You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
Tuesday’s encouraging inflation data concealed an ominous warning sign.
The Trump administration’s policy of increased natural gas exports abroad, plus increased industrial and artificial intelligence investment at home, plus cuts to green energy tax credits could add up to more energy price volatility for Americans.
On Monday, the House Ways and Means Committee unveiled its plan for deep cuts to the Inflation Reduction Act, including early expiration dates and restrictions on the core clean energy tax credits that would effectively gut America’s signature climate law.
But Tuesday’s good news about inflation also contained a troubling omen for electricity prices.
Overall, prices are rising at their slowest rate in years. The Bureau of Labor Statistics reported that overall prices have risen 2.3% in the past year, the slowest annual increase since February 2021. But electricity prices were up 0.8% just in the past month, and were up 3.6% over last year.
This is likely due in part to rising natural gas prices, as natural gas provides the better part of American electricity generation.
The benchmark Henry Hub spot price for natural gas was $3.26 per million British thermal unit last week, according to the latest Energy Information Administration data — around twice the price of a year ago. And there’s reason to think prices for both gas and electricity will continue to rise, or at least be vulnerable to spikes, explained Skanda Amarnath, the executive director of Employ America.
European demand for liquified natural gas has been high recently, which helps pull the American natural gas price closer to a global price, as Europe is a major buyer of U.S. LNG.
During the early years of the shale boom in the 2010s, before the United States had built much natural gas export capacity (the first LNG shipment from the continental United States left Louisiana in early 2016, believe it or not), American natural gas consumers benefited from “true natural gas abundance,” Amarnath told me. “We had this abundance of natural gas and no way for it to get out.”
Those days are now over. The Trump administration has been promoting LNG exports from day one to a gas-hungry global economy. “We’re not the only country that wants natural gas, and LNG always pays a premium,” Amarnath said.
In March, Western European gas imports hit their highest level since 2017, according to Bloomberg. And there’s reason to expect LNG exports will continue at that pace, or even pick up. One of the Trump administration’s first energy policy actions was to reverse the Biden-era pause on permitting new LNG terminals, and Secretary of Energy Chris Wright has issued a number of approvals and permits for new LNG export terminals since.
The EIA last week bumped up its forecast for natural gas prices for this year and next, citing both higher domestic natural gas demand and higher exports than initially expected. And those are in addition to all the structural factors in the United States pulling on electricity demand — and therefore natural gas demand — including the rise in data center development and the boom in new manufacturing.
But we’re in the era of “drill, baby, drill,” right? So all that new demand will be met with more supply? Not so fast.
Increased production of oil overseas — pushed for by Trump — is playing havoc with the economics of America’s oil and gas companies, which are starting to level off or even decrease production. The threat of an economic slowdown induced by Trump’s tariffs also influenced some of those decisions, though that fear may have eased with the U.S.-China trade deal announced on Monday.
While it’s the price of oil that largely determines investment decisions for these companies, a consequence can be fluctuations in natural gas production. That’s because much of America’s natural gas comes out of oil wells, so when oil wells go unexploited, natural gas stays in the ground, too.
“A drop in crude oil prices over the past three months has reduced our expectations for U.S. crude oil production growth, and we now expect less associated natural gas production than we did in January,” the EIA wrote last week.
“Together, these factors mean we expect natural gas prices will be higher in order to incentivize production and keep markets balanced.”
At the same time, Republicans in Congress and the Trump administration look to choke off policy support for a boom in renewables investment with their planned dismantling of the Inflation Reduction Act. This means a less diversified grid that will be more reliant on natural gas, Amarnath explained.
When natural gas prices spike, “it’s very useful to have non-gas sources of supply,” Amarnath told me. The alternative fuel can be anything as long as it’s not fossil. It can be solar, it can be wind, it can be nuclear — all three of which would be hammered by the IRA cuts.
What these sources of power do — besides reduce greenhouse gas emissions — is diversify the grid, so that America’s electricity consumers are “not held hostage to what Asian or European LNG buyers want to pay,” Amarnath said.
“The less you rely on a fuel source for electricity, the more stable you are from a price spike. And we’re more at risk now.”
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Tech companies, developers, and banks are converging behind “flexible loads.”
Electricity prices are up by over 5% so far this year — more than twice the overall rate of inflation — while utilities have proposed $29 billion worth of rate hikes so far this year, compared to $12 billion last year, according to electricity policy research group PowerLines. At the same time, new data centers are sprouting up everywhere as tech giants try to outpace each other — and their Chinese rivals — in the race to develop ever more advanced (and energy hungry) artificial intelligence systems, with hundreds of billions of dollars of new investments still in the pipeline.
You see the problem here?
In the PJM Interconnection, America’s largest electricity market which includes Virginia’s “data center alley” as part of its 13-state territory, some 30 gigawatts of a projected 32 total gigawatts of load growth through 2030 are expected to come from data centers.
“The onrush of demand has created significant upward pricing pressure and has raised future resource adequacy concerns,” David Mills, the chair of PJM’s board of managers, said in a letter last week announcing the beginning of a process to look into the issues raised by large load interconnection — i.e. getting data centers on the grid without exploding costs for other users of the grid or risking blackouts.
Customers in PJM are paying the price already, as increasingly scarce capacity has translated into upward-spiraling payments to generators, which then show up on retail electricity bills. New large loads can raise costs still further by requiring grid upgrades to accommodate the increased demand for power — costs that get passed down to all ratepayers. PJM alone has announced over $10 billion in transmission upgrades, according to research by Johns Hopkins scholar Abraham Silverman. “These new costs are putting significant upward pressure on customer bills,” Silverman wrote in a report with colleagues Suzanne Glatz and Mahala Lahvis, released in June.
“There’s increasing recognition that the path we’re on right now is not long-term sustainable,” Silverman told me when we spoke this week about the report. “Costs are increasing too fast. The amount of infrastructure we need to build is too much. We need to prioritize, and we need to make this data center expansion affordable for consumers. Right now it’s simply not. You can’t have multi-billion-dollar rate increases year over year.”
While it’s not clear precisely what role existing data center construction has played in electricity bill increases on a nationwide scale, rising electricity rates will likely become a political problem wherever and whenever they do hit, with data centers being the most visible manifestation of the pressures on the grid.
Charles Hua, the founder and executive director of PowerLines, called data centers “arguably the most important topic in energy,” but cautioned that outside of specific demonstrable instances (e.g. in PJM), linking them to utility rate increases can be “a very oversimplified narrative.” The business model for vertically integrated utilities can incentivize them to over-invest in local transmission, Hua pointed out. And even without new data center construction, the necessity of replacing and updating an aging grid would remain.
Still, the connection between large new sources of demand and higher prices is pretty easy to draw: Electricity grids are built to accommodate peak demand, while the bills customers receive are based on a combination of the fixed cost of maintaining the grid for everyone and the cost of the energy itself, therefore higher peak demand and more grid maintenance equals higher bills.
But what if data centers could use the existing transmission and generation system and not add to peak generation? That’s the promise of load flexibility.
If data centers could commit to not requiring power at times of extremely high demand, they could essentially piggyback on existing grid infrastructure. Widely cited research by Tyler Norris, Tim Profeta, Dalia Patino-Echeverri, and Adam Cowie-Haskell of Duke University demonstrated that curtailing large loads for as little as 0.5% of their annual uptime (177 hours of curtailment annually on average, with curtailment typically lasting just over two hours) could allow almost 100 gigawatts of new demand to connect to the grid without requiring extensive, costly upgrades.
The groundswell behind flexibility has rapidly gained institutional credibility. Last week, Google announced that it had reached deals with two utilities, Indiana Michigan Power and the Tennessee Valley Authority, to incorporate flexibility into how their data centers run. The Indiana Michigan Power contract will “allow [Google] to reduce or shift electricity demand to carry out non-urgent tasks during hours when the electric grid is under less stress,” the utility said.
Google has long been an innovator in energy procurement — it famously pioneered the power purchase agreement structure that has helped finance many a renewable energy development — and already has its fingers in many pots when it comes to grid flexibility. The company’s chief scientist, Jeff Dean, is an investor in Emerald AI, a software company that promises to help data centers work flexibly, while its urbanism-focused spinout Sidewalk Infrastructure Partners has backed Verrus, a demand-flexible data center developer.
Hyperscale developers aren’t the only big fish excited about data center flexibility. Financiers are, as well.
Goldman Sachs released a splashy report this week that cited Norris extensively (plus Heatmap). Data center flexibility promises to be a win-win-win, according to Goldman (which, of course, would love to finance an AI boom unhindered by higher retail electricity rates or long interconnection queues for new generation). “What if, thanks to curtailment, instead of overwhelming the grid, AI data centers became the shock absorbers that finally unlocked this stranded capacity?” the report asks.
The holy grail for developers and flexibility is not just saving money on electricity, which is a small cost compared to procuring advanced chips to train and run AI models. The real win would be to build new data centers faster. “Time to market is critical for AI companies,” the Goldman analysts wrote.
But creating a system where data centers can connect to the grid sooner if they promise to be flexible about power consumption would require immense institutional change for states, utilities, regulators, and power markets.
“We really don’t have existing service tiers in place for most jurisdictions that acknowledges and incentivizes flexible loads and plans around them,” Norris told me.
When I talked to Silverman, he told me that integrating flexibility into local decision-making could mean rewriting state utility regulations to allow a special pathway for data centers. It could also involve making local or state tax incentives contingent on flexibility.
Whatever the new structure looks like, the point is to “enshrine a policy that says, ‘data centers are different,’ and we are going to explicitly recognize those differences and tailor rules to data centers,” Silverman said. He pointed specifically to a piece of legislation in New Jersey that he consulted on, which would have utilities and regulators work together to come up with specific rate structures for data centers.
Norris also pointed to a proposal in the Southwest Power Pool, which runs down the spine of the country from the Dakotas to Louisiana, which would allow large loads like data centers to connect to the grid quickly “with the tradeoff of potential curtailment during periods of system stress to protect regional reliability,” the transmission organization said.
And there’s still more legal and regulatory work to be done before hyperscalers can take full advantage of those incentives, Norris told me. Utilities and their data center customers would have to come up with a rate structure that incorporates flexibility and faster interconnection, where more flexibility can allow for quicker timelines.
Speed is of the essence — not just to be able to link up more data centers, but also to avoid a political firestorm around rising electricity rates. There’s already a data center backlash brewing: The city of Tucson earlier this month rejected an Amazon facility in a unanimous city council vote, taken in front of a raucous, cheering crowd. Communities in Indiana, a popular location for data center construction, have rejected several projects.
The drama around PJM may be a test case for the rest of the country. After its 2024 capacity auction jumped came in at $15 billion, up from just over $2 billion the year before, complaints from Pennsylvania Governor Josh Shapiro led to a price cap on future auctions. PJM’s chief executive said in April that he would resign by the end of this year. A few months later, PJM’s next capacity auction hit the price cap.
“You had every major publication writing that AI data centers are causing electricity prices to spike” after the PJM capacity auction, Norris told me. “They lost that public relations battle.”
With more flexibility, there’s a chance for data center developers to tell a more positive story about how they affect the grid.
“It’s not just about avoiding additional costs,” Norris said. “There’s this opportunity that if you can mitigate additional cost, you can put downward cost on rates.” That’s almost putting things generously — data center developers might not have a choice.
On a billion-dollar mineral push, the north’s grim milestones, and EV charging’s comeback
Current conditions: The Southeastern U.S. is facing flash floods through the end of Thursday • Temperatures in Fez, Morocco, are forecast to hit 108 degrees Fahrenheit • Wildfires continue to rage across southern Europe, sending what Spain’s environment minister called a “clear warning” of the effects of climate change.
President Donald Trump on Wednesday named David Rosner, a centrist Democrat, as the new chairman of the Federal Energy Regulatory Commission. Since joining the commission in June 2024, Rosner focused the panel on the nation’s growing electricity demand from data centers and pushed for greater automation of the engineering process to connect power plants to the continent’s various grid systems. “Getting grid interconnection moving faster is essential to ensuring reliability,” Rosner told E&E News in March. “We’re starting to learn about these new tools and platforms that just make this work faster, smarter, saves us time, solves the reliability and affordability problems that are facing the country.”
The Bipartisan Policy Center, where Rosner previously worked as a staffer, hailed his promotion as a positive step. “Chairman Rosner’s strong understanding of the energy challenges facing our country, and demonstrated record of bipartisan work to address those challenges, make him well-suited to carry out the responsibilities of FERC chairman,” David R. Hill, the executive vice president of the group’s energy program, said in a statement.
Lithium production in Chile's Atacama Desert, one of the world's main sources.John Moore/Getty Images
The Energy Department announced at least $925 million in funding for five proposed programs to bolster the country’s domestic supply of minerals. “For too long, the United States has relied on foreign actors to supply and process the critical materials that are essential to modern life and our national security,” Secretary of Energy Chris Wright said in a press release. “The Energy Department will play a leading role in reshoring the processing of critical materials and expanding our domestic supply of these indispensable resources.”
That funding includes:
The Trump administration has made bolstering America’s critical minerals industry one of its signature energy policy priorities. Though as Heatmap’s Matthew Zeitlin has written, it has also gone out of its way to annihilate sources of domestic demand for these minerals, especially in the wind energy and electric vehicle industries.
In Alaska, an overflowing glacial lake north of Juneau triggered the Mendenhall River to surge to a record height, flooding the state’s capital city. The problem has been growing for years as climate change in the nation’s most rapidly-warming state accelerates the volume of ice melt. In 2023, floodwaters eroded Mendenhall’s banks, causing homes to collapse, according to the Alaska Beacon. In 2024, the news outlet reported, “the flood was the worst yet.” The flood peaked Wednesday afternoon at nearly 17 feet, damaging hundreds of homes.
Across the border, meanwhile, the more than 700 active fires blazing in Canada have already made this the country’s second-worst fire season on record. The largest fire, the Shoe fire in Saskatchewan, has been burning across 1.4 million acres — an area larger than the Grand Canyon National Park in Arizona — since May 7, The New York Times reported.
In an executive order on his first day back in office, Trump singled out the $5 billion National Electric Vehicle Infrastructure program, directing his Department of Transportation to pause and review the funding, with an eye toward cutting it entirely. Earlier this week, the Federal High Administration completed its review and issued a new guidance that, as my colleague Emily Pontecorvo wrote yesterday, “not only preserves it, but also purports to ‘streamline applications,’ ‘slash red tape,’ and ‘ensure charging stations are actually built.’”
“If Congress is requiring the federal government to support charging stations, let’s cut the waste and do it right,” Transportation Secretary Sean Duffy said in a press release. “While I don’t agree with subsidizing green energy, we will respect Congress’ will and make sure this program uses federal resources efficiently.” The statement, Emily noted, is out of sync with the administration’s other actions to throttle the adoption of EVs: “Only time will tell whether the new guidance is truly a win for EV charging, however. It’s a win in the sense that many EV advocates feared the agency would try to kill the program or insert poison pills into the guidance. But it’s unclear whether the changes will speed up NEVI deployment beyond what might have happened had it not been paused.”
A researcher has designed a new centimeter-square device that could help probe the “ignorosphere,” a layer of ultra-thin air that has largely escaped exploration by balloons, aircraft and satellites. The contraption uses technology similar to a weathervane encased in a low-pressure chamber that will spin when exposed to light. “You don’t really believe it until you see it,” Ben Schafer, a physicist at Harvard University in Cambridge, Massachusetts, told Nature.
President Trump has had it in for electric vehicle charging since day one. His January 20 executive order “Unleashing American Energy” singled out the $5 billion National Electric Vehicle Infrastructure program by name, directing the Department of Transportation to pause and review the funding as part of his mission to “eliminate” the so-called “electric vehicle mandate.”
With the review now complete, the agency has concluded that canceling NEVI is not an option. In an ironic twist, the Federal Highway Administration issued new guidance for the program on Monday that not only preserves it, but also purports to “streamline applications,” “slash red tape,” and “ensure charging stations are actually built.”
“If Congress is requiring the federal government to support charging stations, let’s cut the waste and do it right,” Transportation Secretary Sean Duffy said in a press release. “While I don’t agree with subsidizing green energy, we will respect Congress’ will and make sure this program uses federal resources efficiently.”
Duffy’s statement stands in sharp contrast to the stance of other federal agencies, including the Environmental Protection Agency and the Department of Energy, which continue to block congressionally-mandated spending programs.
Only time will tell whether the new guidance is truly a win for EV charging, however. It’s a win in the sense that many EV advocates feared the agency would try to kill the program or insert poison pills into the guidance. But it’s unclear whether the changes will speed up NEVI deployment beyond what might have happened had it not been paused.
“The real story to me is the needless delay,” Joe Halso, a senior attorney for Sierra Club, told me. “They took six months to produce something that they could have done in an afternoon, and that didn’t require them to halt the program in the first place. Every day of that delay stalled critical EV charging projects.”
The goal of the NEVI program was to help states install charging stations in areas that the market, on its own, was not serving. States had to submit annual plans to the FHWA for how they would deploy the funds to fill gaps in regional EV charging networks. Once those plans are approved, states could issue requests for proposals from EV charging companies to build the new charging stations and award grants to help get them financed.
In February, Duffy issued a letter to state Departments of Transportation suspending approval of their plans for all fiscal years, pending forthcoming new guidance from the agency. That meant states would not be able to issue new awards, essentially freezing the program. At the time, the agency had approved state spending plans totaling more than $3.2 billion for fiscal years 2022 through 2025. Of that money, states had committed only about $526 million to specific projects.
In early May, 16 states plus the District of Columbia challenged the DOT’s actions in court, winning a preliminary injunction that prevented the agency from suspending or revoking their previously-approved plans. While the injunction unfroze the program in the plaintiff states, about $1.8 billion for the rest of the country was still locked up. But the judge allowed a coalition of national, regional, and community groups, including the Sierra Club, to become parties in the case and fight for the funding to be restored across the board. That means that if the plaintiffs are ultimately successful, the verdict will apply to every state, not just those 16 that filed the case.
The fact that the DOT issued new guidance this week doesn’t change anything about the case, Halso of the Sierra Club told me. The move could wind up delaying the program further.
“This new guidance prolongs the freeze by forcing states to resubmit already approved plans to access money they’re already entitled to,” Halso explained. “And we don’t know if or when federal highways will approve those plans and restore states’ access to money.” The guidance gives states 30 days to submit their plans, though it does allow them to simply re-submit previously-approved versions.
In Monday’s press release, Duffy declared the program’s implementation to date a “failure,” citing the fact that only 16% of the funds had been obligated so far. It’s true that the program has been slow in getting underway. As of this week, there are at least 106 NEVI-funded charging stations with 537 ports across 17 states, Loren McDonald, the chief analyst for the EV charging data analytics firm Paren, told me. That’s a long way off pace to achieve President Biden’s stated goal of installing 500,000 by 2030.
It’s also true that the new rules are simpler. The previous guidance, which was 30 pages long, contained more than five pages of detailed “considerations” states had to follow in developing their plans, which designated specific distances between chargers, required projects to mitigate adverse impacts to the electric grid, and mandated that States target “rural areas, underserved and overburdened communities, and disadvantaged communities,” among other rules. The new guidance, by contrast, is a tight seven pages devoid of almost any obligations not explicitly required by the Bipartisan Infrastructure Law, which created the program.
Under the previous guidance, for example, NEVI-funded stations had to be built within one mile of a federally-designated EV corridor and at no greater than 50-mile increments along those corridors. The new guidance simply says that states should “consider the appropriate distance between stations to allow for reasonable travel and certainty that charging will be available to corridor travelers when needed.”
McDonald told me that some states had been frustrated with the 50-mile siting requirement and would likely welcome that change. NATSO and SIGMA, two industry associations that represent rest stops, travel centers, and fuel marketers, issued a joint statement praising the “flexible, consumer-oriented approach.” They also specifically applauded the guidance for encouraging states to prioritize projects that are built and operated by the site owner. Some NEVI projects were being developed by a third party, such as Tesla, which had to sign a long-term lease with the site owner, like a grocery store or hotel. These agreements took time to work out, and would sometimes fall apart, McDonald told me.
But from McDonald’s vantage point, what was slowing down the program most was the fact that every state had different requirements and a different process for soliciting and scoring proposals from developers. Also, while a few states already had previous experience administering EV charging grant programs, many lacked staff and expertise in the subject. “I don’t mean this the way it’s going to come out,” McDonald said. “But they barely knew how to spell EV charging. A lot of the state DOTs really just were about building roads and bridges, and they had never had to deal with any charging.”
The new DOT guidance doesn’t seek to address either of those issues. “I’m not seeing anything in here that’s going to lead to a significant reduction in time,” McDonald said. “It seems to sort of miss where the lengthy processes were.”
The Zero Emission Transportation Association, an industry group, had a more positive outlook. Research associate Corey Cantor told me the new guidance is “workable” for the industry and provides regulatory certainty. When I asked Cantor if the changes the agency made to the guidance would help get more money out the door, he said it “remains to be seen on the implementation side,” but that states had been asking for more flexibility.
Cantor emphasized that it was important for state DOTs to have regulatory certainty and to get the funds flowing again. “Charging anxiety, after the upfront cost of EVs, is one of the highest cited barriers for entry for new adopters of electric vehicles,” he said. “And so getting the charging network filled out is key to helping us move to this next stage of the transition.”