Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

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.

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Sparks

Majority of North Carolina Voters Want to Keep the IRA, Poll Finds

The state’s senior senator, Thom Tillis, has been vocal about the need to maintain clean energy tax credits.

A North Carolina sign and solar panels.
Heatmap Illustration/Getty Images

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.)

Keep reading...Show less
Green
Sparks

The Trump-Elon Breakup Has Cratered Tesla’s Stock

SpaceX has also now been dragged into the fight.

Elon Musk.
Heatmap Illustration/Getty Images

The value of Tesla shares went into freefall Thursday as its chief executive Elon Musk traded insults with President Donald Trump. The war of tweets (and Truths) began with Musk’s criticism of the budget reconciliation bill passed by the House of Representatives and has escalated to Musk accusing Trump of being “in the Epstein files,” a reference to the well-connected financier Jeffrey Epstein, who died in federal detention in 2019 while awaiting trial on sex trafficking charges.

The conflict had been escalating steadily in the week since Musk formally departed the Trump administration with what was essentially a goodbye party in the Oval Office, during which Musk was given a “key” to the White House.

Keep reading...Show less
Sparks

Rhizome Raises $6.5 Million for AI Grid Resilience

The company will use the seed funding to bring on more engineers — and customers.

Power lines.
Heatmap Illustration/Getty Images

As extreme weather becomes the norm, utilities are scrambling to improve the grid’s resilience, aiming to prevent the types of outages and infrastructure damage that often magnify the impact of already disastrous weather events. Those events cost the U.S. $182 billion in damages last year alone.

With the intensity of storms, heat waves, droughts, and wildfires growing every year, some utilities are now turning to artificial intelligence in their quest to adapt to new climate realities. Rhizome, which just announced a $6.5 million seed round, uses AI to help assess and prevent climate change-induced grid infrastructure vulnerabilities. It’s already working with utilities such as Avangrid, Seattle City Light, and Vermont Electric Power Company to do so.

Keep reading...Show less
Blue