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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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NextEra CEO John Ketchum projected serenity during the company’s earnings call Wednesday.
The business of renewable energy development in the United States is the business of NextEra. The company’s renewable division is one of the country’s largest and most sophisticated, with almost 30 gigawatts in its project backlog — including 3.2 gigawatts added in the past three months.
NextEra’s financial results and outlook for the future can be a guide to how the sector is thinking — or wants people to think it’s thinking — about the state of the development landscape. Now especially, that landscape looks confusing and contradictory, with power demand increasing sharply alongside hostility to wind and solar development.
The way NextEra sees it, NextEra will come through fine. But many other — especially many other smaller — players may struggle.
“Bottom line, America needs more electricity, not less,” NextEra Chief Executive John Ketchum told analysts during the company’s earnings presentation Wednesday.
“America needs it now, not just in the future. We are firmly aligned with the administration’s goal to unleash American energy dominance. And to do so, we need all of the electrons we can get on the grid. There’s truly no time to wait.”
That alignment may be one way, however. From sunsetting tax credits to ordering enhanced reviews of wind and solar projects by federal regulators, the Trump administration has made it clear that it does not see wind and solar as part of its energy strategy.
The rhetoric coming from Washington hasn’t been particularly constructive, either, no matter how often renewable energy companies try to label their work as part and parcel of an “energy dominance” agenda. Just in the past few weeks, Trump has claimed that China has “very, very few” wind farms (in fact it has very, very many), and Secretary of Energy Chris Wright called wind and solar a “parasite on the grid.”
NextEra is not unaware of the tone and policy emanating from the administration. The company issued a new risk disclosure, first noticed by analysts at Jefferies, saying that its guidance on future performance assumes “no changes to governmental policies or incentives, including continued applicability of existing Internal Revenue Service tax credit safe harbor guidance,” i.e. that it can “commence construction” the way it always has, by following existing IRS guidance.
Although that would be awfully nice, it may not be the case for much longer. Soon after signing the One Big Beautiful Bill Act, President Trump issued an executive order calling for “new and revised” tax guidance “to ensure that policies concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
It doesn’t take a terribly close reading to intuit that Trump wants to narrow the window for renewables developers to claim tax credits even beyond what Congress has already done. According to conservative members of Congress who wanted the tax credits to phase out even sooner, the president was merely fulfilling a promise he’d made to win their vote.
Ketchum at least projected serenity about the safe harbor situation, telling analysts that the definition of construction has been understood “for well over a decade,” that it “is informed by longstanding Treasury Department guidance,” and that the OBBBA’s language “definition is consistent with the settled meeting.”
He also noted that NextEra had “made significant financial commitments over the last few years, including in the first half of 2025, to begin construction under these rules that were in effect at the time those commitments were made,” i.e. before the bill was signed.
“We believe that we’ve begun construction on a sufficient number of projects to cover our development expectations through 2029,” Ketchum continued, adding that the company has determined it will be eligible for tax credits based on “our belief as to what the statute provides based on our experience in this industry over the last couple of decades.”
If anything, Ketchum suggested, NextEra might be advantaged by the harsh deadlines for commencing construction (July 4, 2026) or being placed in service (the end of 2027) in the new law. “It comes down to who’s safe harbor, right?” Ketchum said. “We know we compete against a lot of really small developers who don’t have the balance sheet, the construction financing to do things around safe harbor.”
In this kind of environment, Ketchum said, size matters.
“If you’re in a market where you have folks drop out, right, because they didn’t plan ahead, they don’t have the ability to get construction financing, they don’t have the ability to safe harbor. It obviously creates bigger opportunities for us.”
NextEra could be left to pick up the pieces from smaller developers that don’t make it, Ketchum said. “If we do see some small developers kind of fall away, there’ll be more projects that could potentially hit the market and come up for sale.”
It sure looks that way, at least. Democrats should start coming up with a plan.
For the first six months of President Trump’s term, the big question was about what would happen to the Inflation Reduction Act. We now have something like an answer.
President Trump’s memorably named One Big Beautiful Bill Act repealed many of the IRA’s most important clean energy tax credits, including incentives for wind, solar, and electric vehicles. And while it’s still unclear whether the Trump administration will let developers actually use the tax credits that remain on the books — especially the now-denuded credits for wind and solar — fewer “unknown unknowns” remain about what might come next.
So I’ve been trying to figure out where climate and energy policy might go from here. And one story that I keep coming back to is the flashing red lights around what could become a serious electricity affordability crisis.
It’s now widely understood that electricity demand is rising in the United States for the first time in a generation. The Energy Information Administration projects that electricity use will grow 1.7% in the next few years, after increasing by just 0.1% per year from 2005 to 2020. That growth is projected to come from new data centers, new factories, the (now) slow(er) but (still) steady adoption of electric vehicles, and population growth.
What is less well understood is how poorly the United States is prepared to match this rise in electricity demand with an equivalent increase in supply. To some degree, American electricity prices are already rising: So far this year, utilities have received or requested permission to increase customers’ bills by $29 billion, according to a July report from PowerLines, a think tank and advocacy group. That’s a large number in its own right, and it’s more than twice as much as had been approved at this time last year.
But when you look across the power system, virtually every trend is setting us up for electricity price spikes:
On top of all this, of course, the Trump administration has made it much more uncertain which new solar, wind, and battery projects will be able to secure tax credits — and with them, secure bank financing.
None of these trends alone would guarantee price increases or electricity supply constraints. But taken together, they reveal an electricity system that is coming under a variety of strains.
In the 2010s, cheap natural gas and technological advances in energy efficiency pacified much of the power system. We won’t have the same luxury this decade.
This is all going to be bad for the economy, bad for the climate, and bad for climate policy.
It’s a setback for the U.S. economy because, as President Trump somewhat alluded to in his second inaugural address, energy is a key input to virtually every other economic process, including manufacturing. But it’s especially bad for climate policy. The dominant plan to decarbonize much of the U.S. economy is to “electrify everything” — cars, appliances, home heating, and even many industrial processes. Americans will be far less eager to electrify everything if electricity is expensive.
If energy price hikes do arrive, Democrats are going to have a relatively straightforward time communicating about them in a narrow political sense. The story is just too simple: Democrats passed a law to encourage clean energy called the Inflation Reduction Act. Republicans repealed it. Energy prices inflated. QED.
That story alone might be too contrived, but the evidence we have suggests that OBBBA will raise energy bills. The REPEAT Project at Princeton University — led by Jesse Jenkins, my Shift Key podcast cohost — has a new report out projecting that the One Big Beautiful Bill Act will increase Americans’ electricity bills by $165 a year by the end of the decade. (If the law is allowed to stick around, and in the absence of intervening policies, it could raise bills by hundreds of dollars a year by the middle of next decade.)
OBBBA’s explosion of the federal deficit will make the situation worse: By expanding the deficit for such little public gain — that is, merely to memorialize earlier tax cuts, not even to make new ones — the Federal Reserve will have a more difficult time cutting interest rates in the future. That will in turn make it even more difficult for utilities and developers to finance new energy projects.
The political story will be so compelling here, I think, that Democrats will come under a lot of pressure to reinstate the wind and solar tax credits. And maybe they should do that — it could make sense as part of a larger energy or permitting deal. But stacking more solar and wind on the grid will not on its own lower people’s electricity bills.
Going into 2028, Democrats will need an actual plan to stabilize or cut electricity costs. They will need ideas about how (and whether) to speed up permitting, restructure wholesale power markets, and build new power plants in order to stabilize the power grid.
One thing that’s already clear is that in this inflationary environment, states like New York with publicly owned power authorities are able to intervene more forcefully in their own power markets than states that lack such capability. That’s because the state itself can act to build its own large-scale power plants. New York Governor Kathy Hochul recently directed the state’s power authority to build a new nuclear power plant upstate in order to grow the supply of zero-emissions electricity. Using their state own power authorities, governors in other states — or even the federal government, with an entity like the TVA— could take a similar step.
With all that said, I’ve been trying to come up with a scenario under which these price hikes will not materialize. In the late 2010s, for instance, America’s liquified natural gas exports surged essentially from zero, but domestic consumers didn’t see significant price hikes because drillers increased gas production to match the exports. Maybe that could happen again. And maybe utilities will — and this would, to be clear, be horrible for the climate — run their aging coal plants much more than they once anticipated doing.
Or maybe load growth won’t be as bad as we think. When Jesse and I spoke to Peter Freed, Meta’s former director of energy strategy, for Shift Key, he told us that the current data center boom is different from any previous buildout because of the presence of speculators. For the first time, he said, speculative data center developers are buying up prospective sites and requesting utility-scale hookups with the expectation that they will find a tenant for the data center in the future. In other words, the demand side of the electricity system is filled with an unusual amount of froth at the moment.
We also know that, more generally, the demand side of the power system is a mess. In the past few years, climate analysts have gotten used to talking about the power grid’s interconnection queue — that is, its supply side. But the demand-side queue — the process that lets new data centers, factories, and other new electricity users connect — is even more broken. In some jurisdictions, it’s little more than an Excel file that projects move up and down within as local politics requires.
We also know that one source of new demand — one planned factory or, more often, one data center — will sometimes apply to hook up to multiple states or utilities at the same time. It will get utilities to bid against each other, suss out the best construction sites and power rates, and only relatively late in the process make a final decision about where to build.
So if I were putting together a bear case for electricity demand, I would start here. Maybe aggressive data center speculators are bidding in multiple utilities, driving up projections across many states. That’s causing utilities to freak out about their supply, leading them to project the need for a lot of new investment — and, with it, a lot of electricity rate increases. But as data center speculators actually begin to build (or abandon) projects — and as some of the air inevitably comes out of the AI boom — some of this projected demand will start to evaporate. Perhaps the data centers that do get built will find ways to reduce their power usage, too.
Even this story won’t fully eliminate load growth on its own, though. Data centers make up the largest share of new electricity demand, but even then, they’re not the majority of it. The rest comes from, roughly, new factories, the slow electrification of the vehicle fleet, and new residential construction. But let’s say the One Big Beautiful Bill Act succeeds in hobbling the electric vehicle sector in the United States, many EV and battery factories get canceled, and fewer Americans buy EVs overall. Calculate in a mild recession, too, since all the AI and EV investment will be drying up.
In that world, most new sources of power demand really will be in abeyance. That’s how some of these power projections might not come true. But in most other scenarios, it’s time to hold on — and for blue-state leaders to think about how they can find cheap, zero-emissions electrons, as soon as possible.
The Department of Energy announced Wednesday that it was scrapping the loan guarantee.
The Department of Energy canceled a nearly $5 billion loan guarantee for the Grain Belt Express, a transmission project intended to connect wind power in Kansas with demand in Illinois that would eventually stretch all the way to Indiana.
“After a thorough review of the project’s financials, DOE found that the conditions necessary to issue the guarantee are unlikely to be met and it is not critical for the federal government to have a role in supporting this project. To ensure more responsible stewardship of taxpayer resources, DOE has terminated its conditional commitment,” the Department of Energy said in a statement Wednesday.
The $11 billion project had been in the works for more than a decade and had won bipartisan approval from state governments and regulators across the Midwest. The conditional loan guarantee announced in November 2024 would have secured up to $4.9 billion in financing to fund phase one of the project, which would run from Ford County in Kansas to Callaway County in Missouri.
In response to a request for comment, an Invenergy spokesperson said, “While we are disappointed about the LPO loan guarantee, a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance while delivering billions of dollars in energy cost savings, strengthening grid reliability and resiliency, and creating thousands of American jobs.”
The project had long been the object of ire from Missouri Senator Josh Hawley, who recently stepped up his attacks in the hopes that a more friendly administration could help scrap the project. Two weeks ago, Hawley posted on X that he’d had “a great conversation today with @realDonaldTrump and Energy Secretary Chris Wright. Wright said he will be putting a stop to the Grain Belt Express green scam. It’s costing taxpayers BILLIONS! Thank you, President Trump.” The New York Times later reported that Trump had made a call to Wright on the issue with Hawley in the Oval Office.
Hawley celebrated the Grain Belt Express decision, writing on X, “It’s done. Thank you, President Trump,” and exulting in a separate post that “Department of Energy officially TERMINATES taxpayer funding for Green New Deal ‘grain belt express.’”
The senator had claimed that the plan would hurt Missouri farmers due to the use of eminent domain to acquire land for the project. In 2023, Hawley wrote a letter to Invenergy chief executive Michael Polsky claiming that “your company’s Grain Belt Express construction campaign has hurt Missouri’s farmers,” and that “they have lost the use of arable land, seen their property values decline, and been forced to operate under a cloud of uncertainty.”
Controversy over eminent domain and the use of agricultural land by transmission lines illustrates the difficulties in building the long-distance energy infrastructure necessary to decarbonize the grid.
Opposition to the project had been gestating for years but picked up steam in recent weeks. Earlier this month, Andrew Bailey, the Republican attorney general of Missouri, announced an investigation into the project. “This is a HUGE win for Missouri landowners and taxpayers who should not have to fund these green energy scams,” he wrote on X Wednesday following the DOE’s announcement.
As the project appeared to be more imminently imperiled, Invenergy scrambled to preserve its future, including making plans to connect gas to the transmission line. In a letter to Secretary of Energy Chris Wright written earlier this month, the Invenergy vice president overseeing the project wrote that the Grain Belt Express “has been the target of egregious politically motivated lawfare,” echoing language President Trump has used to describe his own travails.
If the author’s intent was to generate sympathy from the administration, it didn’t work. The end of the loan guarantee could be a death blow to the project, and will at the very least force Invenergy into a mad dash to try to match the lost capital.
Editor’s note: This story has been updated to include a comment from Invenergy.