Gridlocked

This Week's Trend In Brief:

• Earlier this month, The Washington Post said the quiet part out loud: U.S. utilities cannot keep up with the prodigious energy demands of AI, cryptocurrency, electric vehicles, and building decarbonization, particularly as existing power generation is retired before the clean energy infrastructure intended to replace it is even approved, let alone online. 
   

• The energy shortfalls come as state and federal policymakers across the U.S. attempt to use generous federal and state subsidies to electrify their economies, from vehicles to stoves to heat pumps and beyond, leaving utilities and regulators attempting “to squeeze more juice out of an aging power grid.” 
   

• At the same time, energy companies hoping to build the projects needed to alleviate the strain on the electric grid often find themselves running up against federal, state, and local officials wary of the effects the projects will have on communities and who will bear the costs of bringing these projects to fruition. 
   

• Indeed, even with the federal subsidies, energy companies too often find that getting even green energy projects built is more difficult than ever – beset by skepticism from local communities and antagonism from increasingly sophisticated professional activists on both sides of the energy debate. 
   

• To address our straining grid, public affairs professionals need a proven playbook to develop an understanding of who these stakeholders are, how they operate, and where they get their funding and technical expertise. Using that information to build a robust monitoring program will ensure you anticipate challenges before they cause delays. 

Digging Deeper:
 

Earlier this month, The Washington Post reported U.S. utilities cannot keep up with the prodigious energy demands of AI, cryptocurrency, electric vehicles, and building decarbonization. Aging infrastructure and reliability challenges across the country are preventing utilities from meeting the rising energy needs, and the “electricity-hungry data centers and clean-technology factories” that now “proliferate around the country” are only adding to that burden. While most federal and state governments have pledged to bring more, cleaner energy online, developers hoping to build projects to relieve the strain on the grid may find more hurdles than they initially expect.
 
The energy shortfalls come as policymakers across the U.S. attempt to use generous federal and state subsidies to electrify their economies. When Congress passed the Infrastructure Investment and Jobs Act (IIJA), it was lauded for providing $369 billion and expanding tax credits for businesses, clean energy, electric vehicles, and energy efficiency programs. Similarly, when the Inflation Reduction Act (IRA), was passed, it was celebrated as “the single largest investment in climate and energy in American history” and the pathway for “securing America’s position as a world leader in domestic clean energy manufacturing.” Now, as states are pushing to electrify everything from vehicles to stoves to heat pumps and beyond, utilities and regulators have been left attempting “to squeeze more juice out of an aging power grid.”
 
Despite these subsidies, energy developers who want to alleviate the strain on the electric grid often find themselves frustrated by federal, state, and local officials wary of both potential community impacts and who will bear the costs of these projects. For example, local restrictions on clean energy in Michigan “derailed more than two dozen utility-scale renewable energy projects as of last May.” Several of the rejections came “amid growing animosity toward wind and solar energy projects among rural residents in Michigan who see them as a potential threat to health and property values.” A similar situation is playing out across the country, as 15% of counties across dozens of states “have effectively halted new utility-scale wind, solar, or both.” The restrictions “come in the form of outright bans, moratoriums, construction impediments and other conditions that make green energy difficult to build.” While some states have instituted rules preempting local communities from barring these energy projects, the pushback to such preemption has already geared up and local restrictions continue to increase at the behest of a broad range of stakeholders.
 
Barriers from local communities and increasingly sophisticated opposition from both the right and the left make it harder than ever for energy developers to get even green energy projects built and keep them operating. Across the country, community members are forming local activist groups to delay these energy projects, using petitions to protest the projects and lawsuits against the green energy companies themselves. Behind these activist groups is often an increasingly sophisticated apparatus of opposition from both well-funded environmentalists and climate skeptics. These factions can put energy companies in the middle of increasingly contentious political feuds between local communities, conflicting state and federal policy priorities, and national interest groups. To navigate this operating environment successfully, energy companies must be aware of all the stakeholders involved – even ones that aren’t easily identified – in order to assess risks and anticipate potential concerns. 
 
To address our straining grid, public affairs professionals need a proven playbook to develop an understanding of who these stakeholders are, how they operate, and where they get their funding and technical expertise. Using that information to build a robust monitoring program will ensure you anticipate challenges before they cause delays. Energy developers, who increasingly face pressures from both sides of the political spectrum, must engage early to understand the communities they hope to build in before restrictions are set in place. With modern climate activists on the left and growing skepticism about the need for renewable energy solutions on the right, it is more important than ever for public affairs professionals in the energy industry and the companies they support to have an information advantage and ensure their policymaker and stakeholder engagement is two steps ahead of the opposition.  
 

Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.