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PJM is projecting nearly 50% demand growth through the end of the 2030s.
The nation’s largest electricity market expects to be delivering a lot more power through the end of the next decade — even more than it expected last year.
PJM Interconnection, which covers some or all of 13 states (and Washington, D.C.) between Maryland and Illinois, released its latest long-term forecast last week, projecting that its summer peak demand would climb by almost half, from 155,000 megawatts in 2025 to around 230,000 in 2039.
The electricity market attributed the increased demand to “the proliferation of data centers, electrification of buildings and vehicles, and manufacturing,” and noted (not for the first time) that the demand surge comes at the same time many fossil fuel power plants are scheduled to close, especially coal plants. Already, some natural gas and even some coal plants in PJM andelsewhere that were scheduled to close have seen their retirement dates pushed out in order to handle forecast electricity demand.
This is just the latest eye-popping projection of forthcoming electricity demand from PJM and others — last year, PJM forecast summer peak demand of about 180,000 megawatts in 2035, a figure that jumped to around 220,000 megawatts in this year’s forecast.
While summer is typically when grids are most taxed due to heavy demand from air conditioning, as more of daily life gets electrified — especially home heating — winter demand is forecast to rise, too. PJM forecast that its winter peak demand would go from 139,000 megawatts in 2025, or 88% of the summer peak, to 210,000 megawatts in 2039, or 95% of its summer peak demand forecast for that year.
Systems are designed to accommodate their peak, but winter poses special challenges for grids. Namely, the electric grid can freeze, with natural gas plants and pipelines posing a special risk in cold weather — not to mention that it’s typically not a great time for solar production, either.
Aftab Khan, PJM’s executive vice president for operations, planning, and security, said in a statement Thursday that much of the recent demand increase was due to data centers growing “exponentially” in PJM’s territory.
The disparity between future demand and foreseeable available supply in the short term has already led to a colossal increase in “capacity” payments within PJM, where generators are paid to guarantee they’ll be able to deliver power in a crunch. These payments tend to favor coal, natural gas, and nuclear power plants, which can produce power (hopefully) in all weather conditions whenever it’s needed, in a way that variable energy generation such as wind and solar — even when backed up by batteries — cannot as yet.
Prices at the latest capacity auction were high enough to induce Calpine, the independent power company that operates dozens of natural gas power plants and recently announced a merger with Constellation, the owner of the Three Mile Island nuclear plant, to say it would look at building new power plants in the territory.
The expected relentless increase in power demand, power capacity, and presumably, profits for power companies, was thrown into doubt, however, when the Chinese artificial intelligence company DeepSeek released a large language model that appears to require far less power than state of the art models developed by American companies such as OpenAI. While the biggest stock market victim has been the chip designer Nvidia, which has shed hundreds of billions of dollars of market capitalization this week, a number of power companies including Constellation and Vistra are down around 10%, after being some of the best stock market performers in 2024.
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Just about every other renewable energy company is taking a beating today.
American solar manufacturer First Solar may be the big winner from the slew of tariffs Donald Trump announced yesterday against the world’s trading partners. Sorry, make that basically the only winner among renewable energy companies.
In a note to clients this morning, Jefferies analyst Julien Dumoulin-Smith wrote that “in this inflationary environment, we expect FSLR's domestic manufacturing to be the clear winner” in the long term.
For everyone else in the renewable industry — for example, an equipment manufacturer like inverter company Enphase, which has been trying to move its activities away from China — “we perceive all costs to head higher, contributing to a wider inflation narrative.”
First Solar’s’s stock is up almost 4% in early trading as the broader market reels from the global tariffs. Throughout the rest of the solar ecosystem, there’s a sea of red. Enphase is down almost 8%. Chinese inverter manufacturer Sungrow is down 7%. Solar installer Sunrun’s shares are down over 10%. The whole S&P 500 is down 4%, while independent power producers such as Vistra and Constellation and turbine manufacturer GE Vernova are down around 10% as expected power demand has fallen.
First Solar “is currently the largest domestic manufacturer of solar panels and is in the midst of expanding its domestic manufacturing footprint, which should serve as a competitive advantage over its peers,” Morgan Stanley analyst Andrew Perocco wrote in a note to clients Thursday morning.
Nor has First Solar been afraid to fight for its position in the global economy. It ispart of a coalition of American solar manufacturers that have been demanding protections against Southeast Asian solar exporters, claiming that they are part of a scheme by Chinese companies to avoid preexisting solar tariffs. In 2023,80% of American solar imports came from Southeast Asia, according to Reuters.
Tariff rates specific to solar components manufactured in those countries will likely be finalized later this month. Those will come in addition to the new tariffs, which will go into effect on April 9.
But the biggest question about First Solar — and the American renewables industry as a whole — remains unanswered: the fate of the Inflation Reduction Act. The company benefits both from tax credits for advanced manufacturing and investment and production tax credits for solar power.
“Government incentive programs, such as the Inflation Reduction Act of 2022 (the “IRA”), have contributed to this momentum by providing solar module manufacturers, project developers, and project owners with various incentives to accelerate the deployment of solar power generation,” the company wrote in a recent securities filing.
If those tax credits are at risk, then First Solar may not be a winner so much as the fastest runner ahead of an advancing tide.
Tristan Abbey would come to Washington from a Texas think tank that argues peak oil is way off base.
Donald Trump’s pick to run the Energy Information Administration works for a think tank that denies the existence of an energy transition.
The Energy Information Administration is the nation’s primary energy fuel and power forecasting agency. Since its inception in 1977, EIA has become a go-to source of data for many U.S. businesses, analysts, and policymakers alike. The agency’s previous administrators have been relatively apolitical academics and industry experts, including under the first Trump administration, whose EIA administrator came to the role from a faculty position at Rice University. The office’s current acting administrator is Stephen Nalley, who was appointed deputy administrator by Trump in 2018 after serving in various other roles at the agency.
Last month, however, the president quietly nominated a new EIA administrator who may represent a new direction for the agency. Tristan Abbey is an energy consultant and a senior fellow with the National Center for Energy Analytics, a think tank founded last year by a conservative policy outfit, the Texas Public Policy Foundation. The group argues against the concept of “peak oil,” the notion that the world will one day hit a maximum level of oil demand as it transitions to other (presumably more climate-friendly) fuels.
“There has never been a more critical time for sober-minded, fact-based, emotion-free perspectives in energy domains,” the think tank proudly declares on its About webpage. “The U.S. and European governments, along with many U.S. states, are embarking on the biggest industrial spending program in history, all directed in the pursuit of an ‘energy transition’ with the goal to rapidly replace hydrocarbons that currently supply 80% of the world’s energy. Why are the stakes so high? ‘Transitions’ of such scale have never occurred. And energy is fundamental to everything in civilization.”
Abbey was previously director of energy and environment at the National Security Council from 2017 to 2019 under Trump 1.0, and was also chief economist for the GOP on the Senate Energy and Natural Resources Committee, boasting in a CV that his role included successfully repealing a federal oil export ban. Per that CV, he previously worked for Clarium Capital Management and Founders Fund, two hedge funds founded by GOP financier Peter Thiel. Abbey was also on the Trump 1.0 transition team, according to his LinkedIn.
Today, Abbey also works with the Energy Policy Research Foundation, a D.C. petroleum research organization, and recently stepped away from working at the Trump-affiliated America First Policy Institute, according to an ethics disclosure posted online.
Abbey’s work at the NCEA provides insight into the views he may bring to the top of EIA.
His biggest achievement at the think tank was authoring a report declaring that global gas demand will remain strong. “[T]he broad directional arrows are distinguishable: for the foreseeable future, the world will need far more electricity and more industrial energy, and a significant portion of that will require natural gas,” the report said. “The federal government never decided to become the world’s largest LNG exporter, but it did allow private companies to make that happen. The decision that it can make today is to preserve that achievement.”
On a webinar about the report, Abbey called on the U.S. to take steps to increase domestic natural gas consumption and find new ways to use LNG in various consumer products and industrial processes. “Is there something that is holding U.S. industry back from using more natural gas than it would otherwise?,” he asked.
The NCEA is a key player in a highly consequential but wonky debate in Washington about whether the U.S. should try and put thumb screws onto the International Energy Agency, a world power and fuel forecasting body overseen by the OECD, an international body to which the U.S. is the single largest contributor.
The IEA has previously predicted “peak oil” may occur before 2030 — one of many predictions that have led some Republicans in Washington to declare the IEA is no longer impartial and a “cheerleader” for renewable energy. These Republicans have been led by Senator John Barrasso, one of the lawmakers who will oversee Abbey’s nomination. Another fan of this view is Kathleen Sgamma, Trump’s pick to run the Bureau of Land Management, who cited the NCEA to call on U.S. policymakers to pressure the IEA into “meaningful reform” of its forecasting about the energy transition. The op-ed was first reported by E&E News’ Scott Waldman.
How does Abbey feel about the war on the IEA? We’ll find out at his confirmation hearing, which has yet to be scheduled. We’ve asked Republicans on the committee for an update on when that’ll happen and we will let you know once we find out. Given they’re still working through other more high-profile nominees, that’ll take a while.
Microsoft is canceling data center leases, according to a Wall Street analyst.
The artificial intelligence industry is experiencing another TD Cowen shock.
The whole spectrum of companies connected to artificial intelligence — the companies that design the chips, that supply the power, that make the generation equipment — shuddered Wednesday when the brokerage released another note from analysts pointing to evidence that Microsoft was giving up on its data center leases.
“Microsoft has both (1) walked away from +2GW of capacity in both the U.S. and Europe in the last six months that was in process to be leased, and (2) has both deferred and canceled existing data center leases in both the U.S. and Europe in the last month,” the analysts wrote.
Microsoft is one of the biggest players in the artificial intelligence industry, with its near-$14 billion investment in OpenAI and acommitment to spend $80 billion on data center capacity this year.
The company is pulling back, the TD Cowen analysts said, because it had decided not to support incremental increases in training workloads for OpenAI models. Shares in Nvidia, the chip designer that’s become one of the most valuable companies in the world on the back of optimism about artificial intelligence, are down 7% since market close Tuesday, while shares in the power companies Vistra and Constellation are down 9% and 7% respectively. GE Vernova, which makes turbines for gas-fired power plants, is down 9%.
Much of the power industry saw huge increases in their stock prices in 2024, as investors bet on increased demand for electricity from data centers, manufacturing, and electrification. But 2025 so far has been a year of mild expectations.
In February, Cowen analysts issued a similar note warning that Microsoft was pulling back on some of its data center leases. And in January, of course, many of the AI and energy stocks that had been soaring 2024dropped when the Chinese artificial intelligence company DeepSeek released an open source model comparable in performance to the state of the art in the United States but that required far less computing power to train.
The Cowen analysts were hardly doomy about AI and data center construction, writing that Google and Meta may be “backfilling” the capacity left behind by Microsoft as they seek to expand their own data center footprints.
But the case for across the board optimism may be slightly dimming across the sector. CoreWeave, which buys Nvidia chips and operates data centers, has had to reduce the amount of money its seeking to raise in its planned initial public offering to $1.5 billion, from the over $4 billion it was looking to get from investors earlier in the IPO process, Bloomberg reported. Nvidia, an investor in CoreWeave and its most important supplier, will be “anchoring” the IPO, kicking in $250 million.