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The Biden administration tackles one of the biggest barriers to the energy transition: the dread interconnection queue.
It may soon be easier — and cheaper — to build a large-scale clean energy project in the United States.
Under a new and little-noticed update to a climate tax credit published last week, the government will now pick up some of the cost of connecting a new wind or solar project to the power grid.
The policy could ease one of the biggest barriers to the rapid transformation of the electricity system to fight climate change. It could save clean energy developers hundreds of millions in fees while potentially speeding the deployment of new renewable and low-carbon energy sources across the country.
The Treasury Department, which published the new rules governing the tax credit, declined to comment and referred me to earlier remarks from administration officials. In a statement last week, Deputy Treasury Secretary Wally Adeyemo said that the agency sought to give companies “clarity and certainty needed to secure financing and advance clean energy projects nationwide.”
The guidance would be particularly helpful for “small scale projects that need to connect to the grid,” he said. But a close reading of the guidance suggests that it may go further and help medium or large scale projects, deploying even more clean electricity to the grid than proponents had once envisioned.
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The new tax credit appears to address a major obstacle to decarbonizing the grid: It’s very expensive to connect new wind, solar, and other resources to the electricity grid.
When a company proposes a new large-scale solar or wind project, it must apply to the local power-grid authority for permission to connect its new project to the grid.
This process — called the “interconnection queue” — can take nearly half a decade to complete in some parts of the country. More than 8,100 proposed projects — overwhelmingly wind and solar facilities — were waiting in the queue nationwide at last count.
Construction on those projects cannot begin until they receive approval. Only about one-fifth of wind and solar projects that enter the interconnection queue ultimately get built, according to a recent study from Lawrence Berkeley National Laboratory.
Even when a developer finally gets to the front of the line, the process is not over. Because America’s electricity law was written decades ago — when utilities added massive coal-fired power plants or hydroelectric dams to the grid — developers must pay the full cost of upgrading the entire local grid to accept electricity from a new project, even if that project generates relatively little electricity. These “network upgrade” costs are presented to developers as a surprise bill when they reach the end of the queue.
As the grid has gotten older and more congested, these costs have soared, Rob Gramlich, the founder and president of Grid Strategies, told me. A large solar project that costs about $180 million might now pay an extra $30 or $40 million in surprise network-upgrade costs, he said.
As these costs have rapidly increased, they have outstripped wind and solar developers’ ability to predictably budget for them. They are also sometimes large enough to kill the economics of a project.
In the Lawrence Berkeley study, researchers found that wind projects withdrawn from the queue had interconnection costs sometimes 10 times higher than projects that ultimately got built. Earlier this year, a renewable executive told The New York Times that interconnection costs have become the “no. 1 project killer.”
Those withdrawals can clog up the queue further, because proposals that cannot realistically pay the network costs slow down the process for everyone behind them.
But that could soon change. Under the new proposed guidance, at least 30% of a project’s interconnection costs could be covered by the investment tax credit, a climate-friendly subsidy in the Inflation Reduction Act.
While the investment tax credit was already known to cover small projects, the guidance suggests that it can now be used much more broadly. That could save some of the largest solar and wind projects more than $10 million.
Although this new tax credit will not address the underlying cause of high interconnection costs, it will “take the sting out of those charges,” Gramlich said, adding that it will “surely lead to many projects moving forward to construction instead of giving up and withdrawing their interconnection request.”
Utilities should like the new tax credit as well, he added, because it will help them build and own more of their own transmission lines. But the interconnection issue will only be totally solved when the Federal Energy Regulatory Commission, which oversees the country’s electricity grids, writes new rules governing the process, he said.
The investment tax credit has long been one of the workhorses of American clean-energy policy. First created during the 1970s oil crisis, the tax credit initially paid businesses a 10% subsidy to switch to equipment that did not burn oil or natural gas.
The policy bumped along for decades, covering a fraction of the cost of a hodgepodge of clean-ish energy technologies. But last year, the Inflation Reduction Act made sweeping changes to the tax credit, allowing a huge array of climate-friendly energy sources to cover 30% of their costs.
The Treasury Department published draft rules governing those changes last week. The fact that the credit can now be used to pay for interconnection costs for large clean energy projects has not been previously reported.
The change rests on two terms used in the Inflation Reduction Act: “energy property” and “energy project.”
Under the climate law, an “energy property” is any kind of energy facility that qualifies for a 30% investment tax credit. A solar array, a wind turbine, and an industrial battery can all be an “energy property.” So, too, can certain types of electrical equipment — such as transformers or wiring — that might be shared across a clean energy installation.
An “energy project,” meanwhile, is defined in the law as one or more energy properties that connect to form a larger facility.
The Inflation Reduction Act made one more big change to the tax credit. Under the law, any “energy property” of less than five megawatts can have 30% of its interconnection costs covered by the investment tax credit.
This change, while celebrated by climate advocates, was previously assumed to cover only the costs of connecting a small renewable project — like a solar array on a warehouse roof — to the grid. For context, 5 megawatts is enough electricity to power perhaps 2,000 homes.
But remember that an “energy project” can be made up of several smaller and interdependent “energy properties.” So what if a solar developer, say, connected many small solar arrays — each an “energy property” — together into a single “energy project”? Would they be able to cover their interconnection costs under the law?
The new guidance says yes. Any “energy project” — even one large enough to power tens of thousands of homes — can qualify to have some of its interconnection costs covered as long as it is made up of smaller “energy properties” that are each no larger than five megawatts.
“If an energy project comprised of multiple energy properties has a combined nameplate capacity in excess of five megawatts, each of the energy properties would nonetheless be eligible to include amounts paid or incurred by the taxpayer for qualified interconnection property if each energy property satisfies the Five-Megawatt Limitation,” the guidance says.
The guidance goes on to say that the cost “to modify and upgrade the transmission system” can be covered by the tax credit even if those investments are made “at or beyond” the project’s connection to the grid.
Although the guidance is written in a technology-neutral way, it may not benefit all clean energy technologies equally. While a large solar or onshore wind farm can be broken into many five-megawatt segments, each offshore wind turbine generates more than five megawatts of electricity.
Each offshore turbine, in essence, may be too large to qualify as a standalone “energy property.” That said, the new guidance includes other changes that are more favorable to the offshore wind industry.
The guidance remains a draft proposal and has not yet been finalized. But due to an unusual attribute of federal tax law, companies can sometimes rely on proposed tax regulations as long as no final rule has yet been published.
Across the United States, more than 1.4 terawatts of proposed wind and solar projects are currently waiting in interconnection queues, according to the Berkeley National Lab study. That is more than enough to achieve President Biden’s goal of cutting power-sector carbon emissions more than 80% by 2030.
Read more about the investment tax credit:
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From the Inflation Reduction Act to the Trump mega-law, here are 20 years of changes in one easy-to-read cheat sheet.
The landmark Republican reconciliation bill, which President Trump signed on July 4, has shattered the tax credits that served as the centerpiece of the country’s clean energy and climate policy.
Starting as soon as October, the law — which Trump has dubbed the One Big Beautiful Bill Act — will cut off incentives for Americans to install solar panels, purchase electric vehicles, or make energy efficiency improvements to their homes. It’s projected to raise household energy costs while increasing America’s carbon emissions by 190 million metric tons a year by 2030, according to the REPEAT Project at Princeton University.
The loss of these incentives will in part offset the continuation of tax cuts that largely benefit wealthy Americans. But the law as a whole won’t come close to paying for those cuts in their entirety. The legislation is expected to swell federal deficits by nearly $3.8 trillion over the next 10 years, according to the Tax Foundation, a nonpartisan think tank. This explosive deficit expansion could make it more difficult for the Federal Reserve to cut interest rates, possibly further constraining energy development.
President Trump has described the law as ending Democrats’ “green new scam,” and conservative lawmakers have celebrated the termination of Biden-era energy programs. The law is particularly devastating for programs encouraging electric vehicle sales, as well as wind and solar energy deployment.
But the act is more complicated than a simple repeal of Democrats’ 2022 Inflation Reduction Act. In one case, Trump’s big law ends a federal energy incentive that has been in place, in some form, since the 1990s. In others, Republicans have tied up existing energy incentives with new restrictions, regulations, and red tape.
Some parts of the IRA have even remained intact. GOP lawmakers opted to preserve Biden’s big expansion of incentives to support nuclear energy and advanced geothermal development. That said, the Trump administration could still gut these tax credits by making them effectively unusable through executive action.
It can be confusing to keep the One Big Beautiful Bill Act’s many changes to federal energy law in your head — even for experts. That’s why Heatmap News is excited to publish this new reference “cheat sheet”on the past, present, and future of federal energy tax credits, compiled by an all-star collection of analysts and researchers.
The summary takes each clean energy-related provision in the U.S. tax code and summarizes how (and whether) it existed in the 2000s and 2010s, how the Inflation Reduction Act changed it, and how the new OBBBA will change it again. It was compiled by Shane Londagin, a policy advisor at the think tank Third Way; Luke Bassett, a former Biden administration official and Senate Energy committee staffer; Avi Zevin, a former Biden official and a partner at the energy law firm Roselle LLP; and researchers at the REPEAT Project, an energy analysis group at Princeton University. (Note that I co-host the podcast Shift Key with Jesse Jenkins, who leads the REPEAT Project.)
You can find the full summary below.
On presidential proclamations, Pentagon pollution, and cancelled transmission
Current conditions: Over 1,000 people have evacuated the region of Seosan in South Korea following its heaviest rainfall since 1904 • Forecasts now point toward the “surprising return” of La Niña this fall • More than 30 million people from Louisiana through the Appalachians are at risk of flash flooding this weekend due to an incoming tropical rainstorm.
The Hugh L. Spurlock Generating Station in Maysville, Kentucky.Jeff Swensen/Getty Images
President Trump on Thursday signed four proclamations allowing certain highly polluting industries to bypass regulations established by the Biden administration. In addition to chemical manufacturers that help produce semiconductors and medical device sterilizers, the proclamations singled out coal-fired power plants and taconite iron ore processing facilities for two years of exemptions. Taconite is a low-grade iron ore primarily mined in the Upper Peninsula of Michigan and northern Minnesota, which is then processed for use in the production of iron and steel. Trump justified the move by arguing that compliance with the current emissions rule for coal-fired power plants raises the “unacceptable risk” of shutdowns, “eliminating thousands of jobs, placing our electrical grid at risk, and threatening broader, harmful economic and energy security effects,” while the iron processing emissions rule “risks forcing shutdowns, reducing domestic production, and undermining the nation’s ability to supply steel for defense, energy, and critical manufacturing.”
The proclamations allow industries to comply with the Environmental Protection Agency standards that predate former President Joe Biden’s tenure. Trump justified the pause by claiming the former administration had mandated compliance with “standards that rely on emissions-control technologies that have not been demonstrated to work.” Researchers have previously found that air pollutants related to coal power plants cause nearly 3,000 attributable deaths per year. Taconite iron ore processing facilities produce harmful acid gases, including hydrogen chloride and hydrogen fluoride, as well as mercury, which have been linked to numerous adverse health effects.
Separately, the House passed Trump’s $9 billion rescissions package late last night, which includes cuts to international climate, energy, and environmental programs like the Clean Technology Fund. Republicans Brian Fitzpatrick of Pennsylvania and Mike Turner of Ohio joined Democrats in objecting to the bill. Trump is expected to sign the package Friday. An additional rescissions package is expected “soon.”
The Pentagon’s 2026 budget will enable the Department of Defense’s planet-warming emissions to grow by an additional 26 megatons, or about the equivalent of 68 gas power plants, a new analysis by the Climate and Community Institute found. The U.S. military was already the single largest institutional polluter in the world due to its “vast global operations — from jet fuel consumption and overseas deployments to domestic base maintenance,” as well as its manufacturing of weapons and vehicles, the think tank notes. With the passage of the One Big Beautiful Bill Act, the Pentagon’s budget will exceed $1 trillion in 2026, representing a 17% increase over 2024. Its emissions, in turn, could grow to the point that if the DOD were its own country, it’d be the 38th largest polluter in the world, producing more CO2 emissions than the Netherlands, Bangladesh, or Venezuela. But “the Pentagon’s true climate impact will almost certainly be worse” than what the researchers found, The Guardian notes, “as the calculation does not include emissions generated from future supplemental funding such as the billions of dollars appropriated separately for military equipment for Israel and Ukraine in recent years.”
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New York’s Public Service Commission decided Thursday against moving forward with a major transmission project that would have had the capacity to deliver at least 4,770 megawatts of offshore wind power to New York City by the early 2030s. The commissioners said they were unable to justify “charging ratepayers for the multibillion-dollar project when feds are stymying” offshore wind, New York Focus’ Colin Kinniburgh reported on Bluesky. “We will continue to press forward regarding infrastructure needs for offshore wind in the future once the federal government resumes leasing and permitting for wind energy generation projects,” PSC chair Rory Christian said.
The canceled Public Policy Transmission Need determination was not specific to a particular offshore wind project, but rather was intended to match New York’s general offshore wind ambitions when it was approved in 2023. But as Heatmap has previously reported, Trump’s crusade against offshore wind has been a “worst case scenario” for the industry since day one, and, per ABC News 10, effectively “eliminates any reason for building new power lines in the first place.”
Microsoft has inked a deal to purchase 4.9 million metric tons of durable carbon dioxide removal from Vaulted Deep, a waste management startup, for an undisclosed amount. The companies boasted that the deal, which runs through 2038, represents “the second-largest carbon removal deal to date.” Vaulted Deep, an Xprize Carbon runner-up, diverts organic waste from landfills and incinerators by injecting it into wells thousands of feet underground using fracking technologies, which it says ensures over 1,000 years of durability, TechCrunch reports. Since Vaulted’s launch in the summer of 2023, the Houston-based company has removed 18,000 metric tons of carbon dioxide. Microsoft, meanwhile, has slipped behind its 2020 goal to remove more carbon from the atmosphere than it generates by the end of the decade due to its rush to build out data centers.
The Environmental Protection Agency’s reorganization and downsizing are set to continue, with the agency offering another round of buyouts and early retirements to staffers in offices it aims to restructure, Politico reports. Among the affected offices are the Office of Enforcement and Compliance Assurance, which the EPA said it seeks to tweak to “better address pollution problems that impact American communities by re-aligning enforcement with the law to deliver economic prosperity and ensure compliance with agency regulations,” as well as the Office of Land and Emergency Management, which works on Superfund and disaster response issues. The Office of Research and Development, the Office of Mission Support, and the Office of the Chief Financial Officer are also affected.
Separately, in a preliminary decision earlier this week, the agency moved to block the state of Colorado from closing its six remaining coal-fired power plants by 2031. Colorado was attempting to codify the retirement dates in its Regional Haze Plan, which is typically used to protect the air quality of federal wilderness and national parks; however, the EPA rejected the proposal, according to CPR News. “We believe that the Clean Air Act does not give anybody the authority to shut down coal generation plants against the owner’s will,” Cyrus Western, the administrator of EPA Region 8, said. Jeremy Nichols, a senior advocate for the Center of Biological Diversity’s environmental health program, claimed the EPA’s move shows the limits of what climate-conscious states can do on their own. “We may have state rules, but they won't be federally approved,” Nichols told CPR.
“There are so many developers and so many projects in so many places of the world that there are examples where either something goes wrong with a project or a developer doesn’t follow best practices. I think those have a lot more staying power in the public perception of renewable energy than the many successful projects that go without a hiccup and don’t bother people.” —Heatmap Pro’s Charlie Clynes, in conversation with Jael Holzman about his new project tracking all of the nation’s county-level restrictions on renewable energy.
New York City may very well be the epicenter of this particular fight.
It’s official: the Moss Landing battery fire has galvanized a gigantic pipeline of opposition to energy storage systems across the country.
As I’ve chronicled extensively throughout this year, Moss Landing was a technological outlier that used outdated battery technology. But the January incident played into existing fears and anxieties across the U.S. about the dangers of large battery fires generally, latent from years of e-scooters and cellphones ablaze from faulty lithium-ion tech. Concerned residents fighting projects in their backyards have successfully seized upon the fact that there’s no known way to quickly extinguish big fires at energy storage sites, and are winning particularly in wildfire-prone areas.
How successful was Moss Landing at enlivening opponents of energy storage? Since the California disaster six months ago, more than 6 gigawatts of BESS has received opposition from activists explicitly tying their campaigns to the incident, Heatmap Pro® researcher Charlie Clynes told me in an interview earlier this month.
Matt Eisenson of Columbia University’s Sabin Center for Climate Law agreed that there’s been a spike in opposition, telling me that we are currently seeing “more instances of opposition to battery storage than we have in past years.” And while Eisenson said he couldn’t speak to the impacts of the fire specifically on that rise, he acknowledged that the disaster set “a harmful precedent” at the same time “battery storage is becoming much more present.”
“The type of fire that occurred there is unlikely to occur with modern technology, but the Moss Landing example [now] tends to come up across the country,” Eisenson said.
Some of the fresh opposition is in rural agricultural communities such as Grundy County, Illinois, which just banned energy storage systems indefinitely “until the science is settled.” But the most crucial place to watch seems to be New York City, for two reasons: One, it’s where a lot of energy storage is being developed all at once; and two, it has a hyper-saturated media market where criticism can receive more national media attention than it would in other parts of the country.
Someone who’s felt this pressure firsthand is Nick Lombardi, senior vice president of project development for battery storage company NineDot Energy. NineDot and other battery storage developers had spent years laying the groundwork in New York City to build out the energy storage necessary for the city to meet its net-zero climate goals. More recently they’ve faced crowds of protestors against a battery storage facility in Queens, and in Staten Island endured hecklers at public meetings.
“We’ve been developing projects in New York City for a few years now, and for a long time we didn’t run into opposition to our projects or really any sort of meaningful negative coverage in the press. All of that really changed about six months ago,” Lombardi said.
The battery storage developer insists that opposition to the technology is not popular and represents a fringe group. Lombardi told me that the company has more than 50 battery storage sites in development across New York City, and only faced “durable opposition” at “three or four sites.” The company also told me it has yet to receive the kind of email complaint flood that would demonstrate widespread opposition.
This is visible in the politicians who’ve picked up the anti-BESS mantle: GOP mayoral candidate Curtis Sliwa’s become a champion for the cause, but mayor Eric Adams’ “City of Yes” campaign itself would provide for the construction of these facilities. (While Democratic mayoral nominee Zohran Mamdani has not focused on BESS, it’s quite unlikely the climate hawkish democratic socialist would try to derail these projects.)
Lombardi told me he now views Moss Landing as a “catalyst” for opposition in the NYC metro area. “Suddenly there’s national headlines about what’s happening,” he told me. “There were incidents in the past that were in the news, but Moss Landing was headline news for a while, and that combined with the fact people knew it was happening in their city combined to create a new level of awareness.”
He added that six months after the blaze, it feels like developers in the city have a better handle on the situation. “We’ve spent a lot of time in reaction to that to make sure we’re organized and making sure we’re in contact with elected officials, community officials, [and] coordinated with utilities,” Lombardi said.