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Then again, there are reasons why he’d want to focus on existing generation.
Just how big is the data center boom, really? How much is electricity demand going to expand over the coming decades? Business plans, government policy, and alarming environmental forecasts are all based on the idea that we’re on an unrelenting ride upwards in terms of electricity use, especially from data centers used to power artificial intelligence.
It’s one reason why the new Trump administration declared in the first days of its return to power that the country was in an “energy emergency,” and hasbeen used as a justification for its attempted revival of the coal industry.
But one mildly dissenting voice came from a perhaps-unexpected corner: the power industry.
Constellation Energy’s Chief Executive Officer Joseph Dominguez spent a portion of the company’s quarterly earnings call Tuesday throwing lukewarm water on the most aggressive load growth projections, even as the company looks to profit from increased demand for the power that its over 30,000-megawatt, largely nuclear fleet serves.
Dominguez told his audience of investors and analysts that utilities and their power customers have been telling Constellation that “the same data center need is being considered in multiple jurisdictions across the United States at the same time, just like fishing. If you’re a fisherman, you put a bunch of lines in the water to try to catch fish, and the data center developers are doing exactly the same thing.”
This means that different electricity markets or utility territories could report the same future data center demand, when ultimately the developer will pick just one site.
Tallying the demand growth projections from a few large power markets — namely MISO, which largely serves the Midwest; PJM, which largely serves the East Coast; and ERCOT, the Texas energy market — which together “account for less than half” of U.S. power demand, Dominguez said, Constellation finds that they project “notably higher” demand growth than many third-party consultants and analysts foresee for the country as a whole.
“It’s hard not to conclude that the headlines are inflated,” Dominguez said. He further claimed that Constellation had “done the math,” and that “if Nvidia were able to double its output and every single chip went to ERCOT, it still wouldn’t be enough chips to support some of the load forecasts.”
He argued that utilities tend to overstate load growth — an observation backed up by research from the Rocky Mountain Institute. “We get it,” he said. “Utilities have to plan to ensure that the system is reliable.” That frequently means erring on the side of having more generation and transmission to serve future demand as opposed to being caught short.
Dominguez is hardly the first voice to call into question load growth forecasts. Energy industry consultant Jonathan Koomey told Heatmap more than a year ago that “everyone needs to calm the heck down” about AI-driven load growth. Data center developers, chipmakers, and AI companies would likely find efficiencies to get more computing power out of less electric power, he predicted, similar to how the original data center buildout avoided catastrophic predictions of imminent power shortages and spiking electricity prices in the early 2000s.
Since then, demand growth projections have done nothing but rise. But even just a few weeks ago, Peter Freed, Meta’s former director of energy strategy, told Heatmap’s Shift Key podcast, “It is simultaneously true that I think this is going to be a really large demand driver and that we have bubble-like characteristics in terms of the amount of stuff that people are trying to get done.”
Now, to be clear, Dominguez has a reason to talk down expectations of future demand growth — and with it the expectation that there needs to be massive investment in new power plants. Constellation owns and operates a fleet of nuclear power plants, and is bringing on a gas-heavy fleet with its planned acquisition of Calpine.
Dominguez also said that new natural gas and renewables were likely to prove expensive to build.
“The cost of new entry, whether that be for combined cycle machines or solar with storage, has gone up substantially, as has the time to build and site these assets,” Dominguez said. “Now, at the end of the day, in a tightening market, we compete with the cost of new entry.”
This is halfway consistent with what other big players in the energy industry have been saying. John Ketchum, the chief executive of NextEra, which has a large renewables development business,has been telling anyone who will listen that the way to meet urgent load growth is with renewables and batteries, as they can be built cheaper and faster than natural gas, let alone nuclear.
Dominguez’s take, however, is that it’s all quite expensive and lengthy considering the likely level of need.
“When I listen to some of the comments on these calls, I just have to tell you, folks, I think the load is being overstated. We need to pump the brakes here.”
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A conversation with Mike Hall of Anza.
This week’s conversation is with Mike Hall, CEO of the solar and battery storage data company Anza. I rang him because, in my book, the more insights into the ways renewables companies are responding to the war on the Inflation Reduction Act, the better.
The following chat was lightly edited for clarity. Let’s jump in!
How much do we know about developers’ reactions to the anti-IRA bill that was passed out of the House last week?
So it’s only been a few days. What I can tell you is there’s a lot of surprise about what came out of the House. Industries mobilized in trying to improve the bill from here and I think a lot of the industry is hopeful because, for many reasons, the bill doesn’t seem to make sense for the country. Not just the renewable energy industry. There’s hope that the voices in Congress — House members and senators — who already understand the impact of this on the economy will in the coming weeks understand how bad this is.
I spoke to a tax attorney last week that her clients had been preparing for a worst case scenario like this and preparing contingency plans of some kind. Have you seen anything so far to indicate people have been preparing for a worst case scenario?
Yeah. There’s a subset of the market that has prepared and already executed plans.
In Q4 [of 2024] and Q1 [of this year] with a number of companies to procure material from projects in order to safe harbor those projects. What that means is, typically if you commence construction by a certain date, the date on which you commence construction is the date you lock in tax credit eligibility, and we worked with companies to help them meet that criteria. It hedged them on a number of fronts. I don’t think most of them thought we’d get what came out of the House but there were a lot of concerns about stepdowns for the credit.
After Trump was elected, there were also companies who wanted to hedge against tariffs so they bought equipment ahead of that, too. We were helping companies do deals the night before Liberation Day. There was a lot of activity.
We saw less after April 2nd because the trade landscape has been changing so quickly that it’s been hard for people to act but now we’re seeing people act again to try and hit that commencement milestone.
It’s not lost on me that there’s an irony here – the attempts to erode these credits might lead to a rush of projects moving faster, actually. Is that your sense?
There’s a slug of projects that would get accelerated and in fact just having this bill come out of the House is already going to accelerate a number of projects. But there’s limits to what you can do there. The bill also has a placed-in-service criteria and really problematic language with regard to the “foreign entity of concern” provisions.
Are you seeing any increase in opposition against solar projects? And is that the biggest hurdle you see to meeting that “placed-in-service” requirement?
What I have here is qualitative, not quantitative, but I was in the development business for 20 years, and what I have seen qualitatively is that it is increasingly harder to develop projects. Local opposition is one of the headwinds. Interconnection is another really big one and that’s the biggest concern I have with regards to the “placed-in-service” requirement. Most of these large projects, even if you overcome the NIMBY issues, and you get your permitting, and you do everything else you need to do, you get your permits and construction… In the end if you’re talking about projects at scale, there is a requirement that utilities do work. And there’s no requirement that utilities do that work on time [to meet that deadline]. This is a risk they need to manage.
And more of the week’s top news in renewable energy conflicts.
1. Columbia County, New York – A Hecate Energy solar project in upstate New York blessed by Governor Kathy Hochul is now getting local blowback.
2. Sussex County, Delaware – The battle between a Bethany Beach landowner and a major offshore wind project came to a head earlier this week after Delaware regulators decided to comply with a massive government records request.
3. Fayette County, Pennsylvania – A Bollinger Solar project in rural Pennsylvania that was approved last year now faces fresh local opposition.
4. Cleveland County, North Carolina – Brookcliff Solar has settled with a county that was legally challenging the developer over the validity of its permits, reaching what by all appearances is an amicable resolution.
5. Adams County, Illinois – The solar project in Quincy, Illinois, we told you about last week has been rejected by the city’s planning commission.
6. Pierce County, Wisconsin – AES’ Isabelle Creek solar project is facing new issues as the developer seeks to actually talk more to residents on the ground.
7. Austin County, Texas – We have a couple of fresh battery storage wars to report this week, including a danger alert in this rural Texas county west of Houston.
8. Esmeralda County, Nevada – The Trump administration this week approved the final proposed plan for NV Energy’s Greenlink North, a massive transmission line that will help the state expand its renewable energy capacity.
9. Merced County, California – The Moss Landing battery fire is having aftershocks in Merced County as residents seek to undo progress made on Longroad’s Zeta battery project south of Los Banos.
Anti-solar activists in agricultural areas get a powerful new ally.
The Trump administration is joining the war against solar projects on farmland, offering anti-solar activists on the ground a powerful ally against developers across the country.
In a report released last week, President Trump’s Agriculture Department took aim at solar and stated competition with “solar development on productive farmland” was creating a “considerable barrier” for farmers trying to acquire land. The USDA also stated it would disincentivize “the use of federal funding” for solar “through prioritization points and regulatory action,” which a spokesperson – Emily Cannon – later clarified in an email to me this week will include reconfiguring the agency’s Rural Energy for America loan and grant program. Cannon declined to give a time-table for the new regulation, stating that the agency “will have more information when the updates are ready to be published.”
“Farmland should be for agricultural production, not solar production,” Cannon wrote – a statement also made in the USDA report.
REAP is a program created in 2008 that exists to help fund renewable energy and sustainability projects at the level of individual farms and has been seen as a potential tool for not only building more solar but also more trust in agriculturally-focused communities. It’s without question that retooling REAP to actively disincentivize awardees from building solar on farmland could have a chilling effect, at least amongst those who receive money from the program or wish to in the future. This comes after Trump officials temporarily froze money promised to farmers, too.
As we’ve previously written in The Fight, agricultural interests can at times present as much a threat to the future of solar energy as any oil-funded dark money group, if not more so. Conflicts over solar production on farmland make up a large portion of the total projects I cover in The Fight every week, and it is one of the most frequently cited reasons for opposition against individual renewables projects. (Agricultural workforces are one of the most important signals for renewable energy opposition in Heatmap Pro’s modeling data as well.) I wrote shortly after Trump’s inauguration that I wondered when – not if – he would adopt this position.
It’s unclear what exactly led USDA to dive headlong into the “No Solar on Farmland” campaign, aside from its growing popularity in conservative political circles, but there is reason to believe farming interests may have played a role. USDA has stated the report was the product of discussions with farming groups and an industry roundtable. In addition, per lobbying disclosures, at least one agricultural group – the Pennsylvania Farm Bureau – advocated earlier this year for “congressional action and/or executive orders” to “balance renewable and conventional sources of energy” through “limit[ing] solar on productive farmland.” (The Pennsylvania Farm Bureau denied this in an email to me earlier this week.)
There’s also reason to believe some key stakeholders were caught off-guard or weren’t looped in on the matter.
American Farmland Trust has been trying to cultivate common ground between farmers, solar companies, and various agencies at all levels of government over the future of development. But when asked about this report, the nonprofit told me it couldn’t speak on the matter because it was still trying to suss out what was going on.
“AFT is meeting with the Trump administration to learn more about what they are planning in terms of policy and programs to implement this concept,” AFT media relations associate Michael Shulman told me.