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Jigar Shah might have more control over America’s new wave of industrial policy — not to mention its climate policy — than anyone not named Joe Biden. And he’s not even a Cabinet-level official. As director of the Department of Energy’s Loan Programs Office, which is akin to its in-house bank, Shah oversees how roughly $400 billion in lending authority will be spent. That money will help finance new EV factories, geothermal wells, carbon capture sites, and more.
On this week’s episode, Rob sits down with Shah to discuss the philosophy that he brings to his role. When financing new projects — many of which are the first of their kind — how does he think about cash flow, about technological innovation, about risk? Robinson Meyer is executive editor of Heatmap News; Jesse Jenkins, an energy systems engineering professor at Princeton, is off this week.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: I think one thing you’ve said often is that we have — and you alluded to at the beginning of the conversation — is that we haven’t built manufacturing in this country, basically, for 40 years. I think one note we’ve seen both from the president and from the partisan laws passed by Congress and the president — but also, frankly, from a more bipartisan set of lawmakers — is that there’s a lot of eagerness for that to change. So from your point of view as someone kind of in the weeds every day, what needs to change for the U.S. to build manufacturing and heavy industry domestically again?
Jigar Shah: Well, let’s start by saying that I think that the BIL and IRA that’s passed has been a huge success story, right? We’ve gotten 500 announcements of new factories in the United States. And so, these are communities like the one that I grew up in, that had the seventh largest steel mill in the country that shut down while I was there. And all of the people who went to high school there expected to have a job there, and they don’t. Right? These are folks who are pretty pissed off about the fact that their lot in life, really, was destined to not have family-sustaining jobs for 40 years, right?
And so now we’re giving people hope again that, for folks who have high school educations, that they can actually support their families and do these things, right? So in that perspective, we’re winning, right?
But on the other side, we still have a lot more work to do, right? So when you think about the underlying conventional wisdom, the conventional wisdom is that you’re going to start a factory, China’s going to dump product in the United States and going to put you out of business, right? And so the local bank is saying, prove to me that China’s not going to dump product and put you out of business. Those old habits die hard, right?
Now, the president has put together all sorts of belts and suspenders, but I don’t think that’s clear. I’ll give you an example. So in the EV supply chain — we have an extraordinary amount of lithium in this country. We made the announcements at Thacker Pass and Rhyolite Ridge, as well as recycling for Li-Cycle and Redwood. But we’ve got additional abilities to get lithium over in Arkansas and Salton Sea in California.
And a lot of folks are saying, lithium prices are down 70% from their highs, right? So therefore there’s no way you can make it work right now. Lithium was $5,000 a unit in 2020. Today it’s $20,000 a unit. It was as high as $80,000 — $20,000 is still 4x what it was in 2020. And so there’s a way to make it profitable, but we also have the 30D program where a lot of automakers get incentives to buy locally for domestic content.
And so I feel like there’s just so much in the IRA, that the belts and suspenders approach that the administration took is not something that most people understand. And as a result, a lot of dollars are not moving from the commercial markets. We’ve got to step in and move them.
This episode of Shift Key is sponsored by…
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Music for Shift Key is by Adam Kromelow.
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Here are four ways they can get it right.
On Tuesday, voters handed Democrats control of both the House and the Senate and flipped control of numerous governorships and state legislatures throughout the country. Its clear affordability was high among their concerns. Gas cost more than on any Election Day on record, and electricity bills keep climbing as demand grows faster than it has in decades.
Democrats now have a mandate to lower energy costs by building more homegrown clean energy, a chance to stop the administration from blocking new projects, and an opportunity to begin building a post-Trump American energy policy. Yet the president still holds veto power and control over federal agencies, diminished though they may be. The next administration will inherit a federal government that has been largely hollowed out, its agencies stripped of much of their staff, expertise, and institutional knowledge.
That puts states at the center of what comes next. A new class of governors and state lawmakers — including six new Democratic trifectas — will take office in 2027 ready to act on energy affordability. Given the limited opportunities in Washington, federal lawmakers will need to rely on state governments to advance an effective national energy agenda, both now and under the next administration. The question before them is how to design policy with that in mind from the start.
The 2022 Inflation Reduction Act offers both a model and a warning. The IRA has been transformative, catalyzing hundreds of billions of dollars in clean energy investment, supporting good jobs and domestic manufacturing, and driving economic growth nationwide. But with hindsight, one clear shortcoming emerges: Federal decision-makers too often treated states as grant recipients rather than institutional partners capable of deploying capital and shaping energy markets. This attitude hampered the law’s speed, effectiveness, and durability.
For instance, to implement the law’s Home Energy Rebates — an $8.8 billion program designed to operate through state energy offices and deliver energy efficiency and cost savings for consumers — the Department of Energy required states to navigate an unusually complex approval process. Many states had to hire outside consultants just to apply. Nearly five years after the law’s passage, only a handful have gotten their projects off the ground. The ambitions were real; the architecture made them slow.
The Environmental Protection Agency’s $20 billion Greenhouse Gas Reduction Fund offers a similar lesson. The GGRF was inspired by the growth of state and local green banks, and like them was designed to provide low-cost financing to clean energy projects throughout the country. Those same state-level green banks with local market knowledge and lending experience were well-positioned to deploy capital into local projects, yet they did not receive program funding directly. In consequence, only a small number of existing green banks received a small amount of this funding — less than 10% of the total available — before the Trump administration froze the program in its entirety. DOE’s Loan Programs Office, meanwhile, had $40 billion in authority to loan to state energy financing institutions, but it executed zero such loans.
These aren’t isolated examples. They’re symptoms of a systematic failure by the federal government to treat states as partners in the process of designing and implementing policy. In recent years the federal government has generally engaged with governors and state policymakers through intergovernmental affairs offices staffed with political appointees that treat states more like stakeholders to be managed than governing partners.
State governments are the machinery through which energy policy becomes real. They regulate utilities. Their laws govern the siting and permitting of energy infrastructure, including the data centers now reshaping electricity demand. They oversee housing and land use. And they run the economic development and financing agencies that work to expand local economies. Policies built around these state institutions can move faster, deliver greater local benefits, and last longer — especially as federal policy careens in wildly different directions every few years. Had the federal-state partnership been stronger from the start, IRA funding might have been deployed more quickly and delivered impact sooner in both red and blue districts, making it much more difficult for the Trump administration to roll back these policies.
For Democrats looking to advance an agenda that can deliver more affordable, reliable and clean energy, there’s never been a better time for this partnership, given the 30 governorships their party will hold starting in 2027 — the most in over 30 years.
So, looking ahead, what should happen next time?
Invest in state capacity quickly. For all their powerful authorities, state agencies often lack budget and staff capacity. The IRA mostly routed its dollars around them through tax credits, federal loans, and competitive grants. The few programs it did run through states, such as the home energy rebates, came with detailed federal requirements. Those safeguards were well intentioned, meant to protect consumers and guarantee results. But they assumed a capacity states never had the funding to build.
Formula funding, by contrast, is a no-regrets strategy to build that capacity. These are funds designed by federal lawmakers to be dispersed to all states based on a numeric formula (e.g. population or other appropriate quantitative metric), and are generally made to be easy for states to access. For example, DOE’s State Energy Program has delivered formula grants to all state energy offices, helping to fund their operations for over 40 years. According to the National Association of State Energy Officials, each federal dollar distributed through the program has leveraged more than $10 in state and private investment. EPA’s Clean Air Act programs similarly provide flexible grants to state environmental agencies. Future legislation should multiply the amounts of formula funding available in the IRA and streamline access. It should also pair these efforts with competitive funding that rewards cutting-edge state policies and cross-state collaborations that move industries and markets toward cleaner technologies.
Capitalize state financing institutions directly. States have long managed infrastructure finance, from the 1960s birth of housing finance agencies, to clean water state revolving funds, to federal funding for surface transportation infrastructure — all of which is now intrinsic to how infrastructure is built in this country. That model should now also anchor the next generation of clean energy infrastructure finance — for states to drive locally-impactful projects and economic development. DOE’s authority to lend to state institutions also remains intact.
Leverage state authority where it’s strongest. State public utilities commissions have a longstanding role in regulating the nation’s electric utilities. Federal policymakers should use this to their advantage, providing federal grants to expand PUC staff and expert capacity to oversee utility planning and rate cases. The State Energy Oversight Act, for example, would provide formula funding to state public utility commissions for financial and technical assistance. In addition to supporting their day-to-day role in utility regulation, this could also empower commissions to ensure that new federal tax incentives and investments deliver effective ratepayer relief — a true federal-state partnership that delivers on energy affordability.
States are also closest to the siting, permitting, and interconnection barriers now constraining low-cost clean energy expansion. The next generation of federal energy legislation should build upon and help proliferate state policy innovations like Michigan’s Renewable Ready Communities program, which helps local governments buy into locating energy developments in their towns, and Texas’s connect-and-manage interconnection process, which adds new energy faster than any other U.S. grid.
At the same time, federal policymakers shouldn’t ask states to lead delivery of every program. Where incentives can clearly benefit individual consumers and companies and reorient markets toward more affordable clean technologies, direct federal incentives — especially the IRS’s existing tax filing infrastructure — can be more efficient than new state programs built from scratch. The federal government also has a critical role to play in supporting technology innovation and expediting permitting for projects that cross state lines.
Finally, future federal leaders must prioritize clarity, simplicity, and speed. The next energy legislation should streamline requirements and include real deadlines, backed by deep White House engagement with governors of both parties. That should include stronger regional federal staff support — for example the EPA maintains regional offices throughout the country, while DOE does not. This agenda must also be led by senior officials with genuine authority, not those buried in an intergovernmental affairs office.
States haven’t waited. Green banks now operate all across the country. Forty-five states have built climate plans that are ready to be acted upon. Twenty-four states are committed to achieving 100% clean energy. And this week’s elections have delivered new state leaders ready to build a more affordable energy economy. States are already building America’s energy future. Washington’s job, next time, is to trust them — and build alongside them.
The gains set up Democrats to potentially flip the utility commission in 2028.
The blue wave has officially reached the Arizona down ballot. Though two Democratic wins in the Arizona Corporation Commissioner race might not drum up the same national coverage as, say, flipping a Senate seat in South Carolina, the election of Clara Pratte and Jonathon Hill to the five-seat commission could have major energy implications in a state that already saw renewables champions take over the state’s largest utility earlier this year. (With close margins in slow-to-count Arizona, the ACC race wasn’t officially called until Thursday evening, when both Republicans conceded.)
Arizona is one of 10 states that elects its utility commissioners, with the ACC regulating private water, gas, and electric companies in the state. That includes overseeing Arizona Public Service and Tucson Electric Power, where bills have increased 52% and 10%, respectively, over the past five years, per Heatmap’s data. (The publicly owned Salt River Project, which serves much of the Phoenix area, operates largely without ACC oversight.)
The ACC has been wholly in Republican hands since 2024; during that time, the body repealed Arizona’s Electric Efficiency Standards, which had incentivized utilities to pursue energy efficiency programs, as well as the state’s Renewable Energy Standard and Tariff, which supported the build-out of solar and wind power. “They were a rubber stamp for all our utilities and refused to even consider anything in support of protecting our climate,” Arizona State Representative Brian Garcia, who was reelected on Tuesday, said during a press call with Lead Locally this week. “At one instant, one of the commissioners told someone who got sick from the heat — who turned off their power and their AC — ‘Well, that’s on them.’ And I think our state and our communities have had enough of that.”
Though the ACC remains under Republican control despite the two Democratic additions, it puts full control within a one-seat striking distance for progressives when the other three seats are up in 2028 — a much easier fight to win, and potentially a huge one, given that the party hasn’t controlled the ACC since 1997.
Of particular concern in 2026, though, was the development of data centers. Ralph Heap, a Republican in the race who made the League of Conservation Voters’ 12-person “worst of the worst” list out of all 6,342 seats up for grabs nationwide on Tuesday, previously told the Arizona Capitol Times he supports the data center build-out in the name of American AI dominance. Incumbent Republican Kevin Thompson, meanwhile, has argued that the commission “has done its job of shielding ratepayers from costs associated with servicing data centers and other large load users.”
Voters evidently disagreed, backing Hill and Pratte, who say they support a data center moratorium. “The Corporation Commission might not be able to implement a pause, but I think they can certainly be a clearinghouse for information,” Hill told Yellow Sheet Report, an Arizona political tipsheet, acknowledging the relatively limited role the ACC actually has in regulating data centers beyond demanding transparency of utilities’ energy service agreements.
There are other concerns, too. Climate organizers zeroed in on the ACC race because of its influence over the solar buildout in the nation’s sunniest state, where nevertheless six of the state’s 15 counties have a restrictive ordinance against the resource, Heatmap Pro data shows. Commissioner-elect Pratte, a member of the Navajo Nation and the first Indigenous person elected to statewide office in Arizona, is also the co-founder of Navajo Power, a clean-energy company that helps tribal nations develop solar energy and storage projects.
Arizona Public Service and Tucson Electric Power also both have pending rate increase requests under review by the ACC; a 14% rate increase for residential customers and a 45% or more increase for data centers in the case of APS, and a 10% increase for residential customers in the case of TEP. (The APS’ rate case will likely be decided in December, before Pratte and Hill take their seats.)
Additionally, State Senator Lauren Kuby has introduced a bill to change the name of the ACC to the Arizona Public Utility Commission, a move intended to highlight to voters “its significance to their daily lives,” as she told the Arizona Capitol Times earlier this year. Sure enough, John Qua, the campaign director at Lead Locally, and Caroline Spears, the executive director of Climate Cabinet, previously told my colleague Matthew Zeitlin that part of the trouble with supporting progressive candidates in the ACC race was communicating to Arizona voters that, like the race for governor, it is a partisan election.
But given how things turned out Tuesday nationwide — a referendum on cost-of-living and, perhaps, data centers — it seems they needn’t have worried. Arizonans worked out exactly who to blame.
Electricity companies look like one of the biggest losers of the 2026 midterms.
This is Heatmap Daily, a weekday digest written by our executive editor. Subscribe here.
I’m still wrapping my head around the size and scale of the Democratic victory on Tuesday. I suspect Wall Street is, too. Yesterday, the S&P 500 gained about 1.6% as investors saw an upside in the Democratic blow-out. Today, they lost their nerve: The S&P fell almost 4.4%, and the tech-focused Nasdaq slid by more than 5%. That AI-loaded index is now down more than 10% from its all-time high in October, which means it’s technically entered a “correction.” (If it drops by 20%, it’ll be in a bear market.)
Amid the market carnage, utilities have held out alright. The Vanguard utilities index fell by less than one percent today, and two of the country’s biggest vertically integrated electricity monopolies — Duke and Southern Company — actually gained ground. Other power companies — including Xcel Energy, which serves the Midwest and Dominion Energy in the Southeast — did okay as well.
I find that surprising, because utilities strike me as one of the biggest losers of Tuesday’s election.
That’s partly because utilities showed up in surprisingly specific ways in candidate policy proposals this cycle. Last night, I wrote about how Senate Democratic candidates took a fairly moderate tack on climate and energy policy this year. What I didn’t mention is that Adam Hamilton, Kansas’ newly elected Democratic senator, called out utilities specifically in his proposal for major new transmission. One of his four big energy policy proposals is as follows:
Require competitive bidding processes for transmission projects instead of handing utility companies lucrative contracts at taxpayer expense. When a nearly half-billion-dollar transmission project is handed to a single utility with no competitive bidding, Kansas ratepayers can end up paying far more than they should. Competitive bidding has been shown to cut these costs by twenty to thirty percent. Politicians on both sides of the aisle should speak out against harmful policies that avoid competitive bidding, like the $493 million project that was handed to Evergy.
I mean, sounds great to me, but transmission policy does not normally rank among Democrats’ biggest applause lines. Hamilton’s other energy ideas are far more conventional, including ending Trump’s tariffs, his war on domestic energy projects, and restoring the clean energy tax credits.
Hamilton wasn’t alone in targeting utilities. David Pomerantz, who leads the watchdogging Energy and Policy Institute, has a great blog post today looking at utility politics in the 2026 election. He argues that we’re about to see utilities endure a much tougher oversight regime than they’ve faced in decades.
Why? There was much more attention on public utility regulators in this election than there have been in previous ones, he argues. Historically, public utility commission appointments have been sleepy affairs. But “incoming new governors Amy Acton (Ohio), Jocelyn Benson (Michigan), David Crowley (Wisconsin), Aaron Ford (Nevada), and Hannah Pingree (Maine) all campaigned overtly on a promise to appoint commissioners who would put ratepayers first,” he writes. In a few of those gubernatorial races, the losing Republican candidate had also promised to fire or replace the existing utility commissioners.
It goes beyond just oversight. The incoming governors in Pennsylvania, Iowa, and Maine have all vowed to reform or lower utility profits. Democrats won a majority on Georgia’s public utility commission — and flipped two seats in Arizona’s five-person board — promising to look closely at the utility profit structure, too.
In one state, voters even directly intervened to limit utility action. Michigan’s Proposition 2, which bars regulated utilities from making campaign contributions, passed overwhelmingly with more than 80% of the vote (although it now faces a legal challenge). And more than 100 politicians, including the winning Benson, pledged not to take utility campaign contributions.
Anyway, it’s an interesting post. You might remember I spoke to David last week for Shift Key about how the bipartisan permitting legislation would weaken monopoly utilities. As my colleagues Jael Holzman and Emily Pontecorvo wrote yesterday, Democrats and Republicans are now negotiating a top-down amendment to that permitting package. We’ll soon learn if the new version — which could come out any time in the next two weeks — preserves the same tough-on-utilities provisions that Dave praised.