts of artificial intelligence than about meat production, according to a poll released Thursday morning by the University of Chicago’s Energy Policy Institute and The Associated Press-NORC Center for Public Affairs Research. Of the 72% of Americans who expressed concern about AI’s environmental footprint, 41% said they were “very or extremely” concerned. That exceeds how many respondents said the same thing about cryptocurrency (29%), meat production (29%), and air travel (23%.) “Looking ahead, Americans are more likely to believe AI will be harmful rather than helpful to society, the economy, and the environment in the next 10 years,” the pollsters explained in a press release, “but they are divided on its impact on them personally.”
The findings mirror Heatmap Pro’s own survey results from August, which found that just 44% of Americans would welcome a data center nearby.
Americans are kings in our own castles, while Germans bow to a Kafkaesque bureaucracy even in their own homes … right? Not when it comes to installing batteries and solar panels on our own roofs. Germans just have to fill out a simple two-page application. Americans? Depending on where we live, we have to fill out all kinds of physical paperwork, get multiple rounds of approval from zoning officials and homeowners associations, and navigate disparate systems at the neighborhood, county, and state levels. That’s according to a new analysis that the group Permit Power shared with me exclusively for Heatmap. The report proposed axing that red tape. Doing so could dramatically lower the cost of rooftop solar and batteries, and ultimately save Americans more than $1 trillion — yes, with a T — over the next quarter-century.
A new analysis by Permit Power calculates the cumulative benefits of cheap rooftop solar over the lifetime of a typical rig.
Liberty-loving Americans are prone to poke fun at the bureaucratic nightmares Australians and Germans face when attempting to do just about anything. But try installing solar panels on your roof in the U.S. Americans pay a median price of $28,000 for a 7-kilowatt system. The typical Australian, meanwhile, spends just $4,000, and the German — after filling out a mere two-page application — pays $10,000 per project.
How is this possible? Blame state and local governments, and even homeowners associations, for holding back Americans from generating their own carbon-free electricity from the sun with onerous permitting regimes, inspection requirements, and interconnection processes.
It doesn’t have to be this way. A new analysis by the research group Permit Power, shared exclusively with Heatmap, outlines a path toward slashing the red tape.
The nonprofit, which advocates for fewer restrictions on renewables, proposed that states adopt several policies already popular in other countries. Those include adopting software that will allow for virtually instantaneous permitting of solar and battery projects, allowing for remote inspections verified via photos or video submitted online, and automatic grid interconnections for residential systems that use smart inverters that manage voltage and frequency to keep energy flowing safely back and forth onto power lines.
If states championed the reforms, the analysis found, more than 18 million U.S. households could afford solar that can’t today. Given rising electricity rates, the free power the panels would provide during the day would shave an average $1,600 off households’ annual utility bills, growing to $56,000 over the 25-year lifetime of a typical rooftop solar system. That would deliver cumulative savings to the U.S. of $1.2 trillion over that time period.
“It’s a number that starts with a ‘t,’” Nick Josefowitz, Permit Power’s founder and chief executive, told me. “That’s a really big number.”
Examples cited in the report highlight just how much time and effort Americans need to go through to install solar panels or batteries even if they can afford the high cost of the equipment.
Illinois requires paper submissions of permitting and inspection documents and approvals from multiple agencies with different document requirements for each local government. Minnesota mandates in-person submission of documents and monthly township meetings for zoning approvals before construction. New York sets strict limits on batteries and requires architects to review the projects in certain areas. Colorado’s bespoke file-naming conventions and mixed paper and digital formats create a bureaucratic quicksand that leads to increased corrections, resubmissions and delays.
“If you were to try and go city by city and modernize permitting in 20,000 different municipalities, that’d be an endless task,” Josefowitz said. “There’s hope we can solve these problems at the state level.” Florida, Maryland, New Jersey, and Texas have all passed legislation to streamline permitting processes in the past year, he said.
While most countries have a national system for regulating solar, “the U.S. is quite unique,” said Andrew Birch, the chief executive of Open Solar, a software company that helps solar installers navigate local rules. “It’s a problem that’s unique to the United States.”
The implications go beyond household electricity costs. The U.S. is struggling to meet surging electricity demand as the backlog of gas turbine orders mounts. Meanwhile, new nuclear reactors remain years away, and the Trump administration has cut back on federal investments in transmission lines and yanked permitting for large-scale solar and offshore wind projects.
By equipping more homes with equipment to generate and store their own electricity, households can temporarily go off-grid when demand is particularly high, freeing up far more room on the existing system for new sources of power and avoiding forced blackouts, said Jigar Shah, the former head of the Biden-era Department of Energy’s Loan Programs Office, who reviewed Permit Power’s findings.
While solar panels have gotten the most attention, he said, batteries are the critical equipment.
“Rooftop solar alone does very little to solve the growth issue. What really solves the growth issue is residential batteries,” Shah told me. “The reason you get solar is because charging those batteries off the grid is expensive. Solar off your roof might be 10 cents per kilowatt hour, while power from the utility is 30 cents.”
To Josefowitz, what makes his group’s findings so practical at this moment is that none of the policy proposals the report puts forward depend on the federal government.
“If we had to go through the federal government, we couldn’t because no one is working there right now — and even when they were working they struggled to come to agreement on anything,” he said. “We can solve these problems at the state level, and allow American families to have the nice things at the nice prices that families in Australia and Germany enjoy.”