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An exclusive interview with the Rivian CEO about the future of electric vehicles.
It has been an astonishing year for the electric vehicle industry. In the past 12 months, the world’s three largest car markets — the United States, the European Union, and China — have unveiled aggressive new subsidies or ambitious new targets to accelerate EV adoption. Even automakers that have long sat out the electric revolution, such as Toyota, are now getting in the game.
That might be good news for R.J. Scaringe, the founder and chief executive of Rivian Automotive. Rivian is angling to use the EV revolution to become one of a handful of new American entrants to the automotive space. You can think of its high-end trucks and SUVs, the R1T and R1S, as the Patagonia meets Apple meets Jeep of the vehicle space. But the company, which designs and manufactures its trucks in America, has struggled with scaling issues and delivered only 42,000 electric vehicles since 2021.
I recently had the chance to sit down with Scaringe and chat about what’s next for Rivian and the broader electric vehicle industry. Our conversation has been lightly edited for concision and clarity.
It seems like over the past year — between the Inflation Reduction Act, between things we’ve seen internationally — the entire electric-vehicle market has undergone a number of shifts that the wider world still hasn’t caught up to yet. Could you give us a snapshot of the sector right now, as you see it?
I think we have seen these really large-scale shifts. You could almost look at it across every vantage point.
You have it from the vantage point of policymakers. If you'd told me just a few years ago that Europe would be committing to 100% of new vehicles being electric, you know, within the next 10 years. That California would be making that commitment in the same way. That the United States, through EPA regulations, is going to be 60% EV of new sales by 2030, I don't think I would have believed it. It’s awesome to see that — literally the reason I started the company is to help drive and instigate that change.
But in parallel with that, we see a shift in how consumers are looking at it. The performance envelope and the drivability of an electric vehicle makes it so much more desirable than an alternative. Buying a non-EV just feels very old. Aside from carbon emissions and environmental responsibility, it's just not interesting.
And then I think the third element is the way that the manufacturers have responded. Up until not too long ago, electrification was sort of a thing you had to do to generate some credits and to look responsible as a company, but they weren't really committed to it. Now, most big vehicle manufacturers have begun to really lean into their electrification strategies.
So with all those things happening, then the question becomes like, what does five years from now look like? What does 10 years from now look like?
I think policy is going to ping-pong around a little bit, unfortunately. Electrification and sustainability have become politicized — it makes no sense at all that it has been, but unfortunately it is. So as a result of that, you will see a little bit of variation there.
But I don't think, at a macro level, [the trend] is going to change. The slope of the curve is going to continue to be policy that drives toward electrification, policy that drives toward moving off of fossil fuels. I think consumers have made the switch and it's a diode-like switch — it's one directional.
I don't think we're going to see consumers have any reignited interest in combustion-powered vehicles. You're going to see a lot of entrenched things try to switch that. But the reality is consumers have made it clear that shift is going to come. It’s not as if everyone has reached that decision [today]. But you can see the slope of the curve.
Once you drive an electric vehicle, again, you can't go back. So for example, for us, more than 75% of our vehicles are sold to first-time EV customers, which is really cool, which means our brand is creating new EV customers. We're helping to drive that change. But once you're in a vehicle, you just can't imagine, like, going back to the pump or dealing with the sound of an engine.
And manufacturers now are all working towards both creating supply of vehicles, but also making sure that the products that they offer are interesting enough to generate demand.
The big question is: There's new brands like us, and then there's existing brands, and which of those brands emerge as the sort of stronger pools of demand — that because of their product attributes, the way those attributes are combined together, the way those are put in under a brand position, which of those offerings, create sort of breakaway interests from consumers?
Do you see consumers deciding my next vehicle will be electric? Or at this point, are consumers still being like, I'd like to go electric, but I want these different attributes. And I'm looking around.
Yeah, both. I think the vast majority of customers are now at least asking themselves the question, "Should I be thinking about electric?"
That doesn't mean they're going to decide on electric, either because of concerns around charging infrastructure or price, or the vehicle that they're looking for doesn't exist — "I want a minivan, but there's no electric minivan that's out there.” There may not be a form factor that fits your desire to see convertible electric vehicles today. So like you may end up in a non-EV choice, because it doesn't exist yet on the supply side. But everyone is asking the question. Or a lot of people are.
And I think what will happen over the next 10 years is those questions today that may not get answered with something that leads to an electric vehicle purchase, that will change. The vehicle that I want, that form factor will be available in an electric offering. And the infrastructure is getting solved too.
Then I think the reality of buying a combustion powered vehicle, in light of the policy that's coming, is sort of like building a horse barn in 1910. Like, imagine buying a Chevy Suburban in 2030. Like, what are you going to do with that, right? In 10 years? Yeah, like gas stations will be slowly disappearing. It's just weird.
It's also, like, your second largest asset.
You're buying this thing that absolutely has no future in our society. And will just increasingly become more and more of a relic of the past. But I think the anticipation of that is leading people to say I don't want to be buying a relic of the past.
I think we're one product cycle away from that really driving consumer demand.
What year do you see?
I think towards the end of this decade. This swing is nonlinear because once you get to that point, whether you're thinking about residual value, or just thinking about standing out as, like, the weird person who still drives a combustion powered vehicle, it's just gonna swing really fast.
What’s the biggest obstacle to electrification right now — to consumers making that decision? Is it just acceptance? Is it charging? Additional policy that needs to happen?
There's a number of them. But I think the biggest is customer choice.
Until recently, there were very, very few choices. Even today, I'd say there are very few good choices, especially across all price bands. So if you want to spend $20,000, you just don't have a good choice to make. You want to spend $35,000 or $40,000, there's a couple of choices. But there's still not a lot of choices. And we've seen that manifest in the extreme market share that Tesla has, because of the lack of choice from other manufacturers.
It's funny, because there aren't that many sub $25,000 new vehicles, period. Do you think we'll get back to that place in a few years in EVs? Or that we might have, you know, a Model 3 that gets there with local incentives, but everything will be nominally above $25,000.
$25,000 starts to get pretty low. I mean, the average selling price, or ASP — like, across the industry now — the average selling price of a new vehicle in the States is about double that, right? It’s like $50,000.
Also, I remember when I could buy a new car for less, but, like, inflation is happening.I bought a new car back in the day for less than $10,000. You can't do that anymore.
What does Rivian need to do to be ready for that moment, five years from now, when consumers are ready to make that leap?
This is the really exciting part for us.
The objective of our R1 program was to serve as our handshake to the world. I often say, it's like it opened the brand umbrella for us as a company and it communicated from a brand point of view and values point of view.
We have vehicles that, we say, enable adventure. They can take your kids to the beach, they can take you to the theme park, they can go to your folks' house for the weekend, you can go mountain biking — just these vehicles that enable life.
And we did that at a premium price with a flagship set of products, the R1T and R1s, that have led to the R1 vehicles being the best-selling electric vehicles over a $70,000 price point. Within that range there, they are the best selling vehicles in the premium segment today, the best-selling electric vehicles.
So as we now look at R2, we need to take that same brand excitement that we've generated, and apply it to a smaller form factor and a much lower price point, and therefore a much bigger addressable market, and carry with it the essence of what was embodied in R1, but make it accessible to so many more people.
So the timing of that program fits beautifully with what we see as this big shift, as a lot of people ask themselves, Am I gonna get an electric car? Well maybe the next one.
So we hope that the R2 platform helps pull a lot of customers across that jump where I want to spend $45,000 or $40,000 in a vehicle. It needs to fit my life. So it's my kids, my pets, my gear — it needs to be able to go places and get dirty and go down a rough road. Our brand fits that so well, but today, a lot of customers just can't afford it, or don't want to spend $70,000-plus, so that's where R2 comes in. I couldn't be more excited about what's coming with that program. Because it just fits so nicely into the market.
What’s the timing on R2?
Beginning of '26. So that vehicle will be produced in our second plant and in Atlanta.
I want to talk about factories for a second. I think Rivian was early to what we would now call reshoring — although, of course, for Rivian, it wasn't really "re," it was just locating manufacturing in the United States with engineering talent located here as well. Lots of other companies are now joining that for various policy and political risk reasons. I think for Rivian, the ramp up has been challenging. What advice would you have to other firms looking to, you know, stand up a manufacturing line and a new factory in the United States?
Yeah, well, we launched our R1T, the R1s, and then our two different variants of our commercial van. In any vehicle, a launch is tough, you’ve got thousands of components coming from hundreds of suppliers that have to ramp in unison and be beautifully synchronized. Any one of those parts can throw it off — there's a whole host of things that can go wrong from a quality or production process point of view. And so we were doing that for the first time. New workforce, new supply chain, new plant, new product, new technology.
And we weren't only doing the first time, we were doing it the first time times three, so it's just really challenging.
And then the operational backdrop was far worse than what we could have ever imagined. So the supply chain catastrophe that was 2022 was our launching ramp here. And then managing the build out of a large 5,000-plus person workforce to produce vehicles in our first plant, in the middle of a pandemic, was also really hard.
It was a hard launch and hard ramp. I don't think you could have designed a more complex environment to do that in. And the strategy we had of those three vehicles happening at the same time, in hindsight, knowing what we know now about what the environment was, we would have created more separation.
In 2017, someone should have come to you and been like, there's going to be a global pandemic.
If somebody only told us that.
So as we think about R2, we're simplifying the launch, we have one product that we're launching, it's a new product, leveraging a lot of the existing technology topology that we have in R1. So there's less technical risk, obviously. There’s also dramatic focus on part simplification, joint simplification and manufacturability. So it’s a very, very different vehicle architecture than what we did in R1. All the scars from ramping R1 are informing and driving this deep focus on manufacture building as we go into R2.
Would that have happened anyway or because of the needs of the R2 platform?
I think it's sometimes the pains of the present that enable the skills of the future. I look at like all the pain we've gone through on R1, created this proximity and an appreciation for manufacturing simplicity that, one, everyone would have agreed that that's necessary for R2, but two, embody that in such a deep way because you've lived through it is really powerful. And it's not like a whole different team is doing R2, it's the team that had to go through the R1 launch.
We’re coming off that — there's still people that are involved with the ramp, but a lot of the people that were on that are now moving to our or have moved, I should say, to R2, and so they're directly talking about stuff like, Hey, that was a real big challenge when we had to attach the C pillar trim on this part because the clips do this, this and this. Let's rethink that. Heck, let's get rid of all the clips. Those types of big questions are now coming up.
How do you see and how you think about vehicle weight right now?
Weight or wait? We get asked about both.
Ha, that’s true. Weight — W E I G H T. Rivian has obviously made two very big vehicles right now, and that increases the material needed for them — the bigger the vehicle, the bigger the battery, the bigger the mineral needs. At the same time, consumers seem to prefer larger motor vehicles. So I'm curious, like, do you think we're gonna find a sweet spot on vehicle weight? Do you think there's a trade-off between consumer demand, consumer tastes, and vehicle size? And if so, what does that mean for profitability? Because if vehicles are getting bigger, and it also means less safe for other people, not vehicles?
Yeah. There's a lot of questions.
First of all, our R1 vehicles are and will be our biggest consumer vehicles. They’re the flagship vehicles, as you'd expect — we have a three row SUV and, like, call it a large truck. And as a result of their physical size, their weight is also high, as a result of batteries, and drive train, chassis architecture, all this stuff. R2 will be a much lighter product, inherently.
And that's, I think, where you start to see where the vast majority of demand is going to be — that mid-size or smallish crossover and SUV space, where the vehicles are themselves smaller and therefore require less materials. This goes back to before the start of the company.
We also have to recognize that in order to drive electrification and to drive this transition, we have to be building products that are both just deeply desirable, but also respond to what customers want. So I talked before about what are the things that would block EV adoption? If we told customers the only way you can get an EV is if it's a small sedan, we're not going to sell a lot of EVs, you're going to see low penetration because customers want a vehicle that can fit all their kids, the gear, their stuff, they want larger SUVs —
And for energy density reasons, actually, the smaller the vehicle, the more likely it is to be fossil.
There's a lot of challenges. So I think what we're seeing is customers do want things that fit a form factor that applies what they've grown accustomed to. And we started with the large truck and largest SUV to do that.
The other thing just to note, and I think this is often missed, but if you're to pick the vehicles on the road, that from a carbon emissions point of view, you wanted to reduce carbon emissions by the largest percentage, you wouldn't pick the smallest vehicles in the road to replace, you'd go to the biggest, the least efficient. A 17 mile-per-gallon, 3-row SUV being replaced with a 80 to 90 mile-per-gallon equivalent R1S is a far better trade than a 45 mile-per-gallon ICE Vehicle being replaced with a 100 mile per gallon equivalent EV. Those deltas are really important.
And then I think the last part is — and this is something that I sort of lightly referenced — but there's so much amplified noise around the imperfections of electrification today that is creating a bunch of misinformation around the sustainability of an electric vehicle. No one, including ourselves, is saying an electric vehicle has zero footprint. Everything we do in our industrialized society has a footprint. If you use a light switch in your house, you have footprint. If you buy anything, or eat anything, for that matter, it has a footprint.
So the question is how do we approach a world that can be sustainable for generations upon generations, which means it needs to be a world that's powered by the sun. So that's either direct with photovoltaics or indirect with wind but either way it's sun powered. And that relies on us shifting off of an overall industrial economy that's running on fossil fuels.
And core to that is the things that need to move through stored energy. I think the vast majority [of that stored energy] will likely be in the form of batteries. There are hard problems like planes, but by the end of my lifetime, very few things on the planet will move with propulsion coming from fossil fuels.
And so the world is going to have a diverse set of needs. You're going to see everything from large trucks to buses, to large SUVs, to minivans to station wagons to hatchbacks to sports cars to — everything needs to be electrified.
And that means our vehicles are going to be a little heavier across the board because you know, the average vehicle weight is going to go up because everything's carrying a battery as opposed to a plastic fuel tank.
But you also get into a world where this becomes very circular. So we could talk about raw material extraction and some of the challenges with that. But in my lifetime, we'll also see a world where the source of our lithium is old lithium-ion batteries. And so you get this closed loop and it's why every lithium manufacturer, lithium processor in the world is focused, very focused on access to recycled content, and recycling becomes a really key feedstock as this system starts to reach scale.
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On FERC’s ‘disastrous misstep,’ the World Court’s climate ruling, and 127 SMRs
Current conditions: West African countries including Guinea-Bissau, Guinea-Conakry, Senegal and The Gambia are facing flash flooding from heavy rainfall • The southwestern corner of New Mexico is suffering “exceptional” drought, the highest possible level in the U.S. Drought Monitor. • Already roasting in excessive heat, Des Moines, Iowa, is bracing for thunderstorms.
The Department of Energy canceled a nearly $5 billion loan guarantee for the Grain Belt Express, a transmission project designed to move wind power from Kansas to the industrial upper Midwest. After more than a decade of development, the power line won bipartisan support and secured $4.9 billion in federal financing late last year to fund the first phase of the project, running from Ford County in Kansas to Callaway County in Missouri.
As Heatmap’s Matthew Zeitlin explained, the project eventually drew the ire of Missouri Senator Josh Hawley, who recently stepped up his attacks in the hopes that a more friendly administration could help scrap the project. The transmission line’s developer, Invenergy, told Heatmap in a statement that “a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance.”
The microreactor startup Oklo inked a deal with Liberty Energy, the fracking giant where Secretary of Energy Chris Wright served as chief executive before entering government. Liberty was already an early investor in Oklo, and Wright served on the nuclear company’s board. But the new deal is a strategic partnership with a plan to deploy Liberty’s gas equipment alongside Oklo’s reactors, mirroring similar pairings that other small modular reactor developers have promoted.
Oklo is among 127 small modular reactor designs currently under development worldwide, according to a new tally from the Nuclear Energy Agency at the Organisation for Economic Co-operation and Development, the 38-member club of rich countries. Of those designs, 51 are in pre-licensing or licensing processes, and 85 are in active discussion between SMR developers and site owners. Just seven are either operating or under construction.
The Federal Energy Regulatory Commission approved fast-track interconnection processes proposed by the Midcontinent Independent System Operator and the Southwest Power Pool. The new processes will allow power plants to sidestep the standard reviews for a grid hookup. Gas-fired power plants are “likely to be the main beneficiary of the fast-track processes, with standalone batteries also potentially being included,” Utility Dive reported. The American Clean Power Association, the biggest renewable energy lobby, called the decision “a dangerous misstep.”
Southern California’s landmark rule to spur the electrification of certain boilers and water heaters survived a major court challenge. A federal court last week upheld the first-in-the-nation regulation that applies to light-industrial and commercial boilers, steam generators, process heaters, residential pool heaters and tankless water heaters. The ruling, which only applies to the 17 million people in large parts of Los Angeles and its surrounding suburbs, could “help reenergize efforts around the country to replace fossil-fuel-burning equipment with electric heat pumps and other clean technologies,” Canary Media’s Maria Gallucci wrote.
Heatmap’s Emily Pontecorvo reported earlier this week on an effort in Newton, Massachusetts to beat back new gas pipelines block by block. But overall, the fight for electrification has recently faced repeated setbacks. In 2023, a federal court struck down the northern California city of Berkeley’s pioneering ban on new gas hookups, which was replicated in cities across the country. Last year, gas utilities staged something of a coup at the quasi-governmental organization that writes the building codes used in nearly every state.
Children stand outside a church destroyed in a cyclone in Vanuatu.Mario Tama/Getty Images
In a historic decision on Wednesday morning, the International Court of Justice ruled that countries must act on climate change. While non-binding, the verdict from the United Nations’ high court was dubbed “the biggest climate case in history,” as it established the first international legal precedent of a nation state’s responsibility to curb planet-heating emissions.
The tiny South Pacific island republic of Vanuatu called the ruling a “milestone in the fight for climate justice” and vowed to “take the ICJ ruling back to the United Nations General Assembly, and pursue a resolution that will support implementation of this decision,” said Vanuatuan climate minister Ralph Regenvanu. He anticipated opposition from Washington. “Even as fossil fuel expansion continues under the U.S.’s influence, along with the loss of climate finance and technology transfer, and the lack of climate ambition following the U.S.’s withdrawal from the Paris Agreement,” he said, “major polluters — past and present — cannot continue to act with impunity and treat developing countries as sacrifice zones to further feed corporate greed.”
Researchers at Japan’s Shinshu University have demonstrated for the first time that a new eco-friendly plastic made from microbes safely decomposes in deep ocean conditions
“This research addresses one of the most critical limitations of current bioplastics—their lack of biodegradability in marine environments,” said Professor Seiichi Taguchi at the Shinshu’s Institute for Aqua Regeneration. “The study provides a pathway for safer alternatives to conventional plastics and supports the transition to a circular bioeconomy.”
NextEra CEO John Ketchum projected serenity during the company’s earnings call Wednesday.
The business of renewable energy development in the United States is the business of NextEra. The company’s renewable division is one of the country’s largest and most sophisticated, with almost 30 gigawatts in its project backlog — including 3.2 gigawatts added in the past three months.
NextEra’s financial results and outlook for the future can be a guide to how the sector is thinking — or wants people to think it’s thinking — about the state of the development landscape. Now especially, that landscape looks confusing and contradictory, with power demand increasing sharply alongside hostility to wind and solar development.
The way NextEra sees it, NextEra will come through fine. But many other — especially many other smaller — players may struggle.
“Bottom line, America needs more electricity, not less,” NextEra Chief Executive John Ketchum told analysts during the company’s earnings presentation Wednesday.
“America needs it now, not just in the future. We are firmly aligned with the administration’s goal to unleash American energy dominance. And to do so, we need all of the electrons we can get on the grid. There’s truly no time to wait.”
That alignment may be one way, however. From sunsetting tax credits to ordering enhanced reviews of wind and solar projects by federal regulators, the Trump administration has made it clear that it does not see wind and solar as part of its energy strategy.
The rhetoric coming from Washington hasn’t been particularly constructive, either, no matter how often renewable energy companies try to label their work as part and parcel of an “energy dominance” agenda. Just in the past few weeks, Trump has claimed that China has “very, very few” wind farms (in fact it has very, very many), and Secretary of Energy Chris Wright called wind and solar a “parasite on the grid.”
NextEra is not unaware of the tone and policy emanating from the administration. The company issued a new risk disclosure, first noticed by analysts at Jefferies, saying that its guidance on future performance assumes “no changes to governmental policies or incentives, including continued applicability of existing Internal Revenue Service tax credit safe harbor guidance,” i.e. that it can “commence construction” the way it always has, by following existing IRS guidance.
Although that would be awfully nice, it may not be the case for much longer. Soon after signing the One Big Beautiful Bill Act, President Trump issued an executive order calling for “new and revised” tax guidance “to ensure that policies concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
It doesn’t take a terribly close reading to intuit that Trump wants to narrow the window for renewables developers to claim tax credits even beyond what Congress has already done. According to conservative members of Congress who wanted the tax credits to phase out even sooner, the president was merely fulfilling a promise he’d made to win their vote.
Ketchum at least projected serenity about the safe harbor situation, telling analysts that the definition of construction has been understood “for well over a decade,” that it “is informed by longstanding Treasury Department guidance,” and that the OBBBA’s language “definition is consistent with the settled meeting.”
He also noted that NextEra had “made significant financial commitments over the last few years, including in the first half of 2025, to begin construction under these rules that were in effect at the time those commitments were made,” i.e. before the bill was signed.
“We believe that we’ve begun construction on a sufficient number of projects to cover our development expectations through 2029,” Ketchum continued, adding that the company has determined it will be eligible for tax credits based on “our belief as to what the statute provides based on our experience in this industry over the last couple of decades.”
If anything, Ketchum suggested, NextEra might be advantaged by the harsh deadlines for commencing construction (July 4, 2026) or being placed in service (the end of 2027) in the new law. “It comes down to who’s safe harbor, right?” Ketchum said. “We know we compete against a lot of really small developers who don’t have the balance sheet, the construction financing to do things around safe harbor.”
In this kind of environment, Ketchum said, size matters.
“If you’re in a market where you have folks drop out, right, because they didn’t plan ahead, they don’t have the ability to get construction financing, they don’t have the ability to safe harbor. It obviously creates bigger opportunities for us.”
NextEra could be left to pick up the pieces from smaller developers that don’t make it, Ketchum said. “If we do see some small developers kind of fall away, there’ll be more projects that could potentially hit the market and come up for sale.”
It sure looks that way, at least. Democrats should start coming up with a plan.
For the first six months of President Trump’s term, the big question was about what would happen to the Inflation Reduction Act. We now have something like an answer.
President Trump’s memorably named One Big Beautiful Bill Act repealed many of the IRA’s most important clean energy tax credits, including incentives for wind, solar, and electric vehicles. And while it’s still unclear whether the Trump administration will let developers actually use the tax credits that remain on the books — especially the now-denuded credits for wind and solar — fewer “unknown unknowns” remain about what might come next.
So I’ve been trying to figure out where climate and energy policy might go from here. And one story that I keep coming back to is the flashing red lights around what could become a serious electricity affordability crisis.
It’s now widely understood that electricity demand is rising in the United States for the first time in a generation. The Energy Information Administration projects that electricity use will grow 1.7% in the next few years, after increasing by just 0.1% per year from 2005 to 2020. That growth is projected to come from new data centers, new factories, the (now) slow(er) but (still) steady adoption of electric vehicles, and population growth.
What is less well understood is how poorly the United States is prepared to match this rise in electricity demand with an equivalent increase in supply. To some degree, American electricity prices are already rising: So far this year, utilities have received or requested permission to increase customers’ bills by $29 billion, according to a July report from PowerLines, a think tank and advocacy group. That’s a large number in its own right, and it’s more than twice as much as had been approved at this time last year.
But when you look across the power system, virtually every trend is setting us up for electricity price spikes:
On top of all this, of course, the Trump administration has made it much more uncertain which new solar, wind, and battery projects will be able to secure tax credits — and with them, secure bank financing.
None of these trends alone would guarantee price increases or electricity supply constraints. But taken together, they reveal an electricity system that is coming under a variety of strains.
In the 2010s, cheap natural gas and technological advances in energy efficiency pacified much of the power system. We won’t have the same luxury this decade.
This is all going to be bad for the economy, bad for the climate, and bad for climate policy.
It’s a setback for the U.S. economy because, as President Trump somewhat alluded to in his second inaugural address, energy is a key input to virtually every other economic process, including manufacturing. But it’s especially bad for climate policy. The dominant plan to decarbonize much of the U.S. economy is to “electrify everything” — cars, appliances, home heating, and even many industrial processes. Americans will be far less eager to electrify everything if electricity is expensive.
If energy price hikes do arrive, Democrats are going to have a relatively straightforward time communicating about them in a narrow political sense. The story is just too simple: Democrats passed a law to encourage clean energy called the Inflation Reduction Act. Republicans repealed it. Energy prices inflated. QED.
That story alone might be too contrived, but the evidence we have suggests that OBBBA will raise energy bills. The REPEAT Project at Princeton University — led by Jesse Jenkins, my Shift Key podcast cohost — has a new report out projecting that the One Big Beautiful Bill Act will increase Americans’ electricity bills by $165 a year by the end of the decade. (If the law is allowed to stick around, and in the absence of intervening policies, it could raise bills by hundreds of dollars a year by the middle of next decade.)
OBBBA’s explosion of the federal deficit will make the situation worse: By expanding the deficit for such little public gain — that is, merely to memorialize earlier tax cuts, not even to make new ones — the Federal Reserve will have a more difficult time cutting interest rates in the future. That will in turn make it even more difficult for utilities and developers to finance new energy projects.
The political story will be so compelling here, I think, that Democrats will come under a lot of pressure to reinstate the wind and solar tax credits. And maybe they should do that — it could make sense as part of a larger energy or permitting deal. But stacking more solar and wind on the grid will not on its own lower people’s electricity bills.
Going into 2028, Democrats will need an actual plan to stabilize or cut electricity costs. They will need ideas about how (and whether) to speed up permitting, restructure wholesale power markets, and build new power plants in order to stabilize the power grid.
One thing that’s already clear is that in this inflationary environment, states like New York with publicly owned power authorities are able to intervene more forcefully in their own power markets than states that lack such capability. That’s because the state itself can act to build its own large-scale power plants. New York Governor Kathy Hochul recently directed the state’s power authority to build a new nuclear power plant upstate in order to grow the supply of zero-emissions electricity. Using their state own power authorities, governors in other states — or even the federal government, with an entity like the TVA— could take a similar step.
With all that said, I’ve been trying to come up with a scenario under which these price hikes will not materialize. In the late 2010s, for instance, America’s liquified natural gas exports surged essentially from zero, but domestic consumers didn’t see significant price hikes because drillers increased gas production to match the exports. Maybe that could happen again. And maybe utilities will — and this would, to be clear, be horrible for the climate — run their aging coal plants much more than they once anticipated doing.
Or maybe load growth won’t be as bad as we think. When Jesse and I spoke to Peter Freed, Meta’s former director of energy strategy, for Shift Key, he told us that the current data center boom is different from any previous buildout because of the presence of speculators. For the first time, he said, speculative data center developers are buying up prospective sites and requesting utility-scale hookups with the expectation that they will find a tenant for the data center in the future. In other words, the demand side of the electricity system is filled with an unusual amount of froth at the moment.
We also know that, more generally, the demand side of the power system is a mess. In the past few years, climate analysts have gotten used to talking about the power grid’s interconnection queue — that is, its supply side. But the demand-side queue — the process that lets new data centers, factories, and other new electricity users connect — is even more broken. In some jurisdictions, it’s little more than an Excel file that projects move up and down within as local politics requires.
We also know that one source of new demand — one planned factory or, more often, one data center — will sometimes apply to hook up to multiple states or utilities at the same time. It will get utilities to bid against each other, suss out the best construction sites and power rates, and only relatively late in the process make a final decision about where to build.
So if I were putting together a bear case for electricity demand, I would start here. Maybe aggressive data center speculators are bidding in multiple utilities, driving up projections across many states. That’s causing utilities to freak out about their supply, leading them to project the need for a lot of new investment — and, with it, a lot of electricity rate increases. But as data center speculators actually begin to build (or abandon) projects — and as some of the air inevitably comes out of the AI boom — some of this projected demand will start to evaporate. Perhaps the data centers that do get built will find ways to reduce their power usage, too.
Even this story won’t fully eliminate load growth on its own, though. Data centers make up the largest share of new electricity demand, but even then, they’re not the majority of it. The rest comes from, roughly, new factories, the slow electrification of the vehicle fleet, and new residential construction. But let’s say the One Big Beautiful Bill Act succeeds in hobbling the electric vehicle sector in the United States, many EV and battery factories get canceled, and fewer Americans buy EVs overall. Calculate in a mild recession, too, since all the AI and EV investment will be drying up.
In that world, most new sources of power demand really will be in abeyance. That’s how some of these power projections might not come true. But in most other scenarios, it’s time to hold on — and for blue-state leaders to think about how they can find cheap, zero-emissions electrons, as soon as possible.