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Why the grid of the future might hinge on these 10 projects.

The energy transition happens one project at a time. Cutting carbon emissions is not simply a matter of shutting down coal plants or switching to electric cars. It calls for a vast number of individual construction projects to coalesce into a whole new energy system, one that can generate, transmit, and distribute new forms of clean power. Even with the right architecture of regulations and subsidies in place, each project must still conquer a series of obstacles that can require years of planning, fundraising, and cajoling, followed by exhaustive review before they can begin building, let alone operating.
These 10 projects represent the spectrum of solutions that could enable a transition to a carbon-free energy system. The list includes vastly scaled up versions of mature technologies like wind and solar power alongside the traditional energy infrastructure necessary to move that power around. Many of the most experimental or first-of-a-kind projects on this list are competing to play the role of “clean firm” power on the grid of the future. Form’s batteries, Fervo’s geothermal plants, NET Power’s natural gas with carbon capture, and TerraPower’s molten salt nuclear reactor could each — in theory — dispatch power when it’s needed and run for as long as necessary, unconstrained by the weather. Others, like Project Cypress, are geared at solving more distant problems, like cleaning up the legacy carbon in the atmosphere.
But they do not all have a clear path to success. Each one has already faced challenges, and many of them are likely to face a great number more. We call these the make-or-break energy projects because it's still unclear what the clean energy system of the future is going to look like, but the projects from this list are likely to play a big part in it — if, that is, they get there.

Type of project: Solar farm
Developer: Intersect Power
Location: Desert Center, Riverside County, California.
Size: 400 megawatts of generation and 650 megawatts of storage
Operation date: Possibly 2025
Cost: $990 million
Why it matters: Facing opposition from local retirees angered by the large number of projects popping up in the area, as well as from conservation-focused groups — such as Basin and Range Watch, which opposes many utility-scale energy projects in desert areas — Easley will be a test of whether California’s reforms to limit the timeframe of appeals to the state’s environmental reviews can actually work in getting a project approved and online faster.
The early signs are promising. A nearby solar project by the same developer, Intersect Power, recently went into operation after getting approved by the Bureau of Land Management in January 2022. Easley could be operational “as early as late 2025,” according to a Plan of Development prepared for Intersect Power.
Easley is also an example of what’s increasingly becoming standard in California, at both the residential and utility-scale level: pairing solar with storage. The California grid increasingly relies on batteries to keep the lights on as solar ramps up and down in the mornings and, especially, the evenings. The state has procured a massive amount of storage and has adjusted how utilities pay for rooftop solar in a way that encourages pairing battery systems with rooftop solar panels. This both stabilizes the grid and helps further decarbonize it, as batteries that are physically close to intermittent renewables are more likely to abate carbon emissions.

Type: Energy storage
Developer: Form Energy and Great River Energy
Location: Cambridge, Minnesota
Size: 150 megawatt hours
Operation date: End of 2025
Cost: Unknown; Goal of less than 1/10th cost of utility-scale lithium-ion batteries per megawatt hour
Why it matters: Form Energy first made waves in 2020 when it announced a contract with Great River Energy, a Minnesota electric utility, to build a battery that could store 100 hours’ worth of electricity, which was simply unheard of. Other energy storage companies were just trying to break the 4-hour limitation of lithium-ion, aiming for 8 hours or, at most, 12. Days-long energy storage would be a game changer for maintaining reliability during extreme weather events, storing renewable energy for stretches of cloudy days or windless nights or kicking in when demand peaks. At first, Form’s project was shrouded in mystery. How, exactly, would it do this? But a year later, the company revealed the secret chemistry behind its breakthrough: iron and oxygen. The batteries are filled with iron pellets that, when exposed to oxygen, rust, releasing electrons to the grid. They “charge” by running in reverse, using the electrical current from the grid to convert the rust back to iron.
Since then, the hype has continued to build. Form has raised nearly $1 billion from venture capital and been awarded tens of millions more ingovernment grants. It has signed contracts with six utilities to deploy projects in California, New York, Virginia, Georgia, and Colorado, in addition to Minnesota. All this, despite not having completed a single project yet.
The Great River Energy Project is set to be the first to come online. Originally, the company said it would be operating by the end of 2023; now it’s expected to start construction later this year and begin operating in early 2025, Vice President of Communications Sarah Bray told Heatmap. First, the company has to complete construction of its first factory in Weirton, West Virginia, where it will be producing all of the batteries. Bray said it expects to start high-volume production later this year.

Type: Onshore wind
Developer: Pattern Energy
Location: Lincoln, Torrance, and San Miguel Counties, New Mexico, with transmission into Arizona
Size: 3,500 megawatts
Operation date: 2026
Cost: The project’s developer, Pattern Energy, has secured $11 billion in financing for the wind and associated transmission project. The cost of the project is estimated to be $8 billion.
Why it matters: This would be the biggest wind project in the country and a test case for a variety of energy policy objectives at both the state and federal level. For California, it would be a key step in decarbonizing its grid, as the state right now imports a large amount of its power, not all of which is carbon-free. For the federal government, it meets several goals — using public lands for carbon-free energy development, plus long-distance transmission to spur energy development across the country and link clean power resources in rural areas to major load centers.
It would also mean an ambitious project could overcome long and concerted opposition. The project was first proposed in 2006, and its transmission line cleared environmental review back in 2015, but it has been mired in lawsuit after lawsuit. Most recently, a coalition of conservation groups and Indian tribes sued to halt construction on the power line portion of the project in Arizona’s San Pedro Valley, claiming that their cultural rights had not been adequately respected. In April, a judge allowed construction to continue, ruling that those claims were barred by the existing federal approvals, which had taken years to attain.

Type: Offshore wind
Developer: Equinor
Location: South of Long Island, New York
Size: 810 megawatts
Operation date: 2026
Cost: Not available, but an earlier estimate for developing two wind farms was $3 billion. Costs have since risen, but the second farm, Empire Wind 2, is no longer under contract.
Why it matters: The Northeast, and especially New York State, have aggressive aims for decarbonization, with a goal of 70% of the state’s electricity coming from renewables by 2030. The Biden administration also has a specific goal for 30 gigawatts of offshore wind capacity by 2030, and New York has a goal of 9 gigawatts by 2035. These types of high-capacity projects will be essential for the Northeast to decarbonize. The windy coast of the Atlantic Ocean is the most potent large-scale renewable resource in the region, and many of the region’s large load centers, such as New York City and Boston, are on the coast.
Offshore wind, while expensive, can present less permitting hassle and local opposition than onshore wind or utility-scale solar. Empire Wind 1 (along with Sunrise Wind) matters tremendously for New York’s offshore wind program, which has been in development for years but has faced escalating costs and project cancellations. Only one offshore wind project is actually operational in the state, South Fork Wind, which was contracted outside the NYSERDA process and has around 130 megawatts of capacity. If Empire manages to get steel in the water and electrons flowing to the coast, it will be a sign that the Northeast’s — and thus the country’s — decarbonization goals are at least somewhat attainable.

Type: Transmission
Developers: Transmission Developers, which is owned by the Blackstone Group
Size: 339 miles / 1,250 megawatts
Operation date: 2026
Cost: $6 billion
Why it matters: The Champlain Hudson Power Express, often referred to as CHPE (affectionately pronounced “chippy”) will deliver 1,250 megawatts of hydropower from Quebec into the New York City grid, which is currently about 90% powered by fossil fuels. It is “the most powerful project you’ll never see,” according to its developers, as it is the largest transmission line in the country to be installed entirely underground and underwater.
The project is essential to New York’s goal to build a zero-emission electricity system by 2040. The line will supply an always-available source of clean power to supplement intermittent wind and solar generation and maintain a reliable grid. It has already overcome a number of barriers, including nearly a decade of environmental reviews, uncertainty over whether New York would buy its power, and opposition from conservation advocates concerned about the negative impacts of hydroelectric dams on the environment and on Native communities in Canada.
When it begins operating, New Yorkers won’t just get cleaner power — they should also see air quality benefits almost immediately. The new line is expected to cut air pollution equivalent to that released by 15 of the city’s 16 fossil fuel-fired peaker plants.

Developer: Fervo
Type: Geothermal
Location: Beaver County, Utah
Size: 400 megawatts
Operation date: 2026, although the project isn’t expected to be finished until 2028
Cost: Not disclosed, but Fervo raised $244 million and said that the cash “will support Fervo’s continued operations at Cape Station.”
Why it matters: This enhanced geothermal project is not the first one for Fervo. The company’s Nevada site, Project Red, began providing power for Google data centers in Nevada in November 2023. This planned site, however, will be far bigger: Fervo currently has authorization from the Bureau of Land Management for up to 29 exploratory wells, while the Project Red site had just two. Cape Station broke ground in September 2023, and in the first six months of drilling, Fervo said it reduced costs from drilling by 70% compared to its Project Red wells.
As the grid decarbonizes and major power consumers like technology companies insist on having clean power for their operations, there will be massive and growing demand for so-called “clean firm” power, carbon-free power that is available all the time. Conventional wind and solar is intermittent, and existing battery technology only allows for limited output over time. Fervo’s “enhanced geothermal” technology uses techniques borrowed from the oil and gas industry to be able to produce geothermal power essentially anywhere where there are hot enough rocks underneath the surface of the Earth, as opposed to conventional geothermal, which depends on locating hot enough fluid or stream.
If Fervo can demonstrate that it can produce power at scale at costs comparable to existing conventional geothermal projects, it can expect a massive market for it and demand for more projects.

Type: Nuclear
Developer: TerraPower
Location: Kemmerrer, Wyoming
Size: 345 megawatts
Operation date: Not available, but the company said in 2021 that it plans to be operational “in the next seven years.” Updated to the 2024 application, that would put it on track for a 2030 completion date.
Cost: Not available, but TerraPower has raised around $1 billion and the federal government has pledged around $2 billion to support the project, which TerraPower has said it will “match … dollar for dollar.”
Why it matters: TerraPower is just one of many companies flogging designs for advanced nuclear reactors, which are smaller and promise to be cheaper to build than America’s existing light-water nuclear reactor fleet. The construction permit application the company submitted in March was a first for a commercial advanced reactor. TerraPower matters as much for the Nuclear Regulatory Commission as it does for anyone else, as it’s a test of whether the NRC can meet Congress and the White House’s preference for a more accelerated approval process for advanced nuclear power.
TerraPower’s design, if successful, would be a landmark for the American nuclear industry. The reactor design calls for cooling with liquid sodium instead of the standard water-cooling of American nuclear plants. This technique promises eventual lower construction costs because it requires less pressure than water (meaning less need for expensive safety systems) and can also store heat, turning the reactor into both a generator and an energy storage system.
While there are a number of existing advanced nuclear designs, several of which involve liquid sodium, Natrium could potentially play well with a renewable-heavy grid by providing steady, unchanging output like a current nuclear reactor as well as discharging stored energy in response to renewables falling off the grid.

Type: Hydrogen
Developer: Hy Stor Energy
Location: Project components located throughout Mississippi, with some in Eastern Louisiana
Size: Goal of 340,000 metric tons per year (phase one)
Operation date: 2027
Cost: Initially reported as $3 billion; recently reported as more than $10 billion. (In response to an inquiry from Heatmap, the company replied that it “will be in the multiple billions of dollars.”
Why it matters: Truly carbon-free hydrogen could unlock big emissions reductions across the economy, from fertilizer production, to steelmaking, to marine shipping. But few companies are going to the lengths that Hy Stor is gto ensure its product is really clean. The company is building the first off-grid hydrogen production facility powered entirely by wind and solar. That means Hy Stor will have no problem claiming the new hydrogen production tax credit, which requires companies to match their operations with clean energy sources by the hour — a provision that’s been contested by large portions of the hydrogen industry.
For a company that has never built anything before, the scale of Hy Stor’s Mississippi project is ambitious. The company has acquired about 70,000 acres across Mississippi and Louisiana, along with 10 underground salt domes — mounds of salt buried beneath the Earth’s surface that can be dissolved to form cavernous, skyscraper-sized storage facilities for hydrogen. Those salt domes are the key to Hy Stor’s approach, and what enables the company to rely on intermittent renewables. By storing vast amounts of hydrogen, the company will be able to deliver a steady supply to customers and will also have a backup source of energy for its own operations when wind and solar are less available.
Chief Commercial Officer Claire Behar told Heatmap the company has obtained many of the necessary permits, including for its salt caverns and the plant’s water use. It plans to begin construction at the beginning of 2025, and to have the first phase of the project “in service at scale” by 2027. Hy Stor recently announced a deal to purchase its electrolyzers, devices that split water molecules into hydrogen and oxygen, from a Norwegian company called Nel Hydrogen. It has also signed up a few customers, including a local port and a green steel company.

Type: Carbon removal
Developers: Climeworks, Heirloom, and Battelle
Location: Calcasieu Parish, Louisiana
Size: Goal of capturing 1 million metric tons per year
Operation date: About 2030
Cost: Total project cost unknown; eligible for up to $600 million from the Department of Energy for its Regional Direct Air Capture Hubs Program.
Why it matters: Project Cypress might be the most ambitious project to remove carbon from the atmosphere under development in the world. It is a collaboration by two leading direct air capture companies, Heirloom Carbon Technologies and Climeworks, which were among the first to demonstrate their ability to capture carbon directly from the air and store it at commercial scale. Now, the two will be attempting to scale up exponentially, from capturing a few thousands tons per year to a combined million.
Last August, the Department of Energy selected Project Cypress to be one of four direct air capture hubs it will support with $3.5 billion from the Bipartisan Infrastructure Law. In March, the project was awarded its first infusion of $50 million, but the developers will have to do extensive community engagement to continue receiving funding. Battelle, the project developer, told Heatmap the project has also received an additional $51 million in private investment.
Between financing, permitting challenges, renewable energy sourcing, and community opposition, the project is sure to face a bumpy road ahead. The project and its developers have no ties to the oil and gas industry, but that hasn’t done much to win over the support of environmental justice advocates, who see the project as a dangerous distraction from cutting emissions and pollution in Louisiana. But if Project Cypress is successful, it will show the world what direct air capture looks like at climate-relevant scales.

Type: Carbon capture
Developer: NET Power
Location: Ector County, Texas
Size: 300 megawatts
Operation date: Late 2027 or early 2028
Cost: About $1 billion
Why it matters: Oil and gas CEOs love to say that the problem is not fossil fuels, the problem is emissions. NET Power’s technology — a natural gas power plant with zero emissions, carbon or otherwise — could prove to be the ultimate vindication of that statement. In short, NET Power’s system recycles most of the CO2 it produces and uses it to generate more energy. It also utilizes pure oxygen, unlike typical natural gas plants that take in regular air, which is mostly nitrogen. This means that any remaining CO2 not recycled in the plant is relatively pure and easy to capture.
NET Power opened a 50 megawatt demonstration plant in La Porte, Texas, in 2018, and is developing a 300 megawatt commercial plant in Ector County, Texas, in partnership with Occidental Petroleum, Baker Hughes, and Constellation Energy. On a recent earnings call, CEO Danny Rice said the project was “expected to have a lower levelized cost per kilowatt hour than new nuclear, new geothermal, and new hydro.”
The company generated a lot of excitement among energy experts in the fall of 2021 when it announced that its La Porte project had successfully delivered power to the Texas grid. It also raised a lot of money when it went public last summer. But things have been somewhat rocky since. During a December earnings call, NET Power’s president told investors that its first commercial plant would be delayed by at least a year due to supply chain challenges. According to filings with the Securities and Exchange Commission, the company also applied for funding from the Department of Energy’s Office of Clean Energy Demonstrations last year, but was not selected. It has not yet found any third parties to license its technology or offtakers to buy energy from the Ector County plant, and noted in its recent filings that while the La Porte pilot project delivered electricity to the grid, it did not, in fact, deliver “net” power — meaning that it used more power than it generated.
A spokesperson for the company told Heatmap the La Porte facility was solely intended to “prove the technical viability of the NET Power Cycle” and not intended to produce net power. So everything’s now riding on Project Permian.
Editor’s note: This story has been updated to correct a typographical error in the amount of private investment Project Cypress has received.
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In practice, direct lithium extraction doesn’t quite make sense, but 2026 could its critical year.
Lithium isn’t like most minerals.
Unlike other battery metals such as nickel, cobalt, and manganese, which are mined from hard-rock ores using drills and explosives, the majority of the world’s lithium resources are found in underground reservoirs of extremely salty water, known as brine. And while hard-rock mining does play a major role in lithium extraction — the majority of the world’s actual production still comes from rocks — brine mining is usually significantly cheaper, and is thus highly attractive wherever it’s geographically feasible.
Reaching that brine and extracting that lithium — so integral to grid-scale energy storage and electric vehicles alike — is typically slow, inefficient, and environmentally taxing. This year, however, could represent a critical juncture for a novel process known as Direct Lithium Extraction, or DLE, which promises to be faster, cleaner, and capable of unlocking lithium across a wider range of geographies.
The traditional method of separating lithium from brine is straightforward but time-consuming. Essentially, the liquid is pumped through a series of vast, vividly colored solar evaporation ponds that gradually concentrate the mineral over the course of more than a year.
It works, but by the time the lithium is extracted, refined, and ready for market, both the demand and the price may have shifted significantly, as evidenced by the dramatic rise and collapse of lithium prices over the past five years. And while evaporation ponds are well-suited to the arid deserts of Chile and Argentina where they’re most common, the geology, brine chemistry, and climate of the U.S. regions with the best reserves are generally not amenable to this approach. Not to mention the ponds require a humongous land footprint, raising questions about land use and ecological degradation.
DLE forgoes these expansive pools, instead pulling lithium-rich brine into a processing unit, where some combination of chemicals, sorbents, or membranes isolate and extricate the lithium before the remaining brine gets injected back underground. This process can produce battery-grade lithium in a matter of hours or days, without the need to transport concentrated brine to separate processing facilities.
This tech has been studied for decades, but aside from a few Chinese producers using it in combination with evaporation ponds, it’s largely remained stuck in the research and development stage. Now, several DLE companies are looking to build their first commercial plants in 2026, aiming to prove that their methods can work at scale, no evaporation ponds needed.
“I do think this is the year where DLE starts getting more and more relevant,” Federico Gay, a principal lithium analyst at Benchmark Mineral Intelligence, told me.
Standard Lithium, in partnership with oil and gas major Equinor, aims to break ground this year on its first commercial facility in Arkansas’s lithium-rich Smackover Formation, while the startup Lilac Solution also plans to commence construction on a commercial plant at Utah’s Great Salt Lake. Mining giant Rio Tinto is progressing with plans to build a commercial DLE facility in Argentina, which is already home to one commercial DLE plant — the first outside of China. That facility is run by the French mining company Eramet, which plans to ramp production to full capacity this year.
If “prices are positive” for lithium, Gay said, he expects that the industry will also start to see mergers and acquisitions this year among technology providers and larger corporations such as mining giants or oil and gas majors, as “some of the big players will try locking in or buying technology to potentially produce from the resources they own.” Indeed, ExxonMobil and Occidental Petroleum are already developing DLE projects, while major automakers have invested, too.
But that looming question of lithium prices — and what it means for DLE’s viability — is no small thing. When EV and battery storage demand boomed at the start of the decade, lithium prices climbed roughly 10-fold through 2022 before plunging as producers aggressively ramped output, flooding the market just as EV demand cooled. And while prices have lately started to tick upward again, there’s no telling whether the trend will continue.
“Everyone seems to have settled on a consensus view that $20,000 a tonne is where the market’s really going to be unleashed,” Joe Arencibia, president of the DLE startup Summit Nanotech, told me, referring to the lithium extraction market in all of its forms — hard rock mining, traditional brine, and DLE. “As far as we’re concerned, a market with $14,000, $15,000 a tonne is fine and dandy for us.”
Lilac Solutions, the most prominent startup in the DLE space, expects that its initial Utah project — which will produce a relatively humble 5,000 metric tons of lithium per year — will be profitable even if lithium prices hit last year’s low of $8,300 per metric ton. That’s according to the company’s CEO Raef Sully, who also told me that because Utah’s reserves are much lower grade than South America’s, Lilac could produce lithium for a mere $3,000 to $3,500 in Chile if it scaled production to 15,000 or 20,000 metric tons per year.
What sets Lilac apart from other DLE projects is its approach to separating lithium from brine. Most companies are pursuing adsorption-based processes, in which lithium ions bind to an aluminum-based sorbent, which removes them from surrounding impurities. But stripping the lithium from the sorbent generally requires a good deal of freshwater, which is not ideal given that many lithium-rich regions are parched deserts.
Lilac’s tech relies on an ion-exchange process in which small ceramic beads selectively capture lithium ions from the brine in their crystalline structure, swapping them for hydrogen ions. “The crystal structure seems to have a really strong attraction to lithium and nothing else,” Sully told me. Acid then releases the concentrated lithium. When compared with adsorption-based tech, he explained, this method demands far fewer materials and is “much more selective for lithium ions versus other ions,” making the result purer and thus cheaper to process into a battery-grade material.
Because adsorption-based DLE is already operating commercially and ion-exchange isn’t, Lilac has much to prove with its first commercial facility, which is expected to finalize funding and begin construction by the middle of this year.
Sully estimates that Lilac will need to raise around $250 million to build its first commercial facility, which has already been delayed due to the price slump. The company’s former CEO and current CTO Dave Snydacker told me in 2023 that he expected to commence commercial operations by the end of 2024, whereas now the company plans to bring its Utah plant online at the end of 2027 or early 2028.
“Two years ago, with where the market was, nobody was going to look at that investment,” Sully explained, referring to its commercial plant. Investors, he said, were waiting to see what remained after the market bottomed out, which it now seems to have done. Lilac is still standing, and while there haven’t yet been any public announcements regarding project funding, Sully told me he’s confident that the money will come together in time to break ground in mid-2026.
It also doesn’t hurt that lithium prices have been on the rise for a few months, currently hovering around $20,000 per tonne. Gay thinks prices are likely to stabilize somewhere in this range, as stakeholders who have weathered the volatility now have a better understanding of the market.
At that price, hard rock mining would be a feasible option, though still more expensive than traditional evaporation ponds and far above what DLE producers are forecasting. And while some mines operated at a loss or mothballed their operations during the past few years, Gay thinks that even if prices stabilize, hard-rock mines will continue to be the dominant source of lithium for the foreseeable future due to sustained global investment across Africa, Brazil, Australia, and parts of Asia. The price may be steeper, but the infrastructure is also well-established and the economics are well-understood.
“I’m optimistic and bullish about DLE, but probably it won’t have the impact that it was thought about two or three years ago,” Gay told me, as the hype has died down and prices have cooled from their record high of around $80,000 per tonne. By 2040, Benchmark forecasts that DLE will make up 15% to 20% of the lithium market, with evaporation ponds continuing to be a larger contributor for the next decade or so, primarily due to the high upfront costs of DLE projects and the time required for them to reach economies of scale.
On average, Benchmark predicts that this tech will wind up in “the high end of the second quartile” of the cost curve, making DLE projects a lower mid-cost option. “So it’s good — not great, good. But we’ll have some DLE projects in the first quartile as well, so competing with very good evaporation assets,” Gay told me.
Unsurprisingly, the technology companies themselves are more bullish on their approach. Even though Arencibia predicts that evaporation ponds will continue to be about 25% cheaper, he thinks that “the majority of future brine projects will be DLE,” and that DLE will represent 25% or more of the future lithium market.
That forecast comes in large part because Chile — the world’s largest producer of lithium from brine — has stated in its National Lithium Strategy that all new projects should have an “obligatory requirement” to use novel, less ecologically disruptive production methods. Other nations with significant but yet-to-be exploited lithium brine resources, such as Bolivia, could follow suit.
Sully is even more optimistic, predicting that as lithium demand grows from about 1.5 million metric tons per year to around 3.5 million metric tons by 2035, the majority of that growth will come from DLE. “I honestly believe that there will be no more hard rock mines built in Australia or the U.S.,” he said, telling me that in ten years time, half of our lithium supply could “easily” come from DLE.
As a number of major projects break ground this year and the big players start consolidating, we’ll begin to get a sense of whose projections are most realistic. But it won’t be until some of these projects ramp up commercial production in the 2028 to 2030 timeframe that DLE’s market potential will really crystalize.
“If you’re not a very large player at the moment, I think it’s very difficult for you to proceed,” Sully told me, reflecting on how lithium’s price shocks have rocked the industry. Even with lithium prices ticking precariously upwards now, the industry is preparing for at least some level of continued volatility and uncertainty.
“Long term, who knows what [prices are] going to be,” Sully said. “I’ve given up trying to predict.”
A chat with CleanCapital founder Jon Powers.
This week’s conversation is with Jon Powers, founder of the investment firm CleanCapital. I reached out to Powers because I wanted to get a better understanding of how renewable energy investments were shifting one year into the Trump administration. What followed was a candid, detailed look inside the thinking of how the big money in cleantech actually views Trump’s war on renewable energy permitting.
The following conversation was lightly edited for clarity.
Alright, so let’s start off with a big question: How do investors in clean energy view Trump’s permitting freeze?
So, let’s take a step back. Look at the trend over the last decade. The industry’s boomed, manufacturing jobs are happening, the labor force has grown, investments are coming.
We [Clean Capital] are backed by infrastructure life insurance money. It’s money that wasn’t in this market 10 years ago. It’s there because these are long-term infrastructure assets. They see the opportunity. What are they looking for? Certainty. If somebody takes your life insurance money, and they invest it, they want to know it’s going to be there in 20 years in case they need to pay it out. These are really great assets – they’re paying for electricity, the panels hold up, etcetera.
With investors, the more you can manage that risk, the more capital there is out there and the better cost of capital there is for the project. If I was taking high cost private equity money to fund a project, you have to pay for the equipment and the cost of the financing. The more you can bring down the cost of financing – which has happened over the last decade – the cheaper the power can be on the back-end. You can use cheaper money to build.
Once you get that type of capital, you need certainty. That certainty had developed. The election of President Trump threw that into a little bit of disarray. We’re seeing that being implemented today, and they’re doing everything they can to throw wrenches into the growth of what we’ve been doing. They passed the bill affecting the tax credits, and the work they’re doing on permitting to slow roll projects, all of that uncertainty is damaging the projects and more importantly costs everyone down the road by raising the cost of electricity, in turn making projects more expensive in the first place. It’s not a nice recipe for people buying electricity.
But in September, I went to the RE+ conference in California – I thought that was going to be a funeral march but it wasn’t. People were saying, Now we have to shift and adjust. This is a huge industry. How do we get those adjustments and move forward?
Investors looked at it the same way. Yes, how will things like permitting affect the timeline of getting to build? But the fundamentals of supply and demand haven’t changed and in fact are working more in favor of us than before, so we’re figuring out where to invest on that potential. Also, yes federal is key, but state permitting is crucial. When you’re talking about distributed generation going out of a facility next to a data center, or a Wal-Mart, or an Amazon warehouse, that demand very much still exists and projects are being built in that middle market today.
What you’re seeing is a recalibration of risk among investors to understand where we put our money today. And we’re seeing some international money pulling back, and it all comes back to that concept of certainty.
To what extent does the international money moving out of the U.S. have to do with what Trump has done to offshore wind? Is that trade policy? Help us understand why that is happening.
I think it’s not trade policy, per se. Maybe that’s happening on the technology side. But what I’m talking about is money going into infrastructure and assets – for a couple of years, we were one of the hottest places to invest.
Think about a European pension fund who is taking money from a country in Europe and wanting to invest it somewhere they’ll get their money back. That type of capital has definitely been re-evaluating where they’ll put their money, and parallel, some of the larger utility players are starting to re-evaluate or even back out of projects because they’re concerned about questions around large-scale utility solar development, specifically.
Taking a step back to something else you said about federal permitting not being as crucial as state permitting–
That’s about the size of the project. Huge utility projects may still need federal approvals for transmission.
Okay. But when it comes to the trendline on community relations and social conflict, are we seeing renewable energy permitting risk increase in the U.S.? Decrease? Stay the same?
That has less to do with the administration but more of a well-structured fossil fuel campaign. Anti-climate, very dark money. I am not an expert on where the money comes from, but folks have tried to map that out. Now you’re even seeing local communities pass stuff like no energy storage [ordinances].
What’s interesting is that in those communities, we as an industry are not really present providing facts to counter this. That’s very frustrating for folks. We’re seeing these pass and honestly asking, Who was there?
Is the federal permitting freeze impacting investment too?
Definitely.
It’s not like you put money into a project all at once, right? It happens in these chunks. Let’s say there’s 10 steps for investing in a project. A little bit of money at step one, more money at step two, and it gradually gets more until you build the project. The middle area – permitting, getting approval from utilities – is really critical to the investments. So you’re seeing a little bit of a pause in when and how we make investments, because we sometimes don’t know if we’ll make it to, say, step six.
I actually think we’ll see the most impact from this in data center costs.
Can you explain that a bit more for me?
Look at northern Virginia for a second. There wasn’t a lot of new electricity added to that market but you all of the sudden upped demand for electricity by 20 percent. We’re literally seeing today all these utilities putting in rate hikes for consumers because it is literally a supply-demand question. If you can’t build new supply, it's going to be consumers paying for it, and even if you could build a new natural gas plant – at minimum that will happen four-to-six years from now. So over the next four years, we’ll see costs go up.
We’re building projects today that we invested in two years ago. That policy landscape we invested in two years ago hasn’t changed from what we invested into. But the policy landscape then changed dramatically.
If you wipe out half of what was coming in, there’s nothing backfilling that.
Plus more on the week’s biggest renewables fights.
Shelby County, Indiana – A large data center was rejected late Wednesday southeast of Indianapolis, as the takedown of a major Google campus last year continues to reverberate in the area.
Dane County, Wisconsin – Heading northwest, the QTS data center in DeForest we’ve been tracking is broiling into a major conflict, after activists uncovered controversial emails between the village’s president and the company.
White Pine County, Nevada – The Trump administration is finally moving a little bit of renewable energy infrastructure through the permitting process. Or at least, that’s what it looks like.
Mineral County, Nevada – Meanwhile, the BLM actually did approve a solar project on federal lands while we were gone: the Libra energy facility in southwest Nevada.
Hancock County, Ohio – Ohio’s legal system appears friendly for solar development right now, as another utility-scale project’s permits were upheld by the state Supreme Court.