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See also: federal policy, batteries, and electricity demand.
The clean energy industry is beginning to report to investors and the public on its first brush with Donald Trump’s trade policy. While earnings season has only just begun, already some broad themes are emerging across the sector: Tariffs hurt. Batteries are getting more expensive. And there’s big demand for power, especially natural gas.
Four big clean energy companies that have reported results so far — inverter and battery maker Enphase, turbine manufacturer GE Vernova, electric vehicle giant Tesla, and developer and utility NextEra — mentioned tariffs prominently in either their earnings reports or their analyst calls. GE Vernova said that tariffs would result in $300 million to $400 million of additional costs. Enphase said that tariffs would take off two percentage points from its margin in the second quarter and six to eight points of gross margin in the third quarter. Tesla said that “increasing tariffs may cause market volatility and near-term impacts to supply and demand.”
Tesla’s executives — including chief executive Elon Musk — expanded on that market volatility later in a call with investors and analysts, with Musk saying that he was an “advocate of predictable tariff structures, free trade, and lower tariffs.” Musk added that economic uncertainty could continue to weigh on Tesla’s auto sales, which notably declined in the first three months of the year. “When there is economic uncertainty, people generally want to pause on doing a major capital purchase like a car,” he observed.
NextEra chief executive John Ketchum said the company had “dramatically diversified where we source our solar panels” and was not affected by the recent announcement of high tariff rates on solar panels from Southeast Asia. He also specified to analysts that “we source our wind turbines from the U.S., with manufacturing in Florida.” The company estimated that it has “$150 million in tariff exposure through 2028, on over $75 billion in expected capital spend,” Ketchum said.
Enphase chief executive Badri Kothandaraman attempted to tread delicately on the tariff issue. “While the global policy environment remains fluid with tariffs, with interest rates and subsidies constantly evolving, we are moving quickly to realign our supply chain to minimize downside across a range of scenarios,” he said. “While we cannot control the macroeconomic conditions, we can absolutely control our response.” GE Vernova chief financial officer Ken Parks described tariffs as a “continued increase in the cost base,” and said that the combined tariffs on steel plus various imports from Canada, Mexico, China — which is facing import duties of 145% or more, depending on the product — affect about a quarter of its spending.
A lot of that tariff impact comes from the battery supply chain, which China dominates. For Tesla, that means its fast growing energy storage business is particularly at risk. While the company has made some efforts to onshore stationary storage battery production, its chief financial officer, Vaibhav Taneja, said that domestic production would ultimately account for only a “fraction” of its battery needs, and even that would “take time.”
Enphase was similarly upfront about the impact on its battery supplies. “We are no exception. We use Chinese sources for the cell packs,” Kothandaraman said. He explained that thanks to the tariffs, making batteries domestically with Chinese cells “therefore turns out for us that whether we make it domestically or whether we make it outside the U.S., our costs are becoming approximately the same. And the cost impact is significant.” In other words, the tariffs make domestic battery production less appealing than it was before. Kothandaraman said that the company is working on establishing a non-Chinese supply chain, which will take six to nine months.
NextEra’s Ketchum said that the company had made “arrangements” to buy batteries made in the U.S. “for a significant portion of our backlog,” and that its contracts for non-Chinese-sourced batteries required the supplier to cover any tariff-related costs. Ketchum did say that the domestic batteries meet local content requirements for tax subsidies under the Inflation Reduction Act, however “there are certain components that come in from outside the United States.” Overall, Ketchum said, “our tariff exposure on batteries is expected to be negligible.”
All four companies are heavily exposed to various energy regulatory and subsidy plans that may or may not survive the double-whammy of the congressional Republicans’ budget-making priorities and the Trump administration’s desire to roll back environmental regulations.
Tesla’s revenue from emissions credits that other carmakers buy to comply with California’s fleet emissions standards was $595 million in the first quarter of this year, compared to $409 million of net income — implying that the company would have lost money if not for the credits. This Trump administration has already attempted to take away California’s ability to set emissions standards, as it did the first time around. Then it was not successful, and this time it might not have to be — the Supreme Court on Wednesday indicated that it would be open to a lawsuit from the fossil fuel industry challenging California’s limits.
Kothandaraman said that “the lack of certainty” around the fate of the Inflation Reduction Act, which is currently being hashed out in Congress, “is definitely a factor” in explaining what one analyst described as “a bit of paralysis on the customer side.” He was hopeful that “demand will be unlocked” once there’s “clarity” on IRA tax credits.
Meanwhile, GE Vernova said that offshore wind orders had fallen by 43%, “as a result of ongoing U.S. policy uncertainty and permitting delays.” It also took a $70 million charge related to the cancellation of a deal to supply 18-megawatt turbines in New York.
Musk bragged that Tesla’s Megapack utility storage system “enables utility companies to output far more total energy than would otherwise be the case,” and that “utility companies are beginning to realize this and are buying in our Megapacks at scale.” While the company deployed almost 40 gigawatt-hours of battery storage in the past 12 months — an impressive amount based on the current level of grid battery storage in the U.S. — Musk predicted that Tesla could end up deploying “terawatts” of storage on an annual basis.
NextEra has a large renewables development business, and Ketchum sees the uptick in demand for electricity as a boon: “When I look at the demand and the outlook in the renewable sector going … we just continue to see strong demand across the board, with hyperscalers being a nice sized part of that.”
GE Vernova competed with NextEra for the most investor-friendly demand growth story — though its is not a particularly climate-friendly one. The company says it has a backlog of 29 gigawatts of natural gas turbine orders, with an additional 21 gigawatts of reservations that will turn into future production. Its earnings before interest, taxes, depreciation, and amortization for its power business jumped from $345 million in the first quarter of last year to $508 million in the first quarter of this year, while its margins grew from 8.6% to 11.5%.
About a third of its reservations for turbines are for data centers, Scott Strazik, the company’s chief executive said. Some more were to provide baseload power. And the rest? “A healthy amount of these are also F-class gas turbines to just strengthen the durability and the resiliency on the grid,” he said.
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Current conditions: A major Pacific storm is drenching California and bringing several inches of snow to Montana, Idaho, and Wyoming • A tropical storm in the Atlantic dumped nearly a foot of water on South Carolina over three days • Algeria is roasting in temperatures of more than 105 degrees Fahrenheit.
The Department of Energy notified workers in multiple offices Friday that they were likely to be fired or reassigned to another part of the agency, E&E News reported Tuesday. Staffers at the Office of Clean Energy Demonstrations and the Office of State and Community Energy Programs received notices stating that the offices would “be undergoing a major reorganization and your position may be reassigned to another organization, transferred to another function or abolished.” Still, the notice said “no determination has been made concerning your specific position” just yet.
At least five offices received “general reduction in force notices,” as opposed to official notification of a reduction in force, according to a Latitude Media report. These included the Office of Clean Energy Demonstrations, the Office of Energy Efficiency and Renewable Energy, the Office of State and Community Energy Plans, and the Office of Fossil Energy. Nearly 200 Energy Department employees received direct layoff notices.
Catastrophic floods brought on by the remnants of a typhoon devastated the Alaska Native village of Kipnuk on Sunday. Five months ago, the Trump administration canceled a $20 million grant intended to protect the community against exactly this kind of extreme flooding, The New York Times reported Tuesday. The grant from the Environmental Protection Agency was meant to stabilize the riverbank on which Kipnuk is built. But in May, the agency yanked back the Biden-era grant, which EPA Administrator Lee Zeldin said was “no longer consistent” with the government’s priorities. In a post on X, Zeldin said the award was part of "wasteful DEI and Environmental Justice grants,” suggesting the funding was part of an ideological push for diversity, equity, and inclusion rather than a practical infrastructure boost to an Indigenous community facing serious challenges.
Zealan Hoover, a Biden-era senior adviser at the EPA, accused Zeldin of using “inflammatory rhetoric” that misrepresented the efforts in places like Kipnuk. “For decades, E.P.A. has been a partner to local communities,” Hoover said. “For the first time under this administration, E.P.A. has taken an aggressively adversarial posture toward the very people and communities that it is intended to protect.”
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Late last Thursday, Heatmap’s Jael Holzman observed that the status of the 6.2-gigawatt Esmeralda 7, the nation’s largest solar project, had changed on the Bureau of Land Management’s website to “canceled.” The news sent shockwaves nationwide and drew blowback even from Republicans, including Utah Governor Spencer Cox, as I reported in this newsletter. Now, however, the bureau’s parent agency is denying that it made the call to cancel the project. “During routine discussions prior to the lapse in appropriations, the proponents and BLM agreed to change their approach for the Esmeralda 7 Solar Project in Nevada,” a spokesperson for the Department of the Interior told Utility Dive. “Instead of pursuing a programmatic level environmental analysis, the applicants will now have the option to submit individual project proposals to the BLM to more effectively analyze potential impacts.”
That means the project could still move forward with a piecemeal approach to permitting rather than one overarching approval, which aligns with what one of the developers involved told Jael last week. A representative for NextEra said that it is “in the early stage of development” with its portion of the Esmeralda 7 mega-project, and that the company is “committed to pursuing our project’s comprehensive environmental analysis by working closely with the Bureau of Land Management.” Still, the move represents a devastating setback for the solar installation, which may never fully materialize.
Ethane exports are rising as export capacity soars.EIA
U.S. exports of ethane, a key petrochemical feedstock extracted from raw natural gas during processing, are on track for “significant growth” through 2026, according to new analysis from the Energy Information Administration. Overseas sales are projected to grow 14% this year compared to the previous year, and another 16% next year. Ethane is mostly used as a feedstock for ethylene, a key ingredient in plastics, resins, and synthetic rubber. China has been the fastest growing source of demand for American ethane in recent years, rising to the largest single destination with 47% of exports last year.
Spain’s electricity-grid operator shrugged off concerns of another major blackout after detecting two sharp voltage variations in recent weeks. Red Electrica, which operates Spain’s grid, said that what The Wall Street Journal described as “recent voltage swings” didn’t threaten to knock out the grid because they stayed within acceptable limits. But the operator warned that variations could jeopardize the electricity supply if the grid didn’t overhaul its approach to managing a system that increasingly relies on intermittent, inverter-based generating sources such as solar panels. Red, which is 20% owned by the Spanish government, acknowledged that the high penetration of renewables was responsible for the recent fluctuations. Among the changes needed to improve the grid: real-time monitoring, which Heatmap’s Matthew Zeitlin noted in April “is necessary because traditionally, grid inertia is just thought of as an inherent quality of the system, not something that has to be actively ensured and bolstered.”
It’s not just Spain facing blackouts. New York City will have a power deficiency equivalent to the energy needed to power between 410,000 and 650,000 homes next summer — and that number could double by 2050, the state’s grid operator warned this week in its latest five-year report. “The grid is at a significant inflection point,” Zach Smith, senior vice president of system and resource planning for NYISO, said in a statement to Gothamist. “Depending on future demand growth and generator retirements, the system may need several thousand megawatts of new dispatchable generation within the next 10 years.”
Sodium-ion batteries are all the rage, as Heatmap’s Katie Brigham reported yesterday about the commercial breakthrough by the startup Alsym. But a major challenge facing sodium-ion batteries compared to lithium-ion rivals is the stability of the cathode material in air and water, which can degrade the battery’s performance and lifespan. A new study by researchers at Tokyo University of Science found that one ingredient can solve the problem: Calcium. By discovering the protective effects of calcium doping in the batteries, “this study could pave the way for the widespread adoption” of sodium-ion batteries.
Rob talks with the author and activist about his new book, We Survived the Night.
Julian Brave NoiseCat is a writer, Oscar-nominated filmmaker, champion powwow dancer, and student of Salish art and history. His first book, We Survived the Night, was released this week — it uses memoir, reporting, and literary anthology to tell the story of Native families across North America, including his own.
NoiseCat was previously an environmental and climate activist at groups including 350.org and Data for Progress. On this week’s episode of Shift Key, Rob talks with Julian about Native American nations and politics, the complexity and reality of Native life in 2025, and the “trickster” as a recurring political archetype.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University. Jesse is off this week.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Robinson Meyer: What were lessons that you took away from the writing of the book, or from the reporting of the book, that changed how you thought about climate or the environment in some way that maybe wasn’t the case when you were working on these issues full time?
Julian Brave NoiseCat: I would say that while I was working on climate issues, I was actually, myself, really changing a lot in terms of my thoughts on how politics worked and did not work. I think I came into my period of my life as a climate activist really believing in the power of direct action, and protest, and, you know, if you get enough people in the streets and you get enough politicians on your side, you eventually can change the laws. And I think that there is some truth to that view.
But I think being in DC for four years, being really involved in this movement, conversation — however you want to put that — around the Green New Deal, around eventually a Biden administration and how that would be shaped around how they might go about actually taking on climate change for the first time in U.S. history in a significant way, really transformed my understanding of how change happens. I got a greater appreciation, for example, for the importance of persuading people to your view, particularly elites in decision-making positions. And I also started to understand a little bit more of the true gamesmanship of politics — that there is a bit of tricks and trickery, and all kinds of other things that are going on in our political system that are really fundamental to how it all works.
And I bring that last piece up because while I was writing the book, I was also thinking really purposefully about my own people’s narrative traditions, and how they get at transformations and how they happen in the world. And it just so happens that probably the most significant oral historical tradition of my own people is a story called a coyote story, which is about a trickster figure who makes change in the world through cunning and subterfuge and tricks, and also who gets tricked himself a fair amount.
And I think that in that worldview, I actually found a lot of resonance with my own observations on how political change happened when I was in Washington, D.C., and so that insight did really deeply shape the book.
Mentioned:
We Survived the Night, by Julian Brave NoiseCat
How Deb Haaland Became the First Native American Cabinet Secretary
This episode of Shift Key is sponsored by …
Hydrostor is building the future of energy with Advanced Compressed Air Energy Storage. Delivering clean, reliable power with 500-megawatt facilities sited on 100 acres, Hydrostor’s energy storage projects are transforming the grid and creating thousands of American jobs. Learn more at hydrostor.ca.
A warmer world is here. Now what? Listen to Shocked, from the University of Chicago’s Institute for Climate and Sustainable Growth, and hear journalist Amy Harder and economist Michael Greenstone share new ways of thinking about climate change and cutting-edge solutions. Find it here.
Music for Shift Key is by Adam Kromelow.
Long-duration storage is still an awkward fit in most U.S. electricity markets.
It’s hard to imagine a decarbonized grid without batteries that can last longer — far longer — than the four hours today’s grid-scale, lithium-ion batteries can pump power onto the grid. But who’s going to pay for it?
That’s the question developers and researchers are puzzling over as the U.S. electricity grid struggles to replace aging generation and transmission infrastructure. At the same time, forecast demand for electricity is surging thanks to electrification of transportation and home heating, factory construction, and, of course, data centers. With solar (still) coming online, there’s a need to spread out the plentiful power generated in the middle of the day — or even year — across other hours and seasons.
In much of the country, electricity markets are set up to optimize the delivery of energy on very short time frames at the lowest cost, and to ensure ancillary services that can keep the grid stable from second to second. Then there are capacity markets, where electricity generators receive payments in exchange for their future availability in order to maintain long-term reliability.
Molly Robertson, an associate fellow studying electricity market design at Resources for the Future, a nonprofit research institution, is skeptical about how long-duration energy storage can fit into this market. “If we think about the market as compensating for those three things, there’s two questions,” she told me. “One is, is the market covering all of the things that the grid needs? And are there enough products that are being purchased that actually cover all of the needs of the grid?”
Long-duration batteries fit awkwardly into that equation. “Right now, I think you don’t see long duration storage because there are resources that are more cost competitive” for what existing wholesale markets reward, Robertson told me.
But the grid today may not be the grid of tomorrow — or at least that’s the argument of the long-duration energy storage industry.
“This energy transition was always going to be necessary around this time frame, regardless of the decarbonization agenda or anything like that,” Jon Norman, the president of Hydrostor, a Canadian company developing large-scale, compressed air batteries, told me. “Most of the infrastructure was built in the 80s and 90s and it’s hitting its natural end-of-life cycle. So these traditional coal-fired power plants, gas-fired power plants would either need to be rebuilt or new infrastructure built.”
“There’s no way of avoiding that,” he added.
Norman, of course, thinks that long-duration storage is a “good replacement for a lot of those assets.” Large-scale batteries like Hydrostor’s can store surplus electricity from when renewables are producing more than the grid needs, and then discharge that energy when needed — and for far longer than today’s batteries.
Lithium-ion is the dominant chemistry for battery energy storage systems today, thanks to its high energy density and ability to withstand many charging and discharging cycles, the same factors that have made it the default choice for electric cars. Because of both lithium-ion’s physical limits and the specific needs of the grid, however, the vast majority of grid-scale systems top out at four hours of discharge.
From a grid planning perspective, the difference between those batteries and long-duration storage, which can discharge for 10 or more hours at a time, means that the latter “can reliably replace” existing fossil fuel generation, Norman said. That makes Hydrostor’s batteries less like an “energy” product and more like capacity — a role typically filled by coal and natural gas, which get paid handsomely for doing so.
Restructured electricity markets work fine at wholesale electricity pricing for infrastructure that already exists, Norman argued. In the late 1990s and early 2000s, when electricity markets were deregulated, “you didn’t need a lot of buildout,” he said. Instead, the question was, “How can we most efficiently dispatch this stuff? How do we send the right signals to the generators?”
But sudden demand growth and the ravages of time have brought a new set of challenges. “The issue that we’ve seen over the past 10 years — and it’s coming to a head now — is, how do you build new capacity? Nobody’s really investing in these markets because there’s a real disconnect between those power market signals that are in real time and short term and the long-run cost of building infrastructure,” Norman told me.
Relying on market forces to come up with new capacity has not worked, he said. “This experiment has failed.”
Management of the PJM Interconnection, the country’s largest electricity market, has practically had to beg developers to bring more firm power onto the grid. It’s also overhauling its internal processes to get projects approved for interconnection more quickly.
In the meantime, as capacity payments and reliability worries continue to spiral, the market’s managers have introduced a pair of proposals that would subject new large sources of electricity demand (i.e. data centers) to mandatory shutoffs and allow utilities to get back into building generation. The former would essentially undo the foundational “duty to serve” model that’s been at the heart of electricity policy for over a century, and the other would reverse decades of electricity market deregulation and restructuring.
Suppliers and customers alike revolted against the idea of mandatory curtailment, and both proposals are now on hold. Whether or not either is ever realized, the fact that they’re even being discussed shows how dire the capacity crisis is.
Even in Texas, the most deregulated market in the country, a plan to offer cheap financing to natural gas-fired power plants to shore up the reliability following the 2021 Winter Storm Elliott disaster has found few takers and few viable projects. You have to get outside restructured electricity markets in states like Tennessee or Georgia, where utilities also control the generation of electricity, to find any appetite for large-scale generation projects like nuclear power plants. These markets are able — for better or worse — to pass along the cost of new power plants to ratepayers. It’s no coincidence that all the new nuclear power — a large source of firm power on the grid that takes a notoriously long time to develop — built this century has come in vertically integrated markets.
Everywhere else, building long-lasting infrastructure assets requires planning to lead the market, Norman told me. “Run really sophisticated competitive procurements — competitive mechanisms that allow you to hit a particular objective instead of the objective supposedly being decided by the market in real time,” he explained.
He pointed to California, where regulators tell utilities to procure clean firm generation like geothermal and long-term energy storage (or the state does it itself). Virginia, which is a vertically integrated market within PJM, has targets for energy storage procurement by its utilities.
Norman’s critique of restructured power markets rhymes with those of former Federal Energy Regulatory Commission Chairman Mark Christie, who said that there’s “missing money” in the electricity markets that exposes consumers to financial and reliability risks. He also asked whether restructured electricity markets, “especially the multi-state capacity markets, have been successful in ensuring a sufficient supply of the power necessary to sustain reliability,” as he wrote in widely noted in a 2023 law review paper.
For her part, Robertson cautioned that there are real technological and logistical questions for how long-duration storage would work in an electricity market, even if you can figure out a way to get them on the grid.
“When we think about longer-duration storage, we have to think about, how would those generators operate, and what timelines are they operating on? If you have a multi-day storage opportunity, how are you going to determine the best time to charge and discharge over that long of an opportunity window?” she asked.
In a RFF paper, Robertson and her co-authors argue that long-duration batteries “likely will not be sufficiently incentivized by price fluctuations within a 24-hour period,” as four-hour batteries are, and will instead have to “take greater advantage of long-term revenue opportunities like capacity markets.” But even then, she cautioned, markets would need to see big swings in prices over potentially multi-day periods to make the charging and discharging cycles of long-duration batteries economical.
Norman, however, had harsh words for critics who say this kind of procurement and planning will lead to inflated costs for infrastructure that may or may not be useful in the future. “What bugs me about keeping our head in the sand is that then results in us saying, Well, we just don’t want to pay for that, so we’re not going to set this target, and we’re going to let the markets decide,” he told me. “All we’re doing is deferring the problem and causing it to cost way more. And so I think we need a bit of a wakeup call.”