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It’s power companies vs. ... convenience stores?
The convenience store lobby is very, very interested in electric vehicle charging.
In state after state, they have clashed with utilities over who gets to install electric chargers — and who pays for it. The reason is that the convenience store industry is also the gas station industry. They sell 80 percent of America’s gas — and they want to sell power as well, if not for what they claim is unfair conduct by America’s utilities.
A group that the convenience store lobby helped found is fighting the utility Xcel Energy in Colorado over its proposal to install its own EV chargers. They have successfully campaigned against a proposed rate hike in Minnesota that would have helped fund Xcel’s plan to install around 730 EV chargers and supported legislative pushes in Oklahoma, Texas, and Georgia that limited utilities’ ability to charge their customers for EV charging investments through the regulated electricity rates.
The federal government is throwing billions of dollars at the electric vehicle industry, including charging, while the regulations that surround who is able to build chargers and with what money are largely fought state-by-state.
So why is the gas station industry so interested in what utilities want to do with EV charging?
It’s essentially a clash of business models. Utilities are almost completely unique in how they’re set up as legal monopolies. Government regulators only allow utilities to take profits based on the scale of the investments they make. “Utilities profit by deploying capital,” Ari Peskoe, Director of the Electricity Law Initiative at the Harvard Law School, told me. “That’s the basic business model.”
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When utilities make investments in things like transmission lines, they can recover the cost of them — and profit — by charging all of their customers in their electric bills. And “if it’s a big market, they may want to completely control and dominate that market,” Peskoe explained. So when utilities have proposed using ratepayer money to fund electric vehicle chargers, it reliably kicks up opposition from potential competitors who see it as an unfair advantage and an existential threat to their own businesses.
Gas stations and convenience stores, on the other hand, have a business model where the sale of gas itself — and, eventually, electricity — is a low-margin business with fierce price competition where profits are largely made on sales of snacks and drinks. Customers drive in for the pump, but profits are made at the cash register.
The industry claims that the stations with the best locations, customer service, and amenities won’t be willing to make the large upfront investments for charging if a utility could set up shop next door and actually profit purely from setting up the charger, and thus be able to undercut them on price. They also fear, Peskoe said, that the necessary services a utility has to provide to non-utility chargers may be degraded or disfavored compared to the utilities’ own chargers.
“The only way we’re going to get the buildout of an adequate number of locations to service those drivers is if the private sector has a reason to invest and that reason is potential to make profit,” said Doug Kantor, the general counsel of the National Association of Convenience Stores.
The dispute between the two industries is yet another example of how public policy firmly shifting in support of decarbonization and electrification at the federal level and in many states has transformed how businesses respond to climate change.
While there is still industry-led opposition to decarbonization, many companies, even those directly tied to fossil fuels, are trying to position themselves to profit from the massive transformation underway in how Americans get around. The result, at least in the case of utilities and convenience stores, is a state-by-state battle royale.
The utilities argue that there’s no way to electrify American transportation without their involvement and that rate decisions like the one in Minnesota will ultimately make it hard to massively expand the nation’s charging network, hurting decarbonization goals. Xcel spokesperson Lacey Nygrad said in email, “We know EVs are the future of transportation, and we will help our customers and communities make the transition, but we also need constructive outcomes in rate reviews to help drive the state forward.”
Xcel attorneys argued a similar point in a letter to the Public Utilities Commission when it withdrew its plan to install 730 chargers. “[T]he Commission made several decisions that, if allowed to go into effect, will limit the Company’s ability to continue to lead the clean energy transition for our customers.”
The convenience stores have been able to win over some major figures in the push for electrification, touting a NACS-funded report by the influential public policy consulting firm Grid Strategies LLC — frequently quoted in the media as an advocate for large investments in transmission infrastructure typically favored by green groups and decarbonization advocates — which concludes that “Only independent owners should be allowed to own and operate EV chargers across the interstate highway system and in our local communities."
The convenience store lobby is trying to take advantage of the ambiguous place that utilities play in the energy system. As regulated monopolies, utilities are often unpopular with the general public. They have been accused of dragging their feet on the transition to non-carbon energy and even outright obstruction of so-called “behind-the-meter” resources like rooftop solar. It also means they will be around, in some form or other, essentially indefinitely and will likely be shouldering much of the massive investments needed for a decarbonized and electrified power system.
The utilities industry has argued for its role in the EV charging space, saying what’s required is an “all-hands-on-deck approach,” in the words of Kellen Schefter, an official at the Edison Electric Institute, the trade association for investor-owned utilities. “No one is preventing private-sector stakeholders from investing in EV charging today, and the idea that some stakeholders are trying to prevent electric companies from building EV charging infrastructure is senseless.”
No matter who gets to build chargers – and how they’re funded — the utility industry will inevitably be deeply involved, not least with the transmission and distribution infrastructure necessary to bring power to electric vehicles.
“Utilities do have an indispensable role to play in EV charging,” Matthew Goetz, Associate Director of the Mitigation Program at the Georgetown Climate Center, told me. “A primary role for utilities is the broad system planning and the grid infrastructure investments, both in the distribution grid and investments in transmission infrastructure.”
In the end, the utilities and the convenience stores will have to learn to work together.
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Packed hearings. Facebook organizing. Complaints about prime farmland and a disappearing way of life. Sound familiar?
Solar and wind companies cite the rise of artificial intelligence to make their business cases after the United States government slashed massive tax incentives for their projects.
But the data centers supposed to power the AI boom are now facing the sort of swift wave of rejections from local governments across the country eerily similar to what renewables developers have been dealing with on the ground over the last decade. The only difference is, this land use techlash feels even more sudden, intense, and culturally diffuse.
What’s happening is simple: Data centers are now routinely being denied by local governments in zoning and permitting decisions after local residents turn against them. These aggrieved denizens organize grassroots campaigns, many with associated Facebook groups, and then flood city council and county commission hearings.
Just take this past week. Last Thursday, Prince George’s County, Maryland, paused all data center permitting after a campaign against converting an abandoned mall into a data center gained traction online, with a petition garnering more than 20,000 signatures. On Monday, faced with a ferocious public outcry, Google rescinded a proposal to build what would’ve been its second data center in Indiana in Franklin Township, a community in southeastern Indianapolis – a withdrawal requested mere minutes before the township council was reportedly going to reject it.
That same day, the rural Illinois town of DeKalb denied a solar company’s request to build a “boutique data center” on the same site as a previously-permitted solar farm. And on Tuesday, the small city of Howell – located smack between Lansing and Detroit, Michigan – denied a data center proposed by an anonymous Fortune 100 company. Apparently, so many people showed up to voice their opposition to the project that the hearing was held in a high school gymnasium.
Opponents cite many things in their arguments against development, some unique to the sector like energy and water use, and others familiar to the solar and wind industry, like preserving prime farmland or maintaining a way of life.
These arguments are incredibly salient, as polling conducted by Heatmap News has revealed: less than half of Americans would ever support a data center coming near them, and this technology infrastructure is less popular than any form of renewable energy. Digging into the cross-tabs of that poll, data centers are unpopular with essentially all age demographics, and arguments against the facilities – like “they use too much water” or “they consume too much electricity” – get relatively similar agreement from registered Democrats and Republicans alike.
Ben Inskeep, a clean energy advocate in Indianapolis, told me he started fighting data centers last year after he became aware of the total power needed to fuel the rising number of projects in the state. His advocacy organization, Citizens Action Coalition of Indiana, previously weighed in on rate hikes and electricity generation decisions. Now, they’re tracking more than 40 data center projects they say are proposed in the state and getting involved in the fight on the ground against them.
Inskeep told me that, from his point of view, the primary support for data centers comes from local governments and municipally-funded works like schools and health facilities that are facing slashed budgets. In some cases the projects are being rejected despite representing millions – even billions – in capital investments and potential tax revenues so large that municipal governments are put between a rock and a hard place as they’re pressured by a weakening economy and state funding cuts.
That’s what happened in Indianapolis. Earlier this month the school district that would’ve been funded by the now-rejected Google data center came out in support of the project, declaring it would welcome new tax revenue, and said it would also lead to new educational partnerships with the tech giant. But none of that mattered. Some local officials even lambasted their colleagues' support as unwarranted, a lashing out that reminds me of what happens to pro-solar officials in Ohio.
Heatmap News has been tracking contested data center projects since the spring of this year and has found almost 100 projects under development across the country that are being actively fought by local organizers, citizens advocacy groups, and environmental organizations. The data is preliminary and likely an undercount.
Still, there’s lots to glean from it. Crucially, as we’ve seen with renewable energy development, data center opposition crops up most often in tandem with the number of projects proposed and constructed. This is only logical: the more of something that is built in a place, the more likely people are to say, “We’ve built enough of that.” This is why Virginia is the top state when it comes to data centers being opposed – it’s a hub that’s seen development spike for far longer than elsewhere in the United States.
I believe that as data center project proposals continue to rise across the country, we’ll see in parallel rising hostility to their development – potentially much larger than anything renewable energy has ever faced. It will undoubtedly also be a problem for anyone in solar or wind who is riding on an AI boom to add demand for their projects.
And more of the week’s most important news around renewable energy conflicts.
1. Pulaski County, Arkansas – The attorney general of Arkansas is reassuring residents that yes, they can still ban wind farms if they want to.
2. Des Moines County, Iowa – This county facing intense pressure to lock out renewables is trying to find a sweet spot that doesn’t involve capitulation. Whether that’s possible remains to be seen.
3. Fayette County, Tennessee – This county just extended its solar energy moratorium for at least the next 18 months after pressure from residents.
4. McCracken County, Kentucky – It’s not all bad news this week, as a large solar project in Kentucky appears to be moving forward without fomenting difficulties on the ground.
A conversation with Wil Gehl at the Solar Energy Industries Association
This week I chatted with Wil Gehl, the InterMountain West senior manager at the Solar Energy Industries Association. I reached out in the hopes we could chat candidly about the impacts of the current national policy regime on solar development in the American West, where a pause on federal permits risks jeopardizing immense development in Nevada. To my delight, Wil was (pun intended) willing to get into the hot seat with me and get into the mix.
The following conversation was lightly edited for clarity.
So for starters, walk me through how solar development out west has changed since the start of this year.
Certainly been a lot of changes. I think there’s sort of a confluence of lots of uncertainty and change in the industry. The impending tax credit deadlines and safe harbor and commence construction deadlines, all of that combined with the sort of things that have been ongoing in the West for a while — public lands, siting issues — I think those have made a relatively difficult development environment for folks.
But that said, we’re also seeing unprecedented load growth across the West, and Nevada’s a really good example of that. So the demand for solar and storage remains super high. But I think now we’re navigating even more difficulty in getting projects both sited and also over the finish line.
How has the pause on federal permitting impacted projects in this area of the country?
Nevada is 80% public land, give or take, so those changes at the federal level, particularly, the Department of Interior … it’s pretty difficult if you’re looking at utility-scale solar in the state to avoid a sort of federal lands nexus. Those policy changes are really being felt on the ground in Nevada.
We don’t do a ton of engagement at the county level but I’ve been tracking those developments across the state, in Nevada, and others around the West. Whether they’re moratoriums or consideration on moratoriums, or new siting restrictions… in most states in the West, the land use decisions rest at the local level, either the county or the municipal jurisdiction. The patchwork of changing ordinances, that [has a] pace that has intensified a little bit this year as well.
How is SEIA trying to get those projects unstuck? I think about Esmeralda 7 for example, which hasn’t seen its permitting timeline updated online in half a year. What’s the process for trying to get these projects to move forward at this juncture?
I guess I don’t have project by project specific information but in general, I think the example with Nevada Gov. Joe Lombardo’s letter is how we’ve been approaching this issue. Trying to make the case for states like Nevada with really high load growth that projects like this are critical to meeting energy demand and serving customers reliably. Trying to tie the really near-term challenge of serving load together with these issues of federal land so that people on the ground at the state level are aware of it and can use the influence they have with federal officials and other folks to make this situation known, that this has real practical effects with states and their economic development.
When it comes to transmission for these solar projects, what’s the status? Is the scope of the pause just limited to the scope of solar generation or also transmission lines connected to them?
I think the kind of more recent challenges have been more focused on the generation side. The pace of the transmission and associated queue bottlenecks, I feel like that situation has not improved by any means but I don’t get the sense there’s any near-term changes that have impacted that. I’d be curious if other folks who work more closely on the transmission side have a different perspective, but that’s kind of what I’m seeing.
Is there from your vantage point a clip or an end here? If these projects are unable to be unstuck, do you expect developers to try and wait out this limbo with public lands? Or do you expect developers to rethink how they site their projects?
I think in general for projects already under the development process, folks have already invested a lot of time, energy, and capital to get those projects to this point. Particularly those in the West really necessary to serve as growing load, I would expect folks to really be pursuing every angle they can to get those projects over the finish line.
That said, I’m sure there is some point. I just don’t have a good sense of when this becomes totally unpalatable or you’re not able to move forward.
NV Energy recently had a filing at the Federal Energy Regulatory Commission that allowed projects previously in their queue an escape route out if they were not able to maintain their queue position. I do think that’s a sign of the siting difficulties, the people re-evaluating their project portfolio. I’m not a developer but if you’re looking on private land or federal land, signs are pointing to a smoother path forward on private land but in states like Nevada where 80% plus is public land, even for a project fully sited on private land, it’s really difficult to avoid interconnection or transmission. There are pretty much always going to be federal impacts. That’s just going to be a challenge that industry’s facing at this point.
What’s your message to developers who are anxious in this moment?
That’s a good question. I share the anxiety.
I also think there’s a lot of effort being undertaken by developers to explain the situation on the ground to their elected officials and I really think that’s the kind of message that needs to get out there. These real tangible impacts of projects that were already invested in, in some cases already under construction, that are being hindered by these policy decisions that I don’t think are serving the public interests and are going to limit economic development if they don’t come online in time. Ultimately energy is needed to meet the growing demand. There’s not a great alternative to these projects not getting done.