Rising demand for LNG

Liquified natural gas (LNG) now accounts for 14% of total US domestic gas demand (BNEF 🔒). This record demand comes as natural gas generation is rising throughout the US (Semafor), and as the Department of Energy approved a permit for a planned LNG terminal facility in Louisiana (Bloomberg 🔒).

Gas prices are rising

In January, Henry Hub natural gas prices rose above $4/MMBtu for the first time since December 2022 and they remained above this threshold for much of March. Gas equipment prices are also on the rise: a Jefferies write-up on NextEra Energy’s developer day read, “The most quoted statistic of the Developer Day was the $2,400/kW 2030 unplanned combined cycle gas turbine (CCGT) price point which is even higher than the robust data points of late. If there are adverse changes to renewables tax credits, NEE believes that incremental demand for gas could push the pricing towards $3,000/kW.” Gas plays an important role in the US power system and will do so for years to come. But the combination of higher gas equipment costs, extended turbine lead times, and rising fuel prices suggest that an all-of-the-above approach that includes renewables and batteries is more likely to ensure the delivery of timely, reliable and affordable power.

US solar and storage soar to new heights

More 2024 data is coming in as Q1 comes to a close, and it’s showing that US storage and solar both had record years. According to a new US Energy Storage Monitor report (link), the US installed 12.3 GW of energy storage last year, a 33% increase from the preceding year (Latitude Media). Meanwhile, data from a new Wood Mackenzie report reveals the US solar capacity installed in 2024 grew 21% year-over-year (YoY) to 50 GW. Combined, the two technologies made up 84% of the grid capacity added last year (link, link).

Clean energy uptake is bipartisan

In Texas, solar and storage continue to have a good year in 2025. As spring temperatures heat up, ERCOT added more solar to its fuel mix than ever before. Five different March days topped the grid operator’s previous solar generation record, which was set earlier this year (GridStatus), and renewables accounted for a 76% share of ERCOT’s total load in early March (LinkedIn). The advancement of renewables is especially stark when comparing this month’s grid makeup to five years ago, when solar and storage’s contributions to the Texas grid were almost nonexistent. Long may this continue. As Governor Abbott put it in his State of the State speech this month, “Our rapidly growing state also needs an increasing supply of power.”

More heatwaves, more gas and coal generation

Even as more renewables capacity is added to the grid, extreme heat is driving up emissions. 2024 was the hottest year ever recorded, and new data reveals how that affected electricity load growth and the generation mix. The year’s hottest months saw a 3.3% YoY increase in US electricity demand with 37% of that increase attributable to air conditioning use, according to a new report from Ember (link). During the June heatwave in the US, electricity demand rose 9.4% YoY. Clean energy covered 67% of the increase, and gas and coal generation rose 4.6% YoY and 6.4% YoY respectively to fill in the gaps.

Sunnova shares take a plunge

Shares in residential solar company Sunnova have dropped from $15.26/share at the start of 2024 to $0.35/share as of March 24. The company issued a “going concern” notice in its latest earnings call. The broader US residential solar market also looks challenging, with residential solar permitting down 30% YoY in 2024 and Q4 2024 data showing no signs of rebound that would make for a stronger 2025 (Jefferies).

China’s trade strategy

China’s outward investment has shifted in recent years from acquisitions to greenfield development as companies race to build factories across the world to circumvent tariffs and secure access to markets (High Capacity, Rhodium Group). The strategy is also trying to “kneecap” Indian manufacturing (link).

Trade war officially kicks off

The Trump administration enacted 25% tariffs on goods from Canada and Mexico and 10% tariffs on Canadian energy, setting off a chain reaction of retaliatory tariffs (AP, E&E News). Canada swiftly imposed 25% tariffs on $155 billion worth of US products (link), while Ontario announced a 25% surcharge on its electricity exports to Northern US states (AP). Trump also increased tariffs on China (WSJ) and announced a 25% tariff on auto imports (Politico). The European Union threatened to retaliate against US steel and aluminum tariffs (NYT 🔒).

Keeping pace with which tariffs have been enacted or paused is dizzying (see NYT tracker 🔒), as is understanding their potential impact on economic costs (link) and the US electricity grid (GridStatus). Risk frameworks and scenario planning.

CERAWeek reinforces Trump’s energy agenda

US policy makers converged with energy leaders at the annual CERAWeek gathering in Houston earlier this month, providing a glimpse of how the Trump administration’s calls for energy pragmatism and re-embracing gas are being received by influential industry players. US Energy Secretary Chris Wright gave a speech promoting “climate realism” and expediting project permitting (link), while utility CEOs stressed the need for “all of the above” energy strategies to get projects built quickly. The key takeaway? Gas isn’t going anywhere yet – even renewables advocates are now incorporating natural gas into their plans. See more CERAWeek recaps and takeaways from Garrett Golding, Heatmap 🔒, and CTVC.

Legal battle over IRA funding freezes

The fight between the Trump administration and Greenhouse Gas Reduction Fund (GGRF) grant recipients is now tied up in the federal courts. After EPA administrator Lee Zeldin announced he was canceling $20 billion in GGRF grants over stated concerns of programmatic fraud and conflicts of interest (Politico, PoliticoPro 🔒), a federal judge temporarily blocked his claw back effort. Whether grant recipients will be able to reclaim their funds will depend on upcoming court proceedings (PoliticoPro 🔒).

Separately, the EPA’s watchdog office is auditing the $7 billion federal Solar for All program, which finances solar projects in low-income communities throughout the US (E&E News 🔒).

Nuclear gets rare bipartisan support

The Trump administration released a $57 million loan to restore the Palisades Nuclear Plant in Michigan, marking the first restart of a retired American nuclear plant. The Biden administration originally approved the loan as part of the IRA (DOE).

More Republicans back IRA tax credits

As the GOP-led Congress continues to work toward a budget reconciliation bill, 21 House Republicans signed a letter urging party leadership to keep the IRA’s clean energy tax credits intact to prevent spiking energy bills for US residents (Politico). The latest research from think tank Energy Innovation corroborates their concern, showing how an IRA repeal would raise household energy costs (link).

Texas bill threatens renewables momentum

The Texas Senate passed SB388 which effectively requires utilities, generation companies and electric cooperatives in ERCOT to offset new renewable energy and battery capacity with an equal amount of new dispatchable capacity, beginning as early as next year (link, Utility Dive). As Texas – like the rest of the US – works to scale its electricity supply to meet growing demand, the bill threatens to stifle renewables development and limit property owners’ control over their onsite power installations (Doug Lewin). There are plenty of echoes here from the 2022 legislative session, which featured multiple misguided and poorly constructed proposals that ultimately did not pass.

More state & local updates

Legislation introduced last month in California to repair what’s been described as a gross misinterpretation by the California Public Utilities Commission (CPUC) on the directive of Assembly Bill (AB) 2316 could have its first hearing as early as April 2 (NPM 🔒).

Federal Energy Regulatory Commission (FERC) approved changes to PJM’s capacity market rules in February, as part of a filing to change aspects of its Open Access Transmission Tariff, but the Independent Market Monitor told FERC in an March 19 appeal for rehearing that it believes the rule change could lead to higher costs for consumers (NPM 🔒). Various market participants filed comments with FERC urging the commission to reject PJM’s the ISO’s price collar proposal (Utility Dive). 

In response to the Trump admin tariffs levied against Canada, New England and New York grid operators set plans to collect millions in tariffs on electricity imports from Canada (Utility Dive, Utility Dive). 

A bill to drop an emissions reduction target for investor-owned utilities in North Carolina is making its way through the state’s legislature. The target directs applicable utilities – including the state’s largest utility, Duke Energy – to reduce their emissions by 70% from 2005 levels by 2030 (E&E News 🔒). 

Breaking ground on an innovative new steel mill

This month, our partners at Pacific Steel Group broke ground on an innovative steel mill in Kern County, CA, financed in part by Generate. The deal is a case study in how creative credit strategies can help unlock significant decarbonization opportunities for heavy industrial sectors. The mill is expected to reduce the emissions associated with using steel in California by 85% while creating nearly 700 local jobs. To celebrate this milestone, we’ve rounded up media coverage and our teams’ analysis of the project:

• Expert view by Bill Sonneborn: How our latest investment helps mobilize the green steel market (link)
• Op-ed by Bill Sonneborn and Eric Benson: Kern County’s new steel mill will do more than make steel — it will be a long-term community partner (link)
• Infralogic: Generate exec explains rebar manufacturing investment (link)
• Bloomberg: A novel CA steel mill gets $200 million boost (link)