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A year and a half ago, President Biden signed the Inflation Reduction Act, the biggest climate law in American history — and arguably in world history. The law will spend an estimated $500 billion in grants and tax credits to incentivize people and businesses to switch from burning fossil fuels to using cleaner, zero-carbon technologies.
That’s the goal, at least. But is the IRA actually working? Now, 18 months after its passage, we’re starting to be able to answer that question. A new report from a coalition of major energy analysts — including MIT, the Rhodium Group, and our cohost Jesse Jenkins’ lab at Princeton — looks at data from the power and transportation sectors and concludes that yes, the law is starting to decarbonize the American economy.
But it isn’t working in the way many people might expect, because while electric vehicles are on track to meet the IRA’s climate goals, the power sector is not.
That’s the opposite of what you might think from reading the popular press, which has bemoaned an alleged slowdown in new EV sales. But the new report finds that the transportation sector actually came in at the upper end of what modelers expected to see this year. About 9.2% of new cars sold last year in the United States were zero-emissions vehicles; after the IRA passed, modelers had expected EVs to come in anywhere from 8.1 to 9.4% of sales.
But the power sector is lagging behind what modelers had expected to see. While the three groups had projected that 46 to 79 gigawatts of new zero-carbon power would come online last year, only 32.3 gigawatts of new capacity actually did. That is primarily due to a drop in new onshore wind projects, which fell below the installation levels achieved in 2020 and 2021. While solar and batteries continued to go gangbusters, exceeding previous records, they could not make up for the drop in wind. That means that the power sector is not on track to cut emissions 40% by 2030, as compared to 2005 levels, as the bill’s supporters have hoped.
Jesse Jenkins, an energy systems expert and professor at Princeton University, and I dive into the details on the latest episode of Shift Key.
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: First, let's do the moment of truth. Let’s just first get into the data. So in the power sector, what do we see?
Jesse Jenkins: What we see in the electricity sector is a new record set for zero carbon electricity generation and storage capacity additions. So that's new power plant and battery storage construction.
In aggregate, we saw over 32,000 megawatts or 32 gigawatts of new zero carbon generation and storage added to the U.S. grid in 2023. That's about a 32% increase from the rate in 2022. And it edges out a previous record that we saw in 2021 of about 31.6 gigawatts. So good news is we're setting new record growth rates in total in terms of wind and solar and battery additions.
Unfortunately, that does fall on the lower end of what we were projecting in most of the modeling results. We were looking for, on average, about 46 to 79 gigawatts, so call it 40 to 80 gigawatts on average of additions in 2023 and 2024. We fell short of the low end of that range at 32.3 gigawatts. So unless the pace accelerates substantially in 2024, we're probably going to fall a bit behind schedule in terms of capacity additions.
Meyer: And do we have a sense of what's driving that? Because I think that's a very surprising finding, that we're behind schedule in the power sector, where I think people feel pretty good generally about the pace of decarbonization. Or I think where the common wisdom, at least, is that the pace of decarbonization is like proceeding apace. What's driving this underperformance of the model?
Jenkins: So it's really the difference between solar and wind additions.
The solar sector added about 18.4 gigawatts of capacity in 2023. That's up massively from just about 11 gigawatts in 2022. It's about double what we had seen in 2020, which was kind of our reference when we were doing our modeling as we started the REPEAT project in 2021. And so that's looking encouraging and in fact is running ahead of schedule with the average pace of additions that we saw in REPEAT project results.
Batteries are growing way faster than we expected.
And that helps really make the most of those solar capacity additions because solar and batteries are kind of like peanut butter and jelly, they go together quite well. And that's because solar has this nice, regular daily fluctuation, right? From the sun rising and setting. And that pairs really well with batteries, which today in a way lithium ion batteries are best suited for, you know, only a few hours of storage. So they'll charge for three or four hours in the middle of the day when we've got an abundance of sun. And then they'll discharge in the evening to help meet the evening peak of demand when everybody's coming home from work.
The batteries basically helped shift the solar output from the middle of the day to hit that evening peak. And that's, that's really helpful. Where things are running behind schedule is really in the wind sector, where we only built about half of the peak rate, actually less than half that we've seen historically in 2023. Additions of wind power in 2023 were only about 6.3 gigawatts, and that's down from nearly 15 gigawatts in each of 2020 and 2021.
So that's a step backwards at a time when we should be smashing new record growth rates across all of these sectors. And that's giving me the biggest concern as we look at in the next couple of years.
Meyer: And that's, I mean, last show we talked about offshore wind and the troubles in offshore wind and how it seems like some big offshore wind projects that we thought might be coming online in the middle of this decade might not be coming online till the end of the decade. But when we talk about wind underperforming in terms of the whole country over the past year, we're really still talking about onshore wind. This is like big turbines in the middle of the Great Plains, not big turbines off the coast of New York, New Jersey, right?
Jenkins: That's right. Yeah, I think I don't think we had any significant offshore wind capacity additions coming in 2024. You know, most of that we were expecting would come in between 2026 and 2030 or 2035. So this is really a story about onshore wind, where if we look at the economics of onshore wind across the country, there's a tremendous number of sites that look very economic given the incentives provided by the Inflation Reduction Act.
And unfortunately, we're just not building out at the pace that would be economically justified. And that is really an indicator that there are a substantial number of other non-economic frictions or barriers to deployment of wind in particular at the pace that we want to see.
The full transcript is here.
This episode of Shift Key is sponsored by Advanced Energy United, KORE Power, and Yale …
Advanced Energy United educates, engages, and advocates for policies that allow our member companies to compete to power our economy with 100% clean energy, working with decision makers and energy market regulators to achieve this goal. Together, we are united in our mission to accelerate the transition to 100% clean energy in America. Learn more at advancedenergyunited.org/heatmap
KORE Power provides the commercial, industrial, and utility markets with functional solutions that advance the clean energy transition worldwide. KORE Power's technology and manufacturing capabilities provide direct access to next generation battery cells, energy storage systems that scale to grid+, EV power & infrastructure, and intuitive asset management to unlock energy strategies across a myriad of applications. Explore more at korepower.com — the future of clean energy is here.
Build your skills in policy, finance, and clean technology at Yale. Yale’s Financing and Deploying Clean Energy certificate program is a 10-month online certificate program that trains and connects clean energy professionals to catalyze an equitable transition to a clean economy. Connect with Yale’s expertise, grow your professional network, and deepen your impact. Learn more at cbey.yale.edu/certificate.
Music for Shift Key is by Adam Kromelow.
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And it only gets worse from here.
Hot and humid weather stretching from Maine to Missouri is causing havoc for grid operators: blackouts, brownouts, emergency authorizations to exceed environmental restrictions, and high prices.
But in terms of what is on the grid and what is demanded of it, this may be the easiest summer for a long time.
That’s because demands on the grid are growing at the same time the resources powering it are changing. Between broad-based electrification, manufacturing additions, and especially data center construction, electricity load growth is forecast to grow several percent a year through at least the end of the decade. At the same time, aging plants reliant on oil, gas, and coal are being retired (although planned retirements are slowing down), while new resources, largely solar and batteries, are often stuck in long interconnection queues — and, when they do come online, offer unique challenges to grid operators when demand is high.
For the previous 20 years, load growth has been relatively steady, Abe Silverman, a research scholar at Johns Hopkins, explained to me. “What’s different is that load is trending up,” he said. “When you’re buying and making arrangements for the summer, you have to aim a bit higher.”
Nowhere is the combined and uneven development of the grid’s supply and demand more evident than in PJM Interconnection, the country’s largest electricity market, spanning from Washington, D.C. to Chicago. The grid now has to serve new load in Virginia’s “data center alley,” while aggressive public policy promoting renewables in states such as Maryland and New Jersey has made planning more complicated thanks to the different energy generation and economic profiles of wind, solar, and batteries compared to gas and coal.
PJM hit peak load on Monday of just over 161,000 megawatts, within kissing distance of its all-time record of 165,500 megawatts and far north of last year’s high demand of 152,700, with load hitting at least 158,000 megawatts on Tuesday. Forecast high load this year was around 154,000 megawatts. Earlier this spring, PJM warned that for the first time, “available generation capacity may fall short of required reserves in an extreme planning scenario that would result in an all-time PJM peak load of more than 166,000 megawatts.”
While that extreme demand has not been seen on the grid during this present heat wave, we’re still early in the year. Typically, PJM’s demand peaks in July or even August; according to the consulting firm ICF, the last June peak was in 2014, while demand last year peaked in July. On Monday, real time prices got just over $3,000 a megawatt, and reached just over $1,800 on Tuesday.
“This is a big test. A lot of capacity has retired since 2006 and the resource mix has changed some,” Connor Waldoch, head of strategy at GridStatus, told me. While exact data on the resource mix over the past 20 years isn’t available, Waldoch said that many of the fossil fuel plants on the grid — including those that help set the price of electricity — are quite old.
PJM’s operators have issued a “maximum generation alert” that will extend to Wednesday, warning generators and transmission owners to defer or cancel maintenance so that “units stay online and continue to produce energy that is needed.”
PJM also issued a load management alert, a warning that PJM may call upon some 8,000 megawatts of electricity users who have been paid in advance to reduce demand when the grid calls for it. Already, some large users of electricity in Virginia have reduced their power demand as part of the program. There are historically around one or two uses of demand response per year in each of the electricity market’s 21 zones.
“Demand response is a real hero,” Silverman said.
Elsewhere in the hot zone, thousands of customers of the New York Independent Systems Operator lost or saw reduced power on Monday, along with over 100,000 customers affected by voltage reductions. On Tuesday, NYISO issued an “energy watch” meaning that “operating reserves are expected to be lower than normal,” and asking customers to reduce their power consumption.
Further north, oil and coal made up 10% of the fuel mix in ISO New England by Monday night, according to GridStatus data. The region has greatly expanded behind-the-meter solar generation since 2010, which as of 2 p.m. Monday was generating over 21% of the region’s power. But the grid as a whole hasn’t been able to keep up, thanks to a nationally anomalous shortage of gas capacity and still-insufficient battery storage. As the sun faded, so too did New England’s renewable generation.
“You don’t see coal very often in the New England fuel mix,” Waldoch told me. In fact, there is only one remaining coal plant in New England, which can typically power around 440,000 homes — though that’s based on normal electricity usage. On days like the past few, it may power far fewer.
Moving into Tuesday, Secretary of Energy Chris Wright invoked emergency authorities to allow Duke Energy in the Carolinas to run certain of its units “at their maximum generation output levels due to ongoing extreme weather conditions and to preserve the reliability of bulk electric power system.”
The strained grid and high prices come as grid operators question how effectively their current and planned generation capacity can meet future demand. These questions have become especially pressing in PJM, which last year shelled out billions of dollars in payments to largely fossil fuel generators in what’s known as a capacity auction. That’s already translating to higher costs for consumers — in some cases as high as 20%. But even that could be nothing compared to what’s coming.
“If you take the current conditions that PJM is dealing with right now and you add tens of gigawatts of data to center demand, they would be in trouble,” Pieter Mul, an energy and infrastructure advisor at PA Consulting, told me.
Right now, Mul said, PJM can muddle through. “It is all hands on deck. Our prices are quite high. They’ve invoked some various emergency conditions.” But that’s before all those data centers are even online. “It’s a 2026, ’27, and beyond question,” Mul said.
Today, however, “it’s mostly just very hot weather.”
The state’s senior senator, Thom Tillis, has been vocal about the need to maintain clean energy tax credits.
The majority of voters in North Carolina want Congress to leave the Inflation Reduction Act well enough alone, a new poll from Data for Progress finds.
The survey, which asked North Carolina voters specifically about the clean energy and climate provisions in the bill, presented respondents with a choice between two statements: “The IRA should be repealed by Congress” and “The IRA should be kept in place by Congress.” (“Don’t know” was also an option.)
The responses from voters broke down predictably along party lines, with 71% of Democrats preferring to keep the IRA in place compared to just 31% of Republicans, with half of independent voters in favor of keeping the climate law. Overall, half of North Carolina voters surveyed wanted the IRA to stick around, compared to 37% who’d rather see it go — a significant spread for a state that, prior to the passage of the climate law, was home to little in the way of clean energy development.
But North Carolina now has a lot to lose with the potential repeal of the Inflation Reduction Act, as my colleague Emily Pontecorvo has pointed out. The IRA brought more than 17,000 jobs to the state, per Climate Power, along with $20 billion in investment spread out over 34 clean energy projects. Electric vehicle and charging manufacturers in particular have flocked to the state, with Toyota investing $13.9 billion in its Liberty EV battery manufacturing facility, which opened this past April.
North Carolina Senator Thom Tillis was one of the four co-authors of a letter sent to Majority Leader John Thune in April advocating for the preservation of the law. Together, they wrote that gutting the IRA’s tax credits “would create uncertainty, jeopardizing capital allocation, long-term project planning, and job creation in the energy sector and across our broader economy.” It seems that the majority of North Carolina voters are aligned with their senator — which is lucky for him, as he’s up for reelection in 2026.
The new Nissan Leaf is joining a whole crop of new electric cars in the $30,000 range.
Here is an odd sentence to write in the year 2025: One of the most interesting electric vehicles on the horizon is the Nissan Leaf.
The Japanese automaker last week revealed new images and specs of the redesign it had teased a few months ago. The new Leaf, which will arrive in 2026, is a small crossover that’s sleeker than, say, a Tesla Model Y, but more spacious than the previous hatchback versions of the car. Nissan promises it will have a max range above 300 miles, while industry experts expect the company to target a starting price not too far above $30,000.
The updated Leaf won’t be one of those EVs that smokes a gas-powered sports car in a drag race, not with the 214 horsepower from that debut version and certainly not with the 174 horsepower from the cheaper version that will arrive later on. Its 150-kilowatt max charging speed lags far behind the blazing fast 350-kilowatt charging capability Hyundai is building into its Ioniq electric vehicles. But because it lacks some of these refinements, the new Nissan may arrive as one of the most compelling of the “affordable” EVs that are, finally, coming to drivers.
Not bad for a car that had become an electric afterthought.
The original Nissan Leaf was a revelation merely for its existence. Never mind that it was a lumpy potato derived from the uninspired Nissan Versa — here was the first mass-market electric car, heralding the age of the EV and welcomed with plenty of “car of the year” laurels at the dawn of the 2010s. Its luster would not last, however, as the arrival of the Tesla Model S a couple of years later stole the world’s attention. The second-generation Leaf that arrived in 2017 was an aesthetic and technological leap forward from its predecessor, with a range that topped 200 miles in its most advanced form. It was, for the time, a pretty good EV. Almost immediately, it was overshadowed by the introduction of Tesla’s Model 3 and Model Y, which catapulted Elon Musk’s company into complete dominance of the global EV market.
It took nearly a decade for Nissan (which fell into corporate mismanagement and outright crisis in the meantime) to update the stale and outdated Leaf. As a result, you might think the new version of the OG EV will arrive just in time to be outshone again. Yet the peculiar nature of the evolving electric car market has created an opportunity for the Leaf to finally grow and thrive.
There was a time when the mythical affordable Tesla could have taken the brand into the entry-level car market, and perhaps below the magic starting price of $30,000. But that has turned out to be a distraction dangled in front of fanboys and investors. In reality, Musk effectively killed the idea as he instead rolled out the Cybertruck and pivoted the company toward the dream of total vehicle autonomy.
Thanks to Tesla’s refusal to act like a normal car company, the affordable EV market is still there for the taking. Some are already in the game: Hyundai’s little Kona Electric starts at $33,000, and I’ve lauded Chevrolet for building a base version of the Equinox EV that starts around $35,000. In the next year or so, an influx of EVs in the $30,000 to $35,000 range might really change the game for electric-curious buyers.
The new Leaf is suddenly a big part of that mix. No, it won’t compete on price with a comparable combustion Nissan like the Kicks crossover that starts in the low $20,000s (not without the $7,500 tax credit, which would have made the new crop of affordable EVs directly cost-competitive with entry-level gas cars). The Leaf is likely to start just above $30,000, with the price creeping higher for buyers who opt for better performance or more range (and as I’ve noted numerous times, you ought to buy all the range you can afford if an EV is going to be your main car).
Arriving next year to compete with the Leaf is the new Chevy Bolt, another revival of an early EV icon. Experts expect a similar price range there. The anticipated Kia EV3 should come to America eventually with a starting cost around $35,000. The Jeff Bezos-backed Slate electric truck shocked the world with its promise of a bare-bones EV in the $20,000s — but, by the time the average buyer adds enough amenities to make it liveable, most Slate trucks will probably top $30,000.
Elon Musk may have abdicated his role as the Leaf’s antagonist via his refusal to build an affordable car, but erstwhile ally Donald Trump is poised to assume the role. Since the Leaf is slated to be built in Japan, the EV would be subject to whatever tariffs might be in place by the time it goes on sale next year. A 25% tariff, plus the federal government’s flip to punishing EVs with penalties instead of rewarding them with incentives, would kill the car’s value proposition in the U.S. Perhaps, then, it will become the next great affordable EV — for everybody else.