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A new report from the Clean Air Task Force casts shade on “levelized cost of energy.”

Forgive me, for I have cited the levelized cost of energy.
That’s what I was thinking as I spoke with Kasparas Spokas, one of the co-authors of a new paper from the Clean Air Task Force that examines this popular and widely cited cost metric — and found it wanting.
Levelized cost of energy, or LCOE, is a simple calculation: You take a generator, like a solar panel (with a discount for future costs), and add up its operating and capital expenditures, and then divide by the expected energy output over the life of the project (also discounted).
LCOE has helped underline the economic and popular case for renewables, especially solar. And it’s cited everywhere. The investment bank Lazard produces an influential annual report comparing the LCOE of different generation sources; the latest iteration puts utility-scale solar as low as $29 per megawatt-hour, while nuclear can be as high as $222. Environmental groups cite LCOE in submissions to utilities regulators. Wall Street analysts use it to project costs. And journalists, including me, will cite it to compare the cost of, say, solar panels to natural gas.
We probably shouldn’t, according to Spokas — or at least we should be more clear about what LCOE actually means.
“We continue to see levelized cost of electricity being used in ways that we think are not ideal or not adequate to what its capabilities are,” Spokas told me.
The report argues that LCOE “is not an appropriate tool to use in the context of long-term planning and policymaking for deep decarbonization” because it doesn’t take into account factors that real-world grids and grid planners also have to consider, such as when the generator is available, whether the generator has inertia, and what supporting infrastructure (including transmission and distribution lines) a generator needs to supply power to customers.
We see these limitations and constraints on real-life grids all the time, for instance in the infamous solar “duck curve.” During the middle of the day, when the sun is highest, non-solar generation can become essentially unnecessary on a solar-heavy grid. But these grids can run into problems as the sun goes down but electricity demand persists. In this type of grid, additional solar may be low cost, but also low value — it gives you electricity when you need it the least.
“If you’re building a lot of solar in the Southwest, at some point you’ll get to the point where you have enough solar during the day that if you build an incremental amount of solar, it’s not going to be valuable,” Spokas said. To make additional panels useful, you’d have to add battery storage, increasing the electricity’s real-world cost.
Looking for new spots for renewables also amps up conflict over land use and provides more opportunities for political opposition, a cost that LCOE can’t capture. And a renewables-heavy grid can require investments in energy transmission capacity that other kinds of generation do not — you can put a gas-fired power plant wherever you can buy land and get permission, whereas utility-scale solar or wind has to be where it’s sunny or windy.
“The trend is, the more renewable penetration you have, the more costly meeting a firm demand with renewables and storage becomes,” Spokas said.
Those real-world pressures are now far more salient to grid planners than they were earlier this century, when LCOE became a popular metric to compare different types of generators.
“The rise of LCOE’s popularity to evaluate technology competitiveness also coincided with a period of stagnant load growth in the United States and Europe,” the report says. When there was sufficient generation capacity that could be ramped up and down as needed, “the need to consider various system needs and costs, such as additional transmission or firm capacity needs was relatively low.”
This is not the world we’re in today.
Demand for electricity is rising again, and the question for grid planners and policymakers now is less how to replace fossil generators going offline, and more how to meet new electricity demand in a way that can also meet society’s varied goals for cost and sustainability.
This doesn’t always have to mean maxing out new generation — it can also mean making large sources of electricity load more flexible — but it does mean making more difficult, more considered choices that take in the grid as a whole into account.
When I asked Spokas whether grid operators and grid planners needed to read this report, he chuckled and said no, they already know what’s in it. Electricity markets, as imperfect as they often are, recognize that not every megawatt is the same.
Electricity suppliers often get paid more for providing power when it’s most needed. In regions with what’s known as capacity markets, generators get paid in advance to guarantee they’ll be available when the grid needs them, a structure that ensures big payouts to coal, gas, and nuclear generators. In markets that don’t have that kind of advance planning, like Texas’ ERCOT, dispatchable generators (often batteries) can get paid for providing so-called “ancillary services,” meeting short term power needs to keep the grid in balance — a service that batteries are often ideally placed to provide.
When grid planners look at the entirety of a system, they often — to the chagrin of many renewables advocates — tend to be less enthusiastic about renewables for decarbonizing the energy system than many environmental groups, advocates, and lawmakers.
The CATF report points to Ontario, Canada where the independent system operator concluded that building a new 300-megawatt small modular nuclear reactor — practically the definition of high LCOE generation, not least because such a thing has never been deployed before in North America — would actually be less risky for electricity costs than building more battery-supported wind and solar, according to the Globe and Mail. Ontario regulators recently granted a construction license to the SMR project, which is part of a larger scheme to install four small reactors, for a total 1.2 gigawatts of capacity. To provide the equivalent supply of renewable energy would require adding between 5.6 and 8.9 gigawatts of wind and solar capacity, plus new transmission infrastructure, the system operator said, which could drive up prices higher than those for advanced nuclear.
None of this is to say that we should abandon LCOE entirely. The best use case, the report argues, is for comparing costs for the same technology over time, not comparing different technologies in the present or future. And here the familiar case for solar — that its cost has fallen dramatically over time — is borne out.
Broadly speaking, CATF calls for “decarbonization policy, industry strategy, and public debate” to take a more “holistic approach” to estimating cost for new sources of electricity generation. Policymakers “should rely on jurisdiction-specific system-level analysis where possible. Such analysis would consider all the system costs required to ensure a reliable and resilient power system and would capture infrastructure cost tradeoffs over long and uncertain-time horizons,” the report says.
As Spokas told me, none of this is new. So why the focus now?
CATF is catching a wave. Many policymakers, grid planners, and electricity buyers have already learned to appreciate all kinds of megawatts, not just the marginally cheapest one. Large technology companies are signing expensive power purchase agreements to keep nuclear power plants open or even revive them, diving into the development of new nuclear power and buying next-generation geothermal in the hope of spurring further commercialization.
Google and Microsoft have embraced a form of emissions accounting that practically begs for clean firm resources, as they try to match every hour of electricity they use with a non-emitting resource.
And it’s possible that clean firm resources could get better treatment than they currently get in the reconciliation bill working its way through Congress. Secretary of Energy Chris Wright recently called for tax credits for “baseload” power sources like geothermal and nuclear to persist through 2031, according to Foundation for American Innovation infrastructure director Thomas Hochman.
“It’s not our intention to try to somehow remove incentives for renewables specifically, but to the extent that we can preserve what we can, we’re happy if it would be used in that way,” Spokas said.
When I asked Spokas who most needed to read this report, he replied frankly, “I think climate advocates would be in that bucket. I think policymakers that have a less technical background would also be in that bucket, and media that have a less technical background would also be in there.”
I’ll keep that in mind.
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Though high costs have become central to the upcoming election, they’re mostly out of the state’s control.
New Jersey suffers from some of the highest and fastest-rising retail electricity prices in the nation, according to Energy Information Administration data. From July 2024 to this year, retail prices exploded by more than 20%. Now, energy policy is at the forefront of the state’s gubernatorial election, in which Democratic nominee Mikie Sherrill has promised to cap electricity rate increases in the course of fighting off a strong challenge from Republican Jack Ciattarelli.
So what did the Garden State do to deserve this? “The short answer is that it’s a variety of factors, including transmission and distribution costs and higher capacity prices, largely driven by data centers,” Abraham Silverman, a research scholar at Johns Hopkins and former New Jersey utility regulator, told me.
New Jersey is a microcosm of how and why electricity prices are rising faster than inflation. The system is expensive to maintain and operate. It exists within an electricity market that has seen some of the fastest data center growth in the country. And it has struggled to bring on new supply quickly.
A lot of this comes down to the electricity market the state is in — PJM Interconnection, the country’s largest grid operator. Over the past two years, the cost of guaranteeing that the grid will be able to meet peak demand has skyrocketed to $16.1 billion, from just $2.2 billion in 2023.
These prices are set at auction, in which generators tell the market how much they’d need to be paid to be around in times when the grid is most in need. “PJM’s capacity market — its primary means of incenting investment in new power plants — has not worked as designed since 2018,”, Silverman testified before the New Jersey legislature in March. (The auctions are supposed to be held annually, but were delayed several times toward the end of the last decade as PJM and the Federal Energy Regulatory Commission reviewed proposed rule changes.)
In February, the New Jersey Board of Public Utilities said that its own auction to procure services from PJM, which follows the prices set in the PJM auction, would result in roughly 20% increases in retail electricity bills. “PJM’s recent capacity auction results are the main driver of these increases,” Christine Guhl-Sadovy, the board’s president said in a statement. In practical terms, that’s about a $20 increase per residential electricity bill on average, according to the non-profit urban planning group the Regional Plan Association.
When Silverman analyzed the components of New Jersey’s electricity price increases, he identified an 8.5% increase in energy prices paid through PJM from 2023 to 2024, a five-fold increase in capacity prices, and transmission costs that had doubled over the previous decade, including a 9% increase in just the previous year.
As for what’s behind those skyrocketing capacity price increases, I’ll give you one guess.
“Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices,” PJM’s independent market monitor said in a report on the 2024 capacity auction, attributing over $9 billion of the increase to the demands on the grid due to data centers.
While much of that data center demand has been in other PJM states like Virginia, Ohio and Pennsylvania, within the service territory for New Jersey’s largest utility, Public Service Electric & Gas, “interconnection inquiries from data centers and other large customers have increased dramatically, from 400 megawatts a year ago to 4,700 megawatts today,” PJM official Jason Stanek said in testimony before the New Jersey State Senate in March. He also referred to “a shrinking supply of energy and capacity,” which was a polite way of saying that PJM has failed to get new resources through its interconnection queue at a pace that matches planned retirements of older, fossil fuel-fired resources. That, “combined with increasing demand, will result in upward pressure on wholesale and retail prices,” Stanek said.
For years, PJM’s auctions, when they happened, were arguably delivering prices that were too low, leaving the market short of capacity as data center construction and interconnection requests boomed, leading prices to shoot up dramatically, shouldering retail ratepayers with rising bills but not quickly resolving the system’s potential reliability issues.
Still, New Jersey is one of 13 states in PJM, but it has seen some of the sharpest electricity increases among that group. In neighboring Pennsylvania, for instance, electricity prices are about a fifth lower and have only risen around 12%.
A major study of recent electricity price increases by the Lawrence Berkeley National Laboratory and the Brattle Group identified New Jersey as an especially severe case — the worst, in fact — even within the dramatic price increases throughout PJM. “New Jersey is experiencing some of the highest price increases of all PJM states in summer of 2025,” the study found.
New Jersey is also exceptionally exposed to natural gas prices. About 60% of its electricity generation comes from natural gas — although that explains more of the price increases in the years immediately following the Russian invasion of Ukraine, and less of the recent price hikes, according to the Lawrence Berkeley and Brattle Group researchers.
New Jersey is the nation’s most population-dense state, but it is also at the mercy of national markets and other states for its power, explained Kyle Mason, an associate planner at the Regional Plan Association.
“A major New Jersey factor is that it’s a net importer,” Mason told me, meaning that the state can’t always satisfy its own demands with home-grown power. “So in times of peak demand, they have to import energy from other states within PJM, and that makes them more reliant on PJM markets, particularly their capacity market,” Mason said.
New Jersey has been working to maintain and expand its existing clean energy generation, including subsidizing nuclear power plants when prices were low and investing in distributed solar power.
But it could do more. Silverman pointed to this in his testimony when he said that “a number of New Jersey-based storage projects have already survived the interconnection gauntlet and could be deployed quickly with the right incentives” — that is, they’ve been approved by PJM but have yet to be built.
New Jersey's offshore wind efforts — which would have provided large amounts of in-state clean generation — have been stymied by a combination of supply chain challenges and Donald Trump. Ciattarelli, the Republican candidate for governor, has said he would ban offshore wind, while both he and Sherrill support more nuclear power.
But even the governor of New Jersey can only do so much. “They are at the mercy of the federal government and the larger PJM body,” Mason said.
It’s an electric vehicle success story, but based on its new future guidance for investors, GM is still getting hammered by the shift in federal policy.
General Motors is on a hot streak with its electric cars. The Chevrolet Equinox EV topped 25,000 in sales during the third quarter of this year, becoming America’s best-selling electric vehicle that’s not a Tesla. The revived Chevy Bolt is due to arrive just after the new year at a starting price under $30,000, and the company promises that more low-cost EVs are on the way. And a variety of new electric offerings have, at the very least, breathed new life and intrigue into the struggling Cadillac brand.
With its Ultium platform helping GM to scale up production of these battery-powered cars, the Detroit giant seems well-positioned among the legacy carmakers to find success in the EV era. Yet last week, GM put out information for investors that predicted a loss of $1.6 billion compared to its previous outlook on the EV market.
Blame chaos. Automakers crave the boring and the predictable. It can take years to tweak the looks or the specs of an existing vehicle, to say nothing of the half-decade or more required to design and build a new car from scratch. With so much time and money on the line, car companies want to know what kind of world will greet their new creations.
But because of the shifting political winds in America, predictability has been hard to come by. Automakers planned and publicized big pushes into electric cars on the assumption that federal policy would continue to move the nation in that direction. They started to move manufacturing into the U.S. to satisfy Biden-era rules for tax credit eligibility. Then they were jerked in the opposite direction by a Trump administration that killed those federal incentives, slapped on haphazard new tariffs that penalize EVs, and got rid of the pollution penalties that nudged carmakers toward a cleaner future.
GM says its newly gloomy outlook is based partly on a decrease in predicted demand. In the absence of federal tax credits that made it more affordable for drivers to choose EVs (gone as of October 1), GM revised down the number of electric cars it expected Americans to buy. As the car market abruptly changes direction — again — GM must change plans to keep up, which means retooling factories to produce fewer EVs and more still-profitable ICE vehicles.
As GM says in its official investor release: “Following recent U.S. government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, we expect the adoption rate of EVs to slow. These charges include non-cash impairment and other charges of $1.2 billion as a result of adjustments to our EV capacity.” Another $400 million in estimated losses come from “contract cancellation fees and commercial settlements associated with EV-related investments,” which is how they arrive at the total of $1.6 billion.
The conglomerate says that this bit of bad news won’t affect its current lineups. But its predicament is emblematic of how the car giants find themselves stuck between the past and the future. In China and other nations around the world, EV adoption continues apace, but the established big automakers simply can’t compete there with the rock-bottom prices of Chinese-made EVs. In the West, meanwhile, the new wave of EV antagonism is pushing the industry back toward the fossil fuels that provided their profits in the past — despite the billions they’ve already invested in electrification.
GM is not alone in this, of course. Ford has gone through several rounds of whiplash during its electrification process — first losing billions on its early EVs, then slowing its EV development plans to retreat toward the easy profitability of combustion, before recently unveiling a different vision to make its EVs scalable and affordable. Companies like Hyundai, which tried to win the EV race, find themselves penalized for trying to qualify for the now-dead Biden tax incentives. Those that dragged their feet, like Toyota, are well-positioned to keep making money in this weird moment.
The end result is that for the sake of survival, companies like GM find themselves talking out of both sides of their mouth. At the end of the previous decade, when it looked as though the 2020s would be the era of EVs, GM pledged itself to a zero-emissions future. And while GM has been an EV success story of late, the Detroit giant also has spent enormous amounts to lobby the federal government against clean air regulations whose disappearance would make its combustion sector more profitable.
If there’s a positive sign from GM’s sour note, it is the statement from James Cain, executive director for finance and sales communications, that, regarding its stable of current EVs, “we will build them to demand.” In other words, it’s not as though GM is throwing in the towel — if Americans keep buying electric Cadillacs and Chevys despite the mess of a market, it’ll keep making them. Even if that means changing plans and retooling factories again.
On Interior’s permitting upset, a nuclear restart milestone, and destroying ‘superpollutants’
A tropical storm brewing in the Caribbean is likely to strengthen into a named storm in the coming days, bringing deadly flooding and powerful winds | Tropical storm Fengshen has killed at least eight in the Philippines as it barrels toward Vietnam and Laos | In Australia, record heat in the eastern Outback hit 113 degrees Fahrenheit.
Late last month, the Department of Energy clawed back $7.5 billion from 321 separate grants to clean energy projects. A week later, as Heatmap’s Emily Pontecorvo extensively reported, a list that included three times as many grants, including those that had already been canceled, began circulating. When the agency declined to confirm that the second list as real, speculation mounted that it was either an old document that the Trump administration was using as a threat for political leverage in ongoing negotiations over the government shutdown, or that the White House was staying mum to avoid conflicts over cuts in red districts. Recent events, however, seem to confirm that the longer kill list is precisely what it appears to be. On Monday, the Energy Department told E&E News that it had canceled $700 million in battery manufacturing projects, the first grants off the second list the agency confirmed were on the chopping block. The awards had gone to companies including Ascend Elements, American Battery Technology Co., Anovion, and ICL Specialty Products, as well as the glass manufacturer LuxWall.
Just because the U.S. is pulling back support for the production of batteries doesn’t mean there aren’t plenty of purchasers. On Monday, BloombergNEF estimated that global energy storage additions are set to reach 92 gigawatts this year, up 23% from last year, according to the consultancy’s market forecast for the second half of 2025. Utility-scale projects made up 84% of the annual growth, and the U.S. market kept expanding despite federal funding cuts. BloombergNEF also said U.S. buyers were looking for more domestic manufacturers to weather rising tariffs, which might be tricky given recent trends in the space.

Despite the Trump administration’s promises to speed up permitting for energy projects, the Department of the Interior plans to fire more than 200 workers in state offices that manage federal licensing in key regions for fossil fuel, geothermal, and mining development. In a court filing Monday, the agency said it would cut as much as 12% of the staff at its Bureau of Land Management office in Utah, 9% in the California outpost, and 6% in Colorado. The Bureau of Ocean Energy Management’s regional office for the Gulf of Mexico, meanwhile, was set to lose 5% of its employees. And those are just the local offices I found in the 35-page document that explicitly handled energy permitting. The cuts are part of a plan to “imminently” axe at least 2,000 jobs from the Interior Department overall, including — as NOTUS first reported — hundreds of National Park Service employees.
The administration’s tightened grip over the BLM office in Utah has already caused some headaches for next-generation geothermal companies, according to industry sources I spoke to earlier this year, as local officials who once had the autonomy to greenlight incremental permits for drilling exploration suddenly needed to report back to political officials in Washington. The Interior Department ultimately eased the issue, but the example illustrates what’s at stake when a state office that’s tasked with doing more as new projects proliferate has fewer people and resources.
A month after federal officers raided Hyundai Motor Group’s $26 billion factory in Ellabell, Georgia, shackling more than 300 South Korean workers the Trump administration accused of violating visa rules, the carmaker remains focused on expanding its U.S. production. Facing growing competition from Chinese cars in other markets, the Korean auto giant still sees the U.S. as its best market for growth, The New York Times reported Monday. “My top three priorities are U-S-A,” José Muñoz, chief executive of Hyundai Motor Company, the car-making subsidiary, said at the company’s annual investor gathering, reportedly pausing for effect after each letter. “If we do well here, it’s very good for Korea. It’s very good for the company.”
The chance to reap the fruits of what Heatmap contributor Andrew Moseman called Hyundai’s “incredible timing” may be too tempting to pass up, even as the Immigration and Customs Enforcement raid sparked a diplomatic crisis involving South Korea’s foreign minister. The company spent three years working on the 2,900-acre campus near Savannah, and sought to make a public statement about its support for President Donald Trump’s re-industrialization plans by naming the facility Metaplant America. With tariffs now coming into force, Andrew argued, Hyundai is better positioned than most to supply the domestic market.
The Palisades nuclear plant in Michigan received fresh nuclear fuel on Monday in what the facility’s owner called “a major milestone on the path to restarting” a permanently shuttered atomic station for the first time in the U.S. As I reported in this newsletter at the time, the Nuclear Regulatory Commission gave Holtec International the green light to restart the facility in July, setting a new precedent for reauthorizing operations at a plant that was already slated for decommissioning. The project faced some local opposition from not-in-my-backyard types backed by the anti-nuclear group Beyond Nuclear. But the Trump administration stood behind the project. The $1.5 billion loan granted by the Biden-era Energy Department’s Loan Programs Office to Holtec to fund the reopening was the only financing deal the agency maintained without any interruption through the change in leadership.
Aside from the 68 fuel assemblies arriving, Holtec said “major equipment restoration work is progressing,” including the reassembly of the main turbine generator and the chemical cleaning of the steam generators. Once complete, the work will remake Holtec — until now primarily a manufacturer of casks to store nuclear waste and a decommissioning company — into an operator of an active power plant. In a press release, Holtec CEO Kris Singh called the “esprit de corps of our tirelessly toiling worker force” a “testament to the national consensus and our collective will to harness nuclear energy to meet the galloping demand for power in our country.”
Isometric bills itself as the world’s leading carbon registry, providing what it calls “scientifically rigorous carbon removal credits so companies can reliably meet their climate commitments.” Now the British company is expanding its operations to cover two climate superpollutants: landfill methane and hydrofluorocarbons. The startup plans to develop protocols for eliminating emissions of both superheating gases with its in-house science team and network of more than 300 outside researchers. Among its partners will be Recoolit, a company that collects and destroys refrigerants and previously partnered with Google to destroy the carbon dioxide equivalent of 250,000 metric tons of superpollutants. Another is Cool Effect, a California-based nonprofit that sells carbon credits for landfill gas collection projects. It worked with Google earlier this year to support the installation of methane destruction equipment at a landfill in Cuiabá, Brazil. “Superpollutants are responsible for nearly half of global warming,” Eamon Jubbawy, Isometric’s chief executive, said in a statement. “Isometric is entering this market to bring the scientific rigour needed to help this crucial climate solution scale, using the same transparent approach that is building the trust needed to scale the carbon removal market.”
Call the paradox of shrinking sea ice in the Arctic Ocean. Overall, it’s a disaster. But the mass melting is fueling the engine of Arctic food chains: algae. A new study led by the University of Copenhagen suggests there will be more food for future marine life than previously thought. That will also improve the ocean’s carbon dioxide uptake, which the researchers said was “likely good news” for the climate. “But biological systems are very complex, so it is hard to make firm predictions, because other mechanisms may pull in the opposite direction,” Lasse Riemann, professor at the Department of Biology and senior author of the study, said in a press release. “We do not yet know whether the net effect will be beneficial for the climate.”
Editor’s note: This story has been updated to clarify Cool Effect’s role in capturing landfill methane.