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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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What would happen to Project Jupiter if the Bipartisan American Affordability and Jobs Act is passed?
One of the nation’s largest data centers is struggling under permitting woes. So let’s play a game: would the bipartisan permitting bill in Congress make the path easier, or might the federal legislation be irrelevant to large hyperscalers under development today?
Meet Project Jupiter, a mega project in southern New Mexico in Dona Ana County under development by Oracle and OpenAI, with financial backing from SoftBank and political support from the Trump administration for being a part of Stargate, a major Trump administration public-private initiative boosting AI development. Project Jupiter would be one of the largest data centers in the country if completed and currently is expected to run on a microgrid powered by fuel cells converting gas to electricity, which the developers claim will burn much cleaner than a typical off-grid gas turbine power plant.
Solving the energy side of the equation is a major hurdle for Jupiter, largely because of permitting delays and legal challenges.
In mid-September, the New Mexico Supreme Court lifted a stay it placed on consideration of the project’s state air permitting application. But on Wednesday, the Santa Fe New Mexican published emails between the New Mexico Environment Department and Project Jupiter staff detailing that independent emissions modeling showed pollution would be greater than predicted by the developers, after they had already requested permission to emit more CO2 than the state’s three largest cities combined. A final decision on the air permit was expected in November; the emails suggest the deadline may slip further. After the emails were reported, Oracle declared it would try to reduce emissions from the site by more than 30%.
At the same time, the New Mexico Justice Department is opposing the Federal Energy Regulatory Commission’s environmental assessment under the National Environmental Policy Act for a gas pipeline key to powering the project. The state’s attorneys assert the agency improperly failed to examine how the data center’s use of the pipeline would affect the environment. This week, a dozen GOP attorneys general representing states with large gas industries wrote FERC insisting they ignore the state’s protests, arguing that a recent Supreme Court ruling – known colloquially as Seven County – meant the federal government doesn’t need to look at the data centers gas pipelines are feeding when the lines are reviewed. Oracle has declared a “force majeure” over the pipeline delay. Rumors have circulated that trucks may just bring gas in for operations; company representatives told the Dona Ana County Commission this week those claims were “misinformation.”
Amidst these delays and potential legal conflicts, I’ve sought to understand whether projects like these – large data centers racing to operate within the next year or two – would be affected by enactment of the Bipartisan American Affordability and Jobs Act of 2026, a major permitting reform deal negotiated in part by New Mexico’s senior senator, Energy and Natural Resources chairman Martin Heinrich.
In Washington D.C., this legislation is exciting many constituencies, including energy industry types, policy wonks, business-friendly climate advocates. At the same time, more conservation-minded environmental groups opposed to provisions benefiting the fossil fuel industry are leaning into an argument that the legislation would accelerate a new era of gas-dominant data center construction.
Last week, I wrote about the environmentalists’ argument. I also examined the parts of the bill unlocking a new transmission build-out and requiring data center ratepayer protection. If enacted, FERC would have to require utilities to charge data centers not only for the costs of new grid upgrades but the charges incurred for using the grid, too. As my colleague Robinson Meyer has written, by forcing AI infrastructure operators to pay for both embedded and incremental energy costs, the legislation would essentially mean data centers paying both to reduce rates and build new energy generation. We’re seeing in real time what happens when you don’t deal with the transmission connection system while building new grid upgrades: companies will often opt to just build their own private off-grid fossil fuel islands. In Texas, for example, we’re seeing transmission hook-up delays lead to companies just building their own gas plants instead. This is not to say companies won’t still go off the grid if this bill passes, but it’s a serious consequence of our dilapidated energy system worth considering.
So I decided to evaluate Project Jupiter as a test case. How might the permitting bill affect this project and other big data centers at a stage like it?
For starters, let's say what the permitting bill does not do. It wouldn’t change the Clean Air Act. Project Jupiter would be one of the largest data centers in the country if completed, as well as potentially one of the nation’s biggest CO2 emitters if permitted as proposed. Nothing in the bill would affect requirements that the project adhere to national air emissions standards, so it wouldn’t affect the New Mexico Environment Department’s pending decision around the project’s air permits.
Enacting BAAJA could potentially affect this sprawling data center project in extremely hypothetical ways. It would reduce legal risks associated with future interstate gas pipelines under development expected to potentially branch out to Project Jupiter, including the Desert Southwest Expansion pipeline. It’s easy to understand in the words of Robert Pattinson in Primetime how this looks: like an easier path to expanding gas generation in this area.
On renewables, the bipartisan permitting deal would codify new permitting certainty and timeline provisions that claim to make it easier for companies to pursue solar development on federal acreage managed by the Bureau of Land Management. Project Jupiter just concluded a request for proposals to procure two gigawatts of renewable energy including solar power to meet the developers’ pledge to achieve 100% carbon matching by 2031 and Thiagarajan previously told the commission they’ve examined potentially getting energy from solar projects nearby on BLM lands.
But all of this is too theoretical and the case for any individual early-stage energy project too. Not to mention that we have no idea how the Trump administration would implement this certainty language, even for Project Jupiter.
To me, if people want to earnestly understand how the bipartisan permitting bill might actually affect data centers, they need to fully consider how making it easier and more transparent to hook up to the existing electric grid could reduce how much on-site gas generation is used at AI data center operations.
Delays in state permitting for the off-grid fuel cell plant have led Project Jupiter’s developers to consider what turning to the power grid would look like. In early September during a Dona Ana County commission meeting, Oracle executive vice president Mahest Thiagarajan told the panel, “If we end up in a situation where the air permit is not actually approved, I do have to work with a grid provider. Whether it is actually part of the grid or they built the grid for me could be TBD.”
“It doesn’t need to be on the grid, but I need [a] source of power to help power the data center,” Thiagarajan said.
Commission chair Manuel Sanchez replied that the microgrid plans were established in their community benefit agreement but he supported proposals requiring data center developers paying for upgrades and directly paying to reduce electricity rates for nearby residents. “It’s actually provided a downward pressure on rates,” Sanchez said, referring directly to such a policy created by the Georgia Public Service Commission.
Thiagarajan agreed. “My current plan is to continue to work with NMED [the New Mexico Environment Division] and get the off-grid site. If for any reason we have to, because I don’t have the air permit and I have to build the site, I strongly believe it has to come with me bringing down pressure to the rates. Period. I don’t think that’s a question of, I’m not increasing the rates. I actually have to come in and say, I am lowering the rates here.”
If Congress enacted this permitting bill in the lame duck, would Project Jupiter ditch plans to be off grid? It’s challenging to prove or disprove such a hypothetical. Representatives for the project did not respond to requests for comment. But we know any attempts at grid hookups without greater ratepayer protections are only leading to more conflict locally; this week, when Project Jupiter tried proposing a hook up to the grid for emergency power, the county commission fumed. Right now, the plan is still to power Project Jupiter with the gas fuel cell generation on site.
As I concluded this research, I noticed Heinrich’s office has actually promoted news coverage about what his efforts to enact data center ratepayer protections would do to Project Jupiter.
In early August, as the Senate was leaving for a summer recess, his office republished a Santa Fe New Mexican article about legislation the senator authored – the GRID Savings Act – and its potential impact on Project Jupiter. The article claimed that if Project Jupiter was unable to get its air permit, they’d be able to get power a different way under his proposal. The local news outlet also quoted an email from Sanchez, the county commission chair, stating that Heinrich’s bill “could be an avenue for Project Jupiter to fulfill their requirements if the air permit is denied.” Sanchez did not respond to requests for comment.
So I asked Senator Heinrich’s office for comment about this republished article, as well as if his permitting deal would indeed help ensure Project Jupiter was completed and came online. To conclude this story, here is their full statement:
The Senator has been clear that building big things responsibly means putting communities first. As he stated in his interview with the Albuquerque Journal, Project Jupiter botched community engagement from the start.
BAAJA is about making sure we build the energy infrastructure we need while keeping costs down for families and small businesses in New Mexico and across the country. The legislation would help get new energy generation, primarily clean energy, on the grid. By getting the energy onto the grid, states like New Mexico, which has enacted the Energy Transition Act, can continue working to ensure the energy powering our grid is increasingly clean.
The Senator has fought to ensure that growing energy demand doesn’t come at the expense of New Mexicans’ electricity bills by requiring data centers to pay for all of their associated transmission costs, rather than those costs shifting onto ratepayers. Ultimately, the Senator strongly believes that any major development, including data centers, should come as a benefit to the communities that host them, not a burden — and that starts with meaningful community engagement and real benefits for New Mexicans.
To be clear, BAAJA is federal legislation focused on energy infrastructure and grid connectivity. It does not ‘permit’ data centers. State and local government approval is still required. The Senator's legislation addresses the federal energy infrastructure challenges associated with a grid that cannot keep up with demand; it does not circumvent the state and local processes that determine whether Project Jupiter moves forward.
Media representatives for Project Jupiter did not respond to requests for comment.
And more of the week’s top news around project fights.
1. New England (and Maryland) – The Trump administration is still messing with offshore wind farms, even while trying to pass a permitting reform deal. Examining the court filings reveals why they may feel empowered to do it — and I’m not sure how this ends.
2. Columbia County, N.Y. – New York’s renewable energy permitting office has rejected an upstate solar farm on farmland as a House Democrat representing the area joined hands with the Trump administration in publicly railing against the project.
3. Cumberland County, N.J. – The Vineland data center project is impacting the sector’s reputation in the Garden State.
4. Hood County, Texas – It looks like this corner of Hill Country is going back to court over a data center.
These seven elections could change state energy policy.
No matter how well Democrats do in the House and Senate in November, it’s unlikely to mean anything new on climate policy in Washington, D.C., for as long as Donald Trump remains in the White House.
That is not true when it comes to the other elections this year.
Several states are on the verge of a possible Democratic trifecta, meaning unified control of both chambers of the state legislature and the governor’s mansion. It’s a position that could enable such states to either top off existing climate and energy policies passed in the last decade or to make the first real run at climate legislation in recent history.
There are also several races for control of public utilities commissions — and, in turn, for influence over rates and the potential adoption or expansion of clean energy — that are being closely watched.
Here are some of the biggest climate races beyond the House and Senate.
Minnesota passed its comprehensive climate legislation in 2023 after Governor Tim Walz won reelection in 2022 and the state Senate flipped to Democratic control. The bill included a 100% clean energy goal for 2040. Almost a year after Walz signed his bill, Michigan Governor Gretchen Whitmer signed her own, with a 100% clean energy target for 2040, along with energy efficiency and permitting streamlining. Walz would also sign a follow-on permitting bill in 2024. That November, however, Democrats lost control of both state houses (sort of — you’ll see).
Now many climate advocates and strategists look forward to possibly regaining trifectas in the two upper Midwestern states. “They’re in a spot where they haven’t been able to pass anything for two years,” Caroline Spears, the executive director of Climate Cabinet, a nonprofit advocacy group, told me. She said a priority for both states would be writing laws specific to data centers to make sure the energy they use is clean and they don’t increase costs for residential ratepayers.
“What you’re able to do when you have multiple bites at the apple is change your existing energy policy to match the current market and match the current needs, and that’s what Minnesota and Michigan have to do now,” Spears said.
In the case of Michigan, the House of Representatives stands at 58 Republicans to 52 Democrats, while the Senate is 20 Democrats to 18 Republicans. In Minnesota, Democrats have a one-seat edge in the House of Representatives, with 67 seats, compared to the Republicans’ 66 thanks to a Republican resignation (68 are required to reach a majority). But the House is still under a power-sharing agreement with a Republican speaker. Ballotpedia currently rates the possibility of a Democratic trifecta in either state as a “toss-up,” although Minnesota has a slightly easier path.
In both Michigan and Minnesota, a trifecta could deliver “policies that are focused on reigning in utilities’ profits to bolster affordability,” Courtney Brady, Evergreen Action’s senior Midwest director, told me.
“Really strong guardrails are needed in Michigan to ensure that data centers and utilities that are providing them energy have to continue to abide by the state’s clean energy laws,” Brady added.
Michigan Democratic gubernatorial candidate and Secretary of State Jocelyn Benson said she would “ban rate increases that are only being used to pad profits” and implement performance-based standards for utility payouts. She also said she would “conduct a comprehensive audit of our power grid and address the vulnerabilities and outdated infrastructure of our aging energy infrastructure.” Benson’s energy platform “heavily focuses on affordability,” Charlotte Jameson of the Michigan Environmental Council, a clean air and water nonprofit, told me.
Amy Klobuchar, the Democratic candidate for governor in Minnesota, has been less specific, typically including utility costs in a laundry list of affordability items including health care, housing, and child care.
And while Michigan does have a clean power standard, “We’ve not in Michigan really tackled transportation sector emissions, or frankly, housing and buildings,” Jameson said. A Democratic trifecta could shift transportation spending toward mass transit and away from lane widening, Jameson added, and could devote resources to electric-vehicle charging. Benson has also supported bringing high-speed rail to Michigan.
While Michigan and Minnesota have passed climate legislation that could be revisited for the age of load growth, several states may elect Democratic trifectas for the first time in decades, giving them a first shot at climate policymaking. Strategists and activists are targeting Wisconsin, Arizona, and Pennsylvania.
In Wisconsin, Republicans have an 18-15 majority in the state Senate, with half the seats up for reelection; Democrats only need to flip two. To gain control of the state Assembly, Democrats would need to flip five seats in the 99-member chamber.
Any energy legislation in the next session would likely address data center construction and ratepayer protection, including empowering utility regulators to better scrutinize requests for new gas plants and demand projections, Brady told me. Wisconsin Democratic gubernatorial candidate David Crowley has also proposed bolstering the state’s existing weatherization and efficiency programs.
In Arizona, where Republicans have a four-seat majority in the state Senate and a 33-27 majority in the House of Representatives, the oncoming Democratic trifecta is always an election away. While Arizonans have elected Democrats to both U.S. Senate seats — and to governor, with Katie Hobbs running for reelection — the party hasn’t controlled any house of the Arizona state legislature since the early 1990s. This has meant that progress on energy legislation has so far largely consisted of Hobbs vetoing anti-renewables legislation passed by Republican majorities.
A Democratic majority could do more to encourage solar development in the sunny state. “The thing we’ve always been pushing for with the Arizona state legislature in getting to a trifecta is any kind of clean energy incentive bill,” John Qua, campaign director at Lead Locally, a group that works to elect progressive candidates, told me. He also said a Democratic majority in the statehouse could implement “guardrails” on energy and water use by data centers in the state.
In Pennsylvania, Republicans hold a four-seat majority in the state Senate while Democrats have a three-seat majority in the House of Representatives. With Democratic Governor Josh Shapiro likely cruising to reelection, climate advocates are looking at maybe finally having an opportunity to pass legislation in a major energy-producing and exporting state with relatively little renewable generation. This could include beefing up standards for clean energy generation for the state’s utilities and getting the Senate to agree to a community solar bill.
Qua said that majority makers in the state legislature support “strong regulations of data centers somewhere between very tough guardrails and moratoriums,” and would likely push Shapiro to continue his turn against rampant data center development.
The 2025 Georgia Public Service Commission elections revolved almost entirely around data centers and electricity costs and resulted in two massive Democratic wins for the utility regulator. Now one of those commissioners, Peter Hubbard, is running for reelection following his special election victory, and another Democrat, Shelia Edwards, could flip partisan control of the PSC if she and Hubbard both win. A super PAC connected to the solar industry is spending $250,000 in the race to support the two Democrats.
“The solar and storage industry is building political power by investing in high-impact local elections like the Georgia PSC races, where policymakers have significant influence over permitting, utility policy, regulation, and energy markets,” Steph Bosh, board chair of the Community Clean Energy Coalition, said in a statement. “Building a durable network of solar and storage champions across the country is a long-term strategy, not a one-year effort, and we’re focused on scaling that work with industry buy-in.”
A Democratic PSC would likely look more skeptically on deals between data center developers and Georgia’s dominant utility, Georgia Power, and would be more friendly to deployment of solar and storage to meet the state’s growing electricity needs.
The other utility regulator race getting national attention is the Arizona Corporation Commission, which has two seats up for election this year. Arizona’s Democratic Attorney General Kris Mayes has tangled with the Republican-controlled board over data centers and the possibility of shifting costs towards ratepayers. The Commission currently has five Republicans, but both Qua and Spears told me part of the challenge is getting voters — who may be voting for Hobbs and other Democratic candidates — to realize the Corporation Commission is a partisan race at all. “It’s standard for most people to say, ‘I think I know what the Arizona Corporation Commission is, but I'm just not sure,’” Spears told me.
“In terms of our get-out-the-vote work, we are mostly focused on hiring organizers for the state legislature,” Qua said. “And then as a second ask: ‘Also, have you heard of the corporation commission?’”