Of all the elements of the One Big Beautiful Bill Act, perhaps none is as obviously self-defeating as getting rid of tax credits for clean energy. That decision will not simply set back the fight against climate change. Congressional Republicans could also be setting America up for the worst energy-affordability crisis since the 1970s. Unlike then, this time we’ll have imposed it on ourselves.
Electricity demand in the United States is rising faster than it has in at least two decades. AI data centers are using huge amounts of power to train new models. More Americans are plugging their electric cars and hybrids into the grid. Rising temperatures mean more air-conditioning use. Failure to meet this rising demand with adequate supply results in higher prices. From 2000 to 2022, U.S. electricity prices rose by an average of about 2.8 percent a year; since 2022, they have risen by 13 percent annually.
Fortunately, the timing of this demand spike coincided with a boom in renewable energy. According to the federal Energy Information Administration, 93 percent of the electricity capacity added to the grid this year will come from a combination of wind, solar, and battery storage. That trend was set to accelerate dramatically in the coming years thanks to the Inflation Reduction Act, which provided tax credits that made building clean power sources cheaper. Investment in those sources has accordingly spiked, and hundreds of new projects could begin generating power over the next decade. The IRA is generally seen as a climate bill, but it was also an energy bill. It provided a jolt to the American power sector at a moment when the sector desperately needed new supply.
Or so it seemed. The Senate version of Donald Trump’s One Big Beautiful Bill repeals the clean-energy tax credits in the IRA for all wind and solar projects that don’t begin construction within a year of the bill’s passage or become fully operational by 2028. (And even if a project begins construction in the first half of 2026, it will need to meet extremely onerous domestic-sourcing requirements that many experts believe will be nearly impossible to satisfy.) As a result, future clean-energy projects, including many that have been announced but not yet built, will cost about 50 percent more than those that received the credits, according to an analysis by Jesse Jenkins, who leads the Princeton ZERO Lab. The inevitable result is that far fewer will come into existence. “It’s hard to think of a bigger self-own,” Jenkins told me. “We’re effectively raising taxes on the country’s main sources of new power at a time when electricity prices are already rising.”
Doug Lewin – Texas Energy and Power Newsletter:
Anti-clean energy activists blithely suggest that the nation can just build a lot of new gas and nuclear power; market realities tell a different story. Even the staunchest nuclear proponents don’t think it can scale up before 2032.
And Lazard wrote that “turbine shortages, rising costs, and long lead times are expected to drive steep [cost] increases for gas technologies in the near term.”
More than ever, the U.S. needs renewables — even if only to cover current and near term needs, counter the cost pressure that’s already building, and buy time for other technologies to catch up. Renewables and storage are, at the very least, a bridge fuel to other forms of power. There simply aren’t available alternatives in the next few years.
Without renewables, costs will rise much faster and voters will be angry. Rising costs are already pissing off voters and Congress is considering throwing gas on the fire.
Yet, there is a perfect storm of uncertainty brewing: surging global demand for gas turbines is creating supply chain constraints, which create timeline and cost risks for recently announced projects. At the same time, global economic turbulence makes it difficult to predict where new load will be located, how large it will be, and how fast it will grow. All this uncertainty, added together, spells massive risks to system-wide reliability and affordability for ratepayers. Fortunately, there are fast and affordable alternatives.Turbine supply is already falling short
Three companies will need to supply most of the historic demand for new gas plants: GE Vernova, Siemens Energy, and Mitsubishi Power — who together serve over 75 percent of projects under construction. Booming demand for turbines has led each of these companies to report extended delivery timelines. Mitsubishi states that turbines ordered today will not be delivered until 2028–2030. Siemens reports a record backlog of €131 billion (US$148 billion). And GE Vernova has announced new turbines will not be available until late 2028 at the earliest. When delivery backlogs exceed the expectations of developers and utilities, they can create unexpected delays and project cost overruns.
The U.S. has reached record LNG export levels, with 2024 shipments averaging nearly 12 billion cubic feet per day. The global appetite for LNG continues to grow, as European and Asian buyers compete for available supply in response to geopolitical instability and reduced Russian gas flows to Europe.
As more U.S. natural gas is sent overseas, domestic markets face added pressure, reducing available supply and further supporting price increases. This trend highlights the interconnected nature of global energy markets, where domestic prices are increasingly influenced by international demand.
Rising demand in Europe and Asia is another key driver of natural gas price volatility. Since the reduction of Russian gas supplies to Europe, many nations have turned to LNG imports to fill the gap, creating intense competition for available cargoes. In Asia, economic recovery and seasonal heating demand have further tightened the market.
Geopolitical tensions also continue to impact global supply chains. Any disruption in LNG shipping routes or export facilities could send prices even higher, making market participants increasingly sensitive to political developments.
Americans can expect to pay more to stay cool this summer thanks to forecasts for above-average temperatures across the country and natural-gas prices that are heading into air-conditioning season 37% higher than last year.
On average, Americans should count on their electricity bills in June, July and August rising 4% from last year, mostly due to more expensive natural gas, according to the Energy Information Administration.
That would bring the nationwide summertime average to $186 a month, up from $180 last year and $148 four years ago, the EIA said.