Energy & Utilities Brief - Week 3 of January

Jan 16, 2025

Good morning Thursday, a lot of exciting things happening this week!

⚡Here are the need-to-knows from our industry this week.⚡

Key Takeaways

White House moves to tackle AI boom: New executive order fast-tracks data center construction on federal land, but requires matching clean power generation
Grid reliability hits critical point: NERC warns half of U.S. grid faces energy shortfalls within 5-10 years as data centers and electrification drive 122 GW surge in peak demand
Gas plants see record deals: Constellation’s $30B Calpine purchase leads 2025’s acquisition boom as utilities hedge renewable transition risks
Battery market faces supply chain shift: Chinese imports brace for 150% tariffs, threatening 8% price hike for U.S. energy storage projects through 2028
Clean energy financing breakthrough: C-PACE programs offer 7% interest rates on 30-year retrofits, while DOE targets 80 GW of virtual power plant capacity by 2030

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Biden Administration’s Data Center Initiative: New executive order directs DOE and DOD to lease sites for gigawatt-scale AI data centers and clean energy generation, requiring developers to match facilities with emissions-free electricity
Federal Land Renewables: NREL reports potential for 51-84 GW of renewable energy on federal lands by 2035, potentially providing 10% of clean energy needed for net-zero goals
PJM Reforms: Broad support emerges for PJM’s proposal to revise Surplus Interconnection Service rules, potentially unlocking 26 GW of capacity for upcoming auctions

Hydrogen Progress: Utah’s Intermountain Power Project advances toward becoming world’s first operational gas plant designed for 100% carbon-free hydrogen
VPP Development: DOE’s updated pathway report targets 80-160 GW of virtual power plant capacity by 2030, emphasizing grid resilience and consumer choice
Energy Management: Swiss automation giant ABB snaps up U.S. startup Lumin in a strategic move to capture America's massive home electrification opportunity. With 48 million U.S. homes needing electric upgrades for heat pumps, EV chargers, and smart appliances. Residential electricity use projected to jump 22% by 2050 - the race is on to control the smart home energy market.

Battery Market Shakeup: U.S. battery prices face a perfect storm as the Trump admin considers raising Chinese import tariffs to as high as 150%. Combined with other trade actions, this could push costs up 8% through 2028, despite falling lithium prices. Alternative suppliers in Southeast Asia and Korea are ramping up, but won’t match China’s scale until at least 2027.
Natural Gas’s Second Wind? While headlines focus on renewables, the gas power sector is seeing its hottest M&A market in years. Constellation’s massive $30B Calpine acquisition - snagging 60 GW of generation - kicks off what analysts predict will be a banner year for gas plant deals.

The up tick reflects utilities hedging their bets against rising power demand and grid reliability concerns.
Power Bills Under Pressure: Your electricity bill’s upward climb isn’t stopping anytime soon. A triple threat of soaring AI/data center demand, building/transport electrification, and booming LNG exports is straining the grid. With U.S. LNG exports set to double by 2030 and data centers potentially consuming 9% of U.S. electricity by the same year, utilities are warning of sustained price increases ahead.

EV Charging Expansion: DOT unleashes $635M to build out 11,500+ charging ports across 27 states and tribal areas. Notable projects include Cherokee Nation's $10.7M rollout across 12 locations and a pioneering $25M hydrogen fueling station at Port of Houston, marking the first major push into alternative fuel corridors along interstate highways.
Western Solar Plan: BLM's ambitious solar expansion gets green light despite state pushbacks. The updated plan opens federal lands across 11 western states for solar development, targeting areas near existing transmission lines while protecting critical wildlife habitats. NREL estimates these lands could host up to 5,750 GW of solar capacity, requiring less than 0.5% of available federal land.
Green Building Finance: C-PACE financing is hitting its stride with 30-year terms at 7% interest rates, enabling major efficiency projects like the $153M Black Desert Resort development.

Now active in 40 states, the program lets building owners finance everything from HVAC upgrades to water conservation measures through property tax assessments, with no upfront costs.

Grid Reliability Alert: NERC warns more than half of U.S. grid faces potential energy shortfalls by 2034. Peak summer demand projected to rise 122 GW (15.7%) while up to 115 GW of generation retirements loom. Arctic temperatures this month put additional stress on natural gas supply in Mid-Atlantic and Northeast regions.
Transmission Development: DOE's National Transmission Planning Study sets framework for interregional projects as FERC Order 1920 gives states bigger role in planning and cost allocation. Grid operators must file compliance plans showing how they'll implement new scenario development requirements across regions.
Load Growth Reality Check: PJM forecasts 42 GW summer demand increase by 2029, driven largely by data centers. However, historical projections since 2006 consistently overestimated actual demand. Amazon Web Services tells regulators that 10-year power needs are "unreasonable" to predict given technological uncertainties.

Thanks for reading → share with your coworkers who care :-)

- Parker