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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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On the IEA’s latest report, flooding in LA, and Bill Gates’ bad news
Current conditions: Severe thunderstorms tomorrow could spawn tornadoes in Mississippi, Louisiana, Arkansas, and Alabama • A massive wildfire on a biodiverse island in the Indian Ocean has been burning for nearly a month, threatening wildlife • Tropical Cyclone Zelia has made landfall in Western Australia with winds up to 180mph.
Bill Gates’ climate tech advocacy organization has told its partners that it will slash its grantmaking budget this year, dealing a blow to climate-focused policy and advocacy groups that relied on the Microsoft founder, Heatmap’s Katie Brigham has learned. Breakthrough Energy, the umbrella organization for Gates’ various climate-focused programs, alerted many nonprofit grantees earlier this month that it would not be renewing its support for them. This pullback will not affect Breakthrough’s $3.5 billion climate-focused venture capital arm, Breakthrough Energy Ventures, which funds an extensive portfolio of climate tech companies. Breakthrough’s fellowship program, which provides early-stage climate tech leaders with funding and assistance, will also remain intact, a spokesperson confirmed. They would not comment on whether this change will lead to layoffs at Breakthrough Energy.
“Breakthrough Energy made up a relatively small share — perhaps 1% — of climate philanthropy worldwide,” Brigham writes. “But what has made Breakthrough Energy distinctive is its support for policy and advocacy groups that promote a wide range of technological solutions, including nuclear energy and direct air capture, to fight climate change.”
Anti-wind activists have joined with well-connected figures in conservative legal and energy circles to privately lobby the Trump administration to undo permitting decisions by the National Oceanic and Atmospheric Administration, according to documents obtained by Heatmap’s Jael Holzman. Representatives of conservative think tanks and legal nonprofits — including the Caesar Rodney Institute, the Heartland Institute and Committee for a Constructive Tomorrow, or CFACT — sent a letter to Interior Secretary Doug Burgum dated February 11 requesting that the Trump administration “immediately revoke” letters from NOAA to 11 offshore wind projects authorizing “incidental takes,” a term of regulatory art referencing accidental and permissible deaths under federal endangered species and mammal protection laws. The letter also requested “an immediate cession of construction” at four offshore wind projects with federal approvals that have begun construction: Dominion Energy’s Coastal Virginia offshore wind project, Copenhagen Infrastructure Partners’ Vineyard Wind 1, and Ørsted’s Revolution Wind and Sunrise Wind projects.
“This letter represents a new stage of Trump’s war on offshore wind,” Holzman writes. “Yes, he has frozen leasing, along with most permitting activity and even public meetings related to pending projects. But the president's executive order targeting offshore wind opened the door to rescinding leases and previous permits. Doing so would produce new, costly legal battles for developers and for publicly-regulated utilities, ratepayers. Over the past few weeks, offshore wind developers with projects that got their permits under Biden have sought to reassure investors that at least they’ll be fine. If this new request is heeded, that calm will subside.”
Heavy downpours triggered flooding and debris flows across Los Angeles County yesterday. A portion of the Pacific Coast Highway, one of the most iconic roadways in America, is closed indefinitely due to mudslides near Malibu, an area devastated in last month’s fires. Duke’s Malibu, a famous oceanfront restaurant along the PCH, was inundated. The worst of the rain has passed now and many flood alerts have been canceled, but the cleanup has just begun.
Rain flows down a street outside a burned home.Mario Tama/Getty Images
Global electricity use is set to rise by 4% annually through 2027, “the equivalent of adding an amount greater than Japan’s annual electricity consumption every year,” according to the International Energy Agency’s new Electricity 2025 report. Here are some key points:
IEA
JPMorgan Chase clients have apparently been demanding more guidance about the climate crisis. As a result, the bank launched a new climate report authored by its global head of climate advisory, Sarah Kapnick, an atmospheric and oceanic scientist who was previously chief scientist at the National Oceanic and Atmospheric Administration. The report seeks to build what Kapnick is calling “climate intuition” – the ability to use science to assess and make strategic investment decisions about the shifting climate. “Success in the New Climate Era hinges on our ability to integrate climate considerations into daily decision-making,” Kapnick writes. “Those who adapt will lead, while others risk falling behind.” Here’s a snippet from the report, to give you a sense of the tone and takeaways:
“Adhering to temperatures below 1.5C will require emissions reductions. Depending on your definition of 1.5C, they may require historic annual reductions and potentially carbon removal. Conversely, if you have a technical or financial view that carbon dioxide removal will not scale, you should assume there is a difficult path to 1.5C (i.e. emissions reductions to zero depending on your definition in 6, 15, or 30+ years). If that is the case, you need to plan for the physical manifestations of climate change and social responses that will ensue if your investment horizons are longer.”
Greenhouse gas leaks from supermarket refrigerators are estimated to create as much pollution each year as burning more than 30 million tons of coal.
Grantees told Heatmap they were informed that Bill Gates’ climate funding organization would not renew its support.
Bill Gates’ climate tech advocacy organization has told its partners that it will slash its grantmaking budget this year, dealing a blow to climate-focused policy and advocacy groups that relied on the Microsoft founder, Heatmap has learned.
Breakthrough Energy, the umbrella organization for Gates’ various climate-focused programs, alerted many nonprofit grantees earlier this month that it would not be renewing its support for them. This pullback will not affect Breakthrough’s $3.5 billion climate-focused venture capital arm, Breakthrough Energy Ventures, which funds an extensive portfolio of climate tech companies. Breakthrough’s fellowship program, which provides early-stage climate tech leaders with funding and assistance, will also remain intact, a spokesperson confirmed. They would not comment on whether this change will lead to layoffs at Breakthrough Energy.
“Bill Gates and Breakthrough Energy remain as committed as ever to using our voice and resources to advocate for the energy innovations needed to address climate change,” the Breakthrough spokesperson told me in a written statement. “We continue to believe that innovation in energy is essential for achieving global climate goals and securing a prosperous, sustainable world for future generations.”
Gates founded Breakthrough Energy in 2015 to help develop and deploy technologies that would help the world reach net-zero emissions by 2050. The organization made more than $96 million in grants in 2023, the most recent year for which data is available.
Among its beneficiaries was the Breakthrough Institute, a California-based think tank that promotes technological solutions to climate change. (Despite having a similar name, it is not affiliatedwith Breakthrough Energy.) Last week, a representative from Breakthrough Energy told the institute’s executive director, Ted Nordhaus, that its funding would not be renewed. The Breakthrough Institute had previously received a two-year grant of about $1.2 million per year, which wrapped up this month.
“What we were told is that they are ceasing all of their climate grantmaking — zeroed out immediately after the USAID shutdown because Bill wants to refocus all of his grantmaking efforts on global health,” Nordhaus told me on Monday, referring to the Trump administration’s efforts to defund the United States Agency for International Development. “But it’s very clear that this wasn’t brought on solely by USAID. I had heard from several people that there was a big reassessment going on for a couple of months.”
The Breakthrough spokesperson disputed this characterization, and denied that cutbacks were due to the USAID shutdown or a shift in funding from climate to global health initiatives. The spokesperson also told me that some grantmaking budget remains, though they would not reveal how much.
As for Breakthrough Institute, the funding cut will primarily impact its agricultural program, which received about 90% of its budget from Breakthrough Energy. Nordhaus is trying to figure out how to keep that program afloat, while the institute’s other three areas of policy focus — energy and climate, nuclear innovation, and energy and development — remain largely unaffected.
Multiple other organizations confirmed to Heatmap that they also will not receive future grants from Breakthrough Energy. A representative for the American Center for Life Cycle Assessment, a trade organization for sustainability professionals, told me that Breakthrough had recently informed the group that it would not renew a $400,000 grant, which is set to wrap up this May. (ACLCA’s spokesperson also noted that the grant had not come with any indication that it would be renewed.) Another former grantee told me that while their organization is currently wrapping up a grant with Breakthrough and does not have anything in the works with them for this year, they expected that future funding would be impacted, though they did not explain why.
Breakthrough Energy made up a relatively small share — perhaps 1% — of climate philanthropy worldwide. Foundations and individuals around the world gave a total of $9 billion to $15 billion to climate causes in 2023, according to an analysis from the Climateworks Foundation.
But what has made Breakthrough Energy distinctive is its support for policy and advocacy groups that promote a wide range of technological solutions, including nuclear energy and direct air capture, to fight climate change.
“Their presence will be missed,” said the CEO of another climate nonprofit who was notified by Breakthrough that its funding would not be renewed. Breakthrough Energy “was one of the few funders supporting pragmatic research and advocacy work that pushed at neglected areas such as the need for zero-carbon firm power and accelerated energy innovation,” they added.
"Even if it’s a drop in the bucket, it still makes a difference,” another former grantee with a particularly large budget told me. This organization recently sent Breakthrough an inquiry about partnering up again and is waiting to hear back. “But for small organizations, it’s make it or break it.”
Speculation abounds as to the rationale behind Breakthrough’s funding cuts. “I have heard that one of the reasons that Bill decided to stop funding climate was that he concluded that there was so much money in climate that his money really wasn’t that important,” Nordhaus told me. But that is not true when it comes to agriculture, he said, which comprises about 12% of global emissions. ”There’s very little money for advocating for agriculture innovation to address the climate impacts of the ag sector,” Nordhaus told me.
Gates, who privately donated to a nonprofit affiliated with the Harris campaign in 2024 but did not endorse the Democrat, dined with Trump and Susie Wiles, the White House chief of staff, for more than three hours at Mar-a-Lago around New Year’s Day, he told Wall Street Journal editor-in-chief Emma Tucker. He said that Trump was interested in the possibility of eradicating polio or developing an HIV vaccine. “I felt like he was energized and looking forward to helping to drive innovation,” he told her, days before the inauguration.
Since then, Trump’s war on USAID has frozen funding to a polio eradication program and shut down the phase 1 clinical trial of an HIV vaccine in South Africa, Kenya, and Uganda.
The Trump administration is now being lobbied to nix offshore wind projects already under construction.
Anti-wind activists have joined with well-connected figures in conservative legal and energy circles to privately lobby the Trump administration to undo permitting decisions by the National Oceanic and Atmospheric Administration, according to documents obtained by Heatmap.
Representatives of conservative think tanks and legal nonprofits — including the Caesar Rodney Institute, the Heartland Institute and Committee for a Constructive Tomorrow, or CFACT — sent a letter to Interior Secretary Doug Burgum dated February 11 requesting that the Trump administration “immediately revoke” letters from NOAA to 11 offshore wind projects authorizing “incidental takes,” a term of regulatory art referencing accidental and permissible deaths under federal endangered species and mammal protection laws. The letter lays out a number of perceived issues with how those approvals have historically been issued for offshore wind companies and claims the government has improperly analyzed the cumulative effects of adding offshore wind to the ocean’s existing industrialization. NOAA oversees marine species protection.
The letter also requested “an immediate cession of construction” at four offshore wind projects with federal approvals that have begun construction: Dominion Energy’s Coastal Virginia offshore wind project, Copenhagen Infrastructure Partners’ Vineyard Wind 1, and Ørsted’s Revolution Wind and Sunrise Wind projects.
“It is with a sense of real urgency we write you today,” the letter states, referencing Trump’s executive order targeting the offshore wind industry to ask that he go further. “[E]leven projects have already received approvals with four of those under construction. Leasing and permitting will be reviewed for these approved projects but may take time.”
I obtained the letter from Paul Kamenar, a longtime attorney in conservative legal circles currently with the D.C.-based National Legal and Policy Center, who told me the letter had been sent to the department this week. Kamenar is one of multiple attorneys involved in a lawsuit filed last year by Heartland and CFACT challenging permits for Dominion’s Coastal Virginia project over alleged potential impacts to the endangered North Atlantic right whale. We reported earlier this week that the government signaled in proceedings for that case it will review approvals for Coastal Virginia, the first indication that previous permits issued for offshore wind could be vulnerable to the Trump effect.
Kamenar described the request to Burgum as “a coalition letter,” and told me that “the new secretary there is sympathetic” to their complaints about offshore wind permits. “We’re hoping that this letter will basically reverse the letter[s] of authorizations, or have the agency go back,” Kamenar said, adding a message for Dominion and other developers implicated by the letter: “Just because the company has the approval doesn’t mean it’s all systems go.”
The Interior Department does not directly oversee NOAA – that’s the Commerce Department. But it does control the Bureau of Ocean Energy Management, which ultimately regulates all offshore wind development and issues final approvals.
Interior did not immediately respond to a request for comment on the letter.
Some signees of the document are part of a constellation of influential figures in the anti-renewables movement whose voices have been magnified in the new administration.
One of the letter’s two lead signatories is David Stevenson, director of the Center for Energy and Environmental Policy at the Caesar Rodney Institute, an organization involved in legal battles against offshore wind projects under development in the Mid-Atlantic. The Institute says on its website it is a member of the State Policy Network, a broad constellation of think tanks, legal advocacy groups, and nonprofits.
Multiple activists who signed onto the letter work with the Save Right Whales Coalition, a network of local organizations and activists. Coalition members have appeared with Republican lawmakers at field hearings and rallies over the past few years attacking offshore wind. They became especially influential in GOP politics after being featured in a film by outspoken renewables critic and famous liberal-turned-conservative Michael Shellenberger, who is himself involved in the Coalition. His film, Thrown to the Wind, blew up in right-wing media circles because it claimed to correlate whale deaths with offshore wind development.
When asked if the Coalition was formally involved in this request of the administration, Lisa Linowes, a co-founder of the Coalition, replied in an email: “The Coalition was not a signer of the request.”
One cosigner sure to turn heads: John Droz, a pioneer in the anti-wind activist movement who for years has given talks and offered roadmaps on how best to stop renewables projects.
The letter also includes an endorsement from Mandy Davis, who was involved with the draft anti-wind executive order we told you was sent to the Trump transition team before inauguration. CFACT also co-signed that draft order when it was transmitted to the transition team, according to correspondence reviewed by Heatmap.
Most of the signatories to the letter list their locations. Many of the individuals unrelated to bigger organizations list their locations as in Delaware or Maryland. Only a few signatories on the letter have locations in other states dealing with offshore wind projects.
On its face, this letter represents a new stage of Trump’s war on offshore wind.
Yes, he has frozen leasing, along with most permitting activity and even public meetings related to pending projects. But the president’s executive order targeting offshore wind opened the door to rescinding leases and previous permits. Doing so would produce new, costly legal battles for developers and for publicly-regulated utilities, ratepayers. Over the past few weeks, offshore wind developers with projects that got their permits under Biden have sought to reassure investors that at least they’ll be fine.
If this new request is heeded, that calm will subside.
Beyond that, reversing these authorizations could represent a scandal for scientific integrity at NOAA – or at least NOAA’s Fisheries division, the National Marine Fisheries Service. Heeding the letter’s requests would mean revisiting the findings of career scientists for what developers may argue are purely political reasons, or at minimum arbitrary ones.
This wouldn’t be the first time something like this has happened under Trump. In 2020, I used public records to prove that plans by career NOAA Fisheries employees to protect endangered whales from oil and gas exploration in the Atlantic were watered down after a political review. At the time, Democratic Representative Jared Huffman — now the top Democrat on the House Natural Resources Committee — told me that my reporting was evidence of potential scientific integrity issues at NOAA and represented “blatant scientific and environmental malpractice at the highest order.”
It’s worth emphasizing how much this mattered, not just for science but literally in court, as the decision to allow more seismic testing for oil under Trump was challenged at the time on the grounds that it was made arbitrarily.
Peter Corkeron, a former NOAA scientist with expertise researching the North Atlantic right whale, reviewed the letter to Burgum and told me in an email that essentially, the anti-offshore wind movement is exploiting similar arguments made by conservationists about issues with the federal government’s protection of the species to target this sector. The federal regulator has for many years faced the ire of conservation activists, who’ve said it does not go far enough to protect endangered species from more longstanding threats like fishing and vessel strikes.
If NOAA were to bow to this request, Corkeron wrote, he would interpret that as the agency’s failure to fully protect the species in good faith instead becoming “suborned by the hydrocarbon exploitation industry as a way of eliminating a competing form of energy production that should, in time, prove more beneficial for whales than what we’re currently doing.”
“The point on cumulative impacts is, on face value, fair,” he said. “The problem is its lack of context. Cumulative impacts on North Atlantic right whales from offshore wind are possible. However, in the context of the cumulative impacts of the shipping (vessel strike kills, noise pollution), and fishing (death, maiming, failure to breed) industries, they’ll be insignificant. Because NOAA has never clearly set out to address ways to offset other impacts while developing the offshore wind industry, these additive impacts place a burden on this new industry in ways that existing, and more damaging, industries don’t have to address.”
CFACT responded to a request for comment by sending me a press release with the letter attached that was not publicly available, and did not respond to the climate criticisms by press time. David Stevenson of the Caesar Rodney Institute sent me a statement criticizing offshore wind energy and questioning its ability to “lower global emissions.”
“The goal is to pause construction until everything is reviewed,” Stevenson said. When asked if there was an outcome where a review led to projects being built, he said no, calling offshore wind an “environmental wrecking ball.”
Well, we’ll soon find out what the real wrecking ball is.