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Sparks

Why Your Car Insurance Bill Is Making Renewables More Expensive

Core inflation is up, meaning that interest rates are unlikely to go down anytime soon.

Wind turbines being built.
Heatmap Illustration/Getty Images

The Fed on Wednesday issued a report showing substantial increases in the price of eggs, used cars, and auto insurance — data that could spell bad news for the renewables economy.

Though some of those factors had already been widely reported on, the overall rise in prices exceeded analysts’ expectations. With overall inflation still elevated — reaching an annual rate of 3%, while “core” inflation, stripping out food and energy, rose to 3.3%, after an unexpectedly sharp 0.4% jump in January alone — any prospect of substantial interest rate cuts from the Federal Reserve has dwindled even further.

Renewable energy development is especially sensitive to higher interest rates. That’s because renewables projects, like wind turbines and solar panels, have to incur the overwhelming majority of their lifetime costs before they start operating and generating revenue. Developers then often fund much of the project through borrowed money that’s secured against an agreement to buy the resulting power. When the cost of borrowing money goes up, projects become less viable, with lower prospective returns sometimes causing investors not to go forward .

High interest rates have plagued the renewables economy for years. “As interest rates rise, all of a sudden, solar assets that are effectively bonds become less valuable,” Quinn Pasloske, a managing director at Greenbacker, a renewable investor and operating company, told me on Tuesday, describing how the stream of payments from a solar project becomes less valuable as rates rise because investors can get more from risk-free government bonds.

The new inflation data is “consistent with our call of an extended Fed pause, with only one rate cut in 2025, happening in June,” Morgan Stanley economists wrote in a note to clients. Bond traders are also projecting just a single cut for the rest of the year — but not until December.

Federal Reserve Chair Jerome Powell told the Senate Banking committee Tuesday, “We think our policy rate is in a good place, and we don’t see any reason to be in a hurry to reduce it further.”

The yield for the 10-year Treasury bond, often used as a benchmark for the cost of credit, is up 0.09% today, to 4.63%. While this is below where yields peaked in mid-January, it’s a level still well above where yields have been for almost all of the last year. When Treasury yields rise, the cost of credit throughout the economy goes up.

Clean energy stocks were down this morning — but so is the overall market. Because while high interest rates are especially bad for renewables, they’re not exactly great for anyone else.

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Sparks

Heatmap Wins a National Magazine Award

We have some exciting news to share.

A bottle of champagne.
Heatmap Illustration/Getty Images

I wanted to update you on some very exciting news — our Decarbonize Your Life section just won the National Magazine Award for Service Journalism. It’s a huge honor for a publication that just turned two years old last month and a testament to the outstanding journalism our small but mighty newsroom does every day guiding our readers through the great energy transition.

A huge shout out, in particular, to our deputy editor Jillian Goodman for making the section so smart and helpful, to Robinson Meyer for dreaming up the idea, and to all the writers — Jeva, Katie, Emily, Charu, Taylor, and Andrew — who reported so insightfully for it. Tackling a complex but consequential subject like how to make better personal decisions around climate changewas a massive undertaking, but a labor of love.

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Trump to New York: End Congestion Pricing, or Else

The administration is doubling down on an April 20 end date for the traffic control program.

Kathy Hochul and Janno Lieber.
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Congestion pricing has only been in effect in New York City for three months, but its rollout has been nearly as turbulent as the 18-year battle to implement it in the first place.

Trump’s Department of Transportation escalated its threat this week to retaliate against New York if the state’s Metropolitan Transit Authority, or MTA, does not shut down the tolling program by April 20.

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Green
Sparks

How Energy Transition Stocks Fared During the Market Rout

There were a lot of tariff losers, but only one tariff winner.

A graph puncturing solar panels.
Heatmap Illustration/Getty Images

The U.S. stock market has taken its worst hit this week since March 2020, with the S&P 500 falling over 10% in just two days, while the tech-heavy Nasdaq is down 22% from its all-time high in December. The tremendous decline in stock values is a reflection of Donald Trump’s chaotic attempt at reordering the global economy, wrenching America’s average effective tariff rate to the highest level since 1909 — four years before the establishment of the federal income tax.

The clean energy economy has not been spared, although the effect has hardly been uniform. Some of the highest flying companies of 2024 and early this year — think Tesla or anyone selling power to a data center — have been some of the hardest hit, while some companies closer to the residential solar market have held their own.

Here’s a look at how some of these companies have performed over the past two days:

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