This article is exclusively
for Heatmap Plus subscribers.
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:
A conversation with Devin Hartman of R Street
Today’s special Q&A is with an old source of mine, Devin Hartman, energy and environment policy director for the conservative D.C. think tank R Street.
When I used to cover Congress, Devin was one of the few climate-minded conservatives willing to offer a candid, principled take on what could happen in that always deliberative body. I decided for our year-end edition to ask him a lot of questions, including an important one: will Trump make it easier or more difficult to permit solar and wind projects?
His answer – that it is very much possible – led us once again down the rabbit hole of conspiracy-powered politics.
The following interview has been lightly edited for clarity.
Let’s start with the U.S. climate elephant in the room – what do you think will happen to the Inflation Reduction Act next Congress?
I have not talked to any Republican staff, members of Congress, or strategists that think full IRA repeal is on the table. Just nip that conversation in the bud right now. That said, they will need to find where to cut some tax credits to pay for the tax extensions. There will be strong pressure to modify those subsidies. So I think subsidy reform is very much on the table but full IRA repeal is not. More specifically, Republicans will be eyeing the electric vehicle tax credit and the PTC and ITC that primarily focus on wind and solar.
Most of the expenditures under IRA are subsidies for mature technologies. I think what you’re going to see is something that is a phase down if not a staggered phase out as on the table for mature technologies, especially wind, solar and EVs.
The thing that’s missing in this narrative so much is that in hindsight the Inflation Reduction Act is not nearly as much of a climate savior as its proponents claim. Folks realized we need all this permitting, all this regulatory reform so we can actually build this stuff and a lot of what we were recognizing is that before the IRA passed, the private sector was going to fund a massive amount of new infrastructure, especially mature technologies. But you couldn’t get the stuff built. So the policy discussion a few years ago really should’ve focused on regulatory and permitting reform… and it prioritized subsidies mostly instead.
Okay. Moving on, folks in Trump’s orbit proffer in conspiracies and misinformation, disinformation about renewable energy – are you at all concerned about the next Trump administration turning against individual solar and wind projects in the permitting process based on those views?
Oh yeah. We’ve seen this getting done under the past several administrations — more polarization. A lot of stakeholders have called this the Keystonization of energy permitting. That’s really concerning.
I always think of presidents or any elected official as more followers to their political milieu than leaders in their own right. We started to see this with President Obama where some of his advisors and his team said, why does something like the Keystone XL matter that much? It doesn’t make or break that much… but you saw a lot of this technology and project tribalism really kicking in with different groups and that clearly influenced political decision-making. It started removing the permitting process from an objective criteria-based approach. It’s really concerning to see this trend move forward. And subsequently on both sides of the aisle you’ve seen this temptation, mostly with presidential administrations given their authorities, these [Council of Environmental Quality] processes or other things that might put their thumb on the scale in favor of some resources over others.
I would note the NEPA reforms that Trump got done on his watch. Those NEPA reforms were cheerleaded by the wind and solar industries. That’s when you started to see the environmental groups really oppose those NEPA reforms but the clean energy groups really wanted them.
That may be true, but activists fighting projects tell me they’re really excited for Trump. These activists believe this – as you put it – Keystonization is going to help them and we're going to see the Trump administration become a more difficult environment to get solar and wind permits on a case-by-case basis. Do you see that happening?
I would be worried if we started to see indications of that. It’s always possible.
Senator Jim Risch recently said he expects the Trump administration to issue a project-by-project executive order. Do you imagine anything in that world is possible?
It’s possible.
Where we’ve seen more of the red-blue divide is at the state level. That’s our biggest concern… oof. That’s been trending in the wrong direction really severely in recent years. That might be the single biggest long-term hindrance to energy infrastructure development and by extension decarbonization. That issue set is really tough. And that unfortunately you’ve seen some of the fault lines–
–Sorry to interrupt. Do you mean the blue states trying to overrule local control versus the red states letting localities have the final say, like Ohio?
Yeah. And some of that can be philosophical, irrespective of the technology. Some of it is home rule versus state government. That is a factor in it.
But going back to some of the misinformation and disinformation stuff… that’s been concerning.
When we’ve surveyed a lot of these developers and asked what is motivating some of this right now? So much of it is Facebook campaigns that were promoting false perspectives on the consequences of infrastructure development. Things like the flicker effect from living near wind turbines causing health effects. A lot of stuff on electro-magnetic fields. There was just a lot of bad information out there. That has generated in some cases opposition from communities that is misguided and unfortunate.
One of our big recommendations with this is we learned a lot from the Telecommunications Act in the ‘90s. Whether Congress pursues something similar for energy infrastructure, I don’t know. But maybe at the state level at least we should have this conversation where you need to actually demonstrate harm if you actually have legitimate concerns about health effects. [It’s] that standing and criteria-based determination approach to this, rather than this sentiment based approach that could be based on utter nonsense.
Is there a federal solution to this problem?
In permitting, we’ve had this conversation for a while now about community engagement – which progressives call for – and judicial review, which is something conservatives have been calling for. I think there’s actually some reinforcing and mutually beneficial reforms that can be done in tandem. Things like narrow standing to individuals and entities actually affected by the infrastructure, and that standing has to be tied to demonstrate harm under these statutes – that’s a piece that can be there.
But the other thing you do is come in with good information. You have standardized packets of information to help communities and siting bodies make more informed decisions. Alright, there can be the potential economic development benefits to your community. Oh also, we’re going to be honest about any kind of drawbacks – legitimate local health and ecosystem effects. You create a system that naturally filters out a bunch of nonsense and also drives in good information. Those concepts can be reinforced.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
And more of the week’s top news about renewable energy conflicts.
1. Nassau County, New York – Opponents of Equinor’s offshore Empire Wind project are now suing to stop construction after the Trump administration quietly lifted its stop-work order.
2. Somerset County, Maryland – A referendum campaign in rural Maryland seeks to restrict solar development on farmland.
3. Tazewell County, Virginia – An Energix solar project is still in the works in this rural county bordering West Virginia, despite a restrictive ordinance.
4. Allan County, Indiana – This county, which includes portions of Fort Wayne, will be holding a hearing next week on changing its current solar zoning rules.
5. Madison County, Indiana – Elsewhere in Indiana, Invenergy has abandoned the Lone Oak solar project amidst fervent opposition and mounting legal hurdles.
6. Adair County, Missouri – This county may soon be home to the largest solar farm in Missouri and is in talks for another project, despite having a high opposition intensity index in the Heatmap Pro database.
7. Newtown County, Arkansas – A fifth county in Arkansas has now banned wind projects.
8. Oklahoma County, Oklahoma – A data center fight is gaining steam as activists on the ground push to block the center on grounds it would result in new renewable energy projects.
9. Bell County, Texas – Fox News is back in our newsletter, this time for platforming the campaign against solar on land suitable for agriculture.
10. Monterey County, California – The Moss Landing battery fire story continues to develop, as PG&E struggles to restart the remaining battery storage facility remaining on site.
A conversation with Biao Gong of Morningstar
This week’s conversation is with Biao Gong, an analyst with Morningstar who this week published an analysis looking at the credit risks associated with offshore wind projects. Obviously I wanted to talk to him about the situation in the U.S., whether it’s still a place investors consider open for business, and if our country’s actions impact the behavior of others.
The following conversation has been lightly edited for clarity.
What led you to write this analysis?
What prompted me was our experience in assigning [private] ratings to offshore wind projects in Europe and wanted to figure out what was different [for rating] with onshore and offshore wind. It was the result of our recent work, which is private, but we’ve seen the trend – a lot of the big players in the offshore wind space are kind of trying to partner up with private equity firms to sell their interests, their operating offshore wind assets. But to raise that they’ll need credit ratings and we’ve seen those transactions. This is a growing area in Europe, because Europe has to rely on offshore wind to achieve its climate goals and secure their energy independence.
The report goes through risks in many ways, including challenging conditions for construction. Tell me about the challenges that offshore wind faces specifically as an investment risk.
The principle behind offshore wind is so different than onshore wind. You’re converting wind energy to electricity but obviously there are a bunch of areas where we believe it is riskier. That doesn’t mean you can’t fund those projects but you need additional mitigants.
This includes construction risk. It can take three to five years to complete an offshore wind project. The marine condition, the climate condition, you can’t do that [work] throughout the year and you need specialized vehicles, helicopters, crews that are so labor intensive. That’s versus onshore, which is pre-fabricated where you have a foundation and assemble it. Once you have an idea of the geotechnical conditions, the risk is just less.
There’s also the permitting process, which can be very challenging. How do you not interrupt the marine ecosystem? That’s something the regulators pay attention to. It’s definitely more than an onshore project, which means you need other mitigants for the lender to feel comfortable.
With respect to the permitting risk, how much of that is the risk of opposition from vacation towns, environmentalists, fisheries?
To be honest, we usually come in after all the critical permitting is in place, before money is given by a lender, but I also think that on the government’s side, in Europe at least, they probably have to encourage the development. And to put out an auction for an area you can build an offshore wind project, they must’ve gone through their own assessment, right? They can’t put out something that they also think may hurt an ecosystem, but that’s my speculation.
A country that did examine the impacts and offer lots of ocean floor for offshore is the U.S. What’s your take on offshore wind development in our country?
Once again, because we’re a rating agency, we don’t have much insight into early stage projects. But with that, our view is pretty gloomy. It’s like, if you haven’t started a project in the U.S., no one is going to buy it. There’s a bunch of projects already under construction, and there was the Empire Wind stop order that was lifted. I think that’s positive, but only to a degree, right? It just means this project under construction can probably go ahead. Those things will go ahead and have really strong developers with strong balance sheets. But they’re going to face additional headwinds, too, because of tariffs – that’s a different story.
We don’t see anything else going ahead.
Does the U.S. behaving this way impact the view you have for offshore wind in other countries, or is this an isolated thing?
It’s very isolated. Europe is just going full-steam ahead because the advantage here is you can build a wind farm that provides 2 or 3 gigawatts – that’s just massive. China, too. The U.S. is very different – and not just offshore. The entire renewables sector. We could revisit the U.S. four or five years from today, but [the U.S.] is going to be pretty difficult for the renewables sector.
What I’m hearing from developers and CEOs about the renewable energy industry after the Inflation Reduction Act
As the Senate deliberates gutting the Inflation Reduction Act’s clean electricity tax credits, renewable energy developers and industry insiders are split about how bad things might get for the sector. But the consensus is that things will undoubtedly get worse.
Almost everyone I talked to insisted that solar and wind projects further along in construction would be insulated from an IRA repeal. Some even argued that spiking energy demand and other macro tailwinds might buffer the wind and solar industries from the demolition of the law.
But between the lines, and beneath the talking points and hopium, executives are fretting that lots of future investments are in jeopardy. And the most pessimistic take: almost all projects will have their balance sheets and time-tables impacted in some way that’ll at minimum increase their budget costs.
“It’s hard to imagine, if the legislation passes in its current form, that it wouldn’t impact all projects,” said Rob Collier, CEO of renewable energy transaction platform LevelTen.
Even industry analysts with the gloomiest views of the repeal say there’s plenty of projects that will keep chugging along and might even become more valuable to investors if they’re close enough to construction or operation. This aligns with recent analysis from BloombergNEF, which found the House bill would diminish our nation’s renewables build-out – but not entirely end its pace.
“The more useful way to break down which project may be hit the hardest is where the projects are going to fall in their development life-cycle,” Collier said. “Projects that have either started construction or have the ability to start construction … are going to very likely rise in terms of their appeal and attractiveness and those projects will be at a premium, if they’re able to skate through the legislative risk and qualify for tax credits.”
There is a more optimistic industry view that believes increased project costs will just be passed along to consumers via higher electricity prices. The American people will in essence have to pick up the tab where the federal tax code left it. Optimists also cite the increased use of power purchase agreements, or PPAs, between renewables developers and entities who need a lot of electricity, like big tech companies. By signing these PPAs, buyers are subsidizing the construction of projects but also insulating themselves from the risk of rising electricity prices.
The most bullish perspective I heard was from Nick Cohen, the CEO of Doral Renewables, who told me deals like these combined with rising premiums for quick energy on the grid may obviate lost credits in a “zero-incentive environment.”
“It’s not the end of the world,” Cohen told me. “If you’re in construction or you’re going to be in construction very soon, you’re fine.”
But Collier called Cohen’s prediction an “experiment” in customers’ willingness to pay for new energy: “If we’re talking about 40%, 50%, 60% of a project’s capital stack now being at risk because of tax credits, those are pretty large price increases.”
I spoke to multiple companies that have been inking massive deals as this legislation has progressed — although many were not nearly as sanguine about the industry’s future prospects as Doral. Like rPlus Energies, which disclosed last week that it closed a commitment for more than $500 million in tax equity investments for a solar and storage project in Utah. rPlus CEO Luigi Resta told me that the legislation “certainly has posed concern from our investors and from the organization” but the project was so far along that the tax equity investment market wasn’t phased by the bill.
“Many people in my company, myself included, have been doing this for more than 20 years. We’ve seen the starts and stops related to ITC and PTC in solar and wind, in multiple cycles, and this feels like another cycle,” Resta told me. “When the IRA passed, everybody was exuberant. And now the runway looks like it may have a cliff. But for us, our mantra since the beginning of the year has been ‘proceed with caution, preserve and protect.’”
However, crucially, it is important to focus on how that caution looks: Resta told me the company has completely paused new contracting while the company is completing the projects it is currently developing.
One government affairs representative for a large and prominent U.S. renewables developer, who spoke on the condition of anonymity to preserve relationships, told me that “whatever rollback occurs will just result in higher electricity prices over time.” In the near term, the only language that would truly gut projects in progress today would be “foreign entity of concern” restrictions that would broadly impact any component even remotely connected to Chinese industries. Similar language all but kneecapped the entire IRA electric vehicle consumer credit.
“It included definitions of what it means to be a foreign company that were really vague,” the government affairs representative said. “Anyone who does any business with China essentially can’t benefit from the credit. That was a really challenging outcome from the House that hopefully the Senate is going to fix.” If this definition became law, this source said, it would be the final straw that “freezes investment” in renewable energy projects.
Ultimately, after speaking to CEO after CEO this week, I’ve been left with an impression that business activity in renewables hasn’t really subsided after the House bill passed, and that it’ll be the Senate bill that undoubtedly defines the future of renewable energy for years to come.
Whether that chamber remains the “cooling saucer” it once was will be the decider.