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Reuters
13-05-2025
- Business
- Reuters
US nuclear builders tight for time in race to power AI
May 13 - The selection of 16 sites located on Department of Energy (DOE) lands for the rapid construction of data centers and energy generation underlines the rising importance of AI demand for the U.S. energy sector. The sites offer "in-place energy infrastructure with the ability to fast-track permitting for new energy generation such as nuclear," the DOE said in a statement. Renewable energy can be deployed rapidly and energy storage can offer more flexible dispatch capabilities than solar and wind alone, but data center owners are keen to secure power day and night and the Trump administration has thrown its support behind fossil fuels and the burgeoning advanced nuclear sector. Join hundreds of senior executives across energy, industry and finance at Reuters Events Global Energy Transition 2025. Several of the DOE sites already host nuclear facilities and could be strong contenders for co-location of data centers and new nuclear generation. However, the exact details of land lease terms, environmental review requirements, and conditions for potential public-private partnerships (PPP) will be crucial to ensure plants can be developed cost-effectively, energy experts told Reuters Events. Importantly, the DOE has set a target of operating the data centers by the end of 2027 and it is unlikely new nuclear power plants can be built by then. The DOE held a request for information (RFI) from developers until May 7 and cited small nuclear reactors (SMRs), enhanced geothermal systems, fuel cells, energy storage and carbon capture as innovative energy approaches that could be installed at the sites. These technologies align with the administration's shift in energy policy away from a focus on renewables to prioritizing more reliable and resilient power sources, said Sidney Fowler, energy attorney at Pillsbury Winthrop Shaw Pittman law firm in Washington, DC. The Solar Energy Industries Association (SEIA) believes solar farms coupled with storage can be deployed cost-effectively and more quickly than other technologies, due to a well-established supply chain and a track record in providing reliable power to big techs and data centers. Meta, Amazon, Google, and Apple are the top four corporate solar users in the U.S., according to a SEIA report released in November 2024. CHART: US planned power generation installations in 2025 The DOE is yet to determine the types and sizes of power generation at the sites as well as the details about potential PPPs. "We are eager to hear ideas from industry, academia, communities and regional consortia. This will build on the long history of partnership between DOE's National Laboratories and the private sector," a DOE spokesperson told Reuters Events. Nuclear sites Expedited permitting on the DOE sites could help developers minimize timelines, especially in areas where site characterization works have already been done, Fowler said. Shorter timelines help lower development costs. As well offering existing grid connections, some of the sites are away from highly populated areas, reducing project risks. "Some of the sites have a lot of space where a data center or a power plant could easily locate without running a risk of community opposition," said Mary Anne Sullivan, senior counsel at Hogan Lovells law firm in Washington, DC. Sites selected by the DOE include the Idaho National Laboratory, where the department has performed extensive site characterization and permitting activities for new nuclear reactors. The site is located in a region supportive of atomic energy and 'offers ample opportunity for development and scaling,' it said. Also on the list is the Pacific Northwest laboratory in Richland, Washington, located in a region with a growing presence of data centers and planned nuclear deployment. In October 2024, Amazon announced a partnership with Energy Northwest to develop an SMR project near the Columbia Generating Station nuclear power plant. Elsewhere, the DOE's Oak Ridge National Laboratory site in Tennessee is located five miles from Tennessee Valley Authority's proposed Clinch River Small Modular Reactor (SMR) project and has readily available water resources, which could attract more nuclear development in the future. CHART: Small modular reactor projects by country Supportive host communities with a long-standing nuclear history, along with high security standards at some of the sites, could favor nuclear power development, according to the Nuclear Energy Institute (NEI). "There is already a natural inclination for data centers to seek nuclear power. Bringing, now, DOE land and encouraging that matching is going to be a catalyst to speed up (deployment) but also lead to new projects being pursued," said Marc Nichol, executive director of New Nuclear at NEI. Timing tight While the DOE is clearly keen to support new nuclear, the initial target timelines it has set out for the sites may favour gas-fired plants or combinations of renewable energy technologies. DOE wants the construction of AI and associated infrastructure to start later this year so the facilities become operational by the end of 2027. For exclusive insights on the energy transition, sign up to our newsletter. Solar and storage are the 'fastest and cheapest forms of energy to develop and deploy' and are the best way to meet the demand for colocated generation, Ben Norris, vice president of Regulatory Affairs for the SEIA, told Reuters Events. Developing a utility-scale solar project typically takes 1.4 years, and batteries take 1.7 years, SEIA said in a letter sent to the DOE in response to the RFI. In comparison, large conventional nuclear power plants take years to develop and build and many SMRs under development are based on new designs and are not expected to be approved and ready for commercial use until the end of the decade. In a bid to accelerate deployment, the DOE recently reissued a tender for $900 million of federal funding to help de-risk the construction of the first SMR reactors based on existing light water reactor (LWR) technologies and announced it would supply high-assay low-enriched uranium (HALEU) to five companies that are developing SMRs based on a range of technologies. Even if SMRs are licensed earlier than 2030, a lack of domestic fuel enrichment capabilities will limit deployment. Nuclear is more likely to play a larger role in serving rising AI demand from the 2030s onwards, experts say. "The only bottleneck that is going to hold the U.S. back in terms of global AI leadership and dominance is speed to firm, reliable power," Hilary Lane, senior director for Strategic Partnerships at the Nuclear Energy Institute (NEI), said. "So given that this is the most important factor here, time and schedule, I can see them looking at gas as an option that could be coming online fairly quickly." "To roll out many reactor systems that could deliver power at that timeframe is a bit unfeasible," said James Walker, chief executive officer at Nano Nuclear Energy, a company developing microreactors. "In the future, nuclear will certainly be the bulk supplier of power for tech centers, but that will be post-2030."
Reuters
02-05-2025
- Business
- Reuters
Federal funding for first small reactors survives cuts
Summary The U.S. Department of Energy (DOE) has reissued a tender for $900 million in federal funding to help de-risk SMR deployment without any requirements for community engagement but developers should still seek community support, experts told Reuters Events. April 28 - While the fate of DOE funding for renewable energy projects remains uncertain under President Donald Trump, the reissue of a nuclear tender on March 24 indicates that the new administration will back the rollout of advanced reactor technology. The solicitation is part of federal efforts to unleash a " nuclear energy renaissance ' to meet rising power demand from large load customers, including data centers, the DOE said. The tender includes $800 million for up to two consortia of 'utility, reactor vendor, constructor, and end-users/off-takers' to deploy a first Generation III+ light-water small modular reactor, or Gen III+ SMR for short. Three groups with projects in Arizona, New York and Tennessee that previously expressed interest in this funding are expected to submit new proposals, industry sources told Reuters Events. The remaining $100 million is to support the development chain for Gen III+ SMRs such as Westinghouse's AP300, NuScale's SMR 3 and Holtec's SMR-300. The DOE dropped mandatory community benefit plans from the evaluation criteria, in line with efforts by the Trump administration to accelerate federal approvals of energy projects. This decision will allow the DOE to 'streamline the award process' noted ClearPath, a conservative clean energy non-profit. But lawyers and executives told Reuters Events that SMR companies will continue to seek support among local communities. Nuclear project developers 'recognise that to be successful they will want to address local needs such as workforce and community planning whether or not a specific community benefits plan is required,' said Joseph Greenberg, Senior Policy Advisor at law firm Holland and Knight. Join us at Reuters Events SMR and Advanced Reactor 2025, and network with over 600 utilities, developers, financiers, technology suppliers and regulators. Most near term deployment, including by the three consortia that are expected to apply, will likely take place at current or former nuclear sites where communities already know the benefits of nuclear, noted Patrick O'Brien, Director, Government Affairs and Communications at Holtec International. 'The reality is that [SMR projects] should already have support from the area,' O'Brien told Reuters Events. 'A responsible developer will work with the local community to ensure success' and Holtec already has strong local support for its plan to build two SMR-300s at the Palisades nuclear plant in Michigan, O'Brien said. Expected bids Applicants in the original October 2024 solicitation must resubmit their proposals, while new bidders are also welcome. Applications close on April 23, giving interested parties just a month to prepare proposals, in comparison with three months first time around. CHART: Small modular reactor projects by country Arizona's bid is led by Arizona Public Service (APS), Salt River Project and Tucson Electric Power, who are assessing potential sites, such as retiring coal plants, for SMR development. They also appear to have state backing, as the Arizona Legislature is considering waiving environmental reviews for SMR projects located near data centers or existing power plants. An APS spokesperson said they would continue to work with local communities. Strategies to overcome cost hurdles for new nuclear - download our webinar. The second group is utility Constellation Energy backed by the New York State Energy Research and Development Authority. They aim to develop advanced reactors at the Nine Mile Point Clean Energy Center in Oswego, New York. Finally, Tennessee Valley Authority (TVA) is leading a coalition working to deploy the GE Hitachi BWRX-300 SMR, alongside GE Hitachi, Bechtel, BWX Technologies, Duke Energy, Sargent and Lundy and others. TVA has an early site permit from the Nuclear Regulatory Commission for the construction of SMRs at its Clinch River Nuclear Site in Tennessee, where the DOE grant could help finance the first of four SMRs. It is currently completing the Construction Permit Application and Draft Supplemental Environmental Impact Statement. If awarded, the funding would bring forward the project's commercial operation by two years to 2031 and help establish a domestic supply chain 'that can be exported to our allies,' TVA spokesperson Scott Fiedler told Reuters Events. 'TVA can help companies that are a part of nuclear energy engineering, licensing, and infrastructure locate, invest and bring jobs to the Tennessee Valley,' Fiedler said. TVA also plans to deploy BWRX-300 technology in Canada by 2029 via a partnership with Ontario Power Generation. Consortium development The tender's focus on consortia can help de-risk SMR deployment by 'bringing together a more comprehensive team to help manage and deliver the project' that can capitalise on each member's resources, skills and expertise, Jill McWhirter, Partner at law firm King and Spalding told Reuters Events. This may also make SMR projects more attractive to investors 'as they may be seen as increasing the likelihood of success of deployment and execution,' said McWhirter, who co-leads her firm's co-Nuclear Working Group. For exclusive nuclear insights, sign up to our newsletter. A preference for a wide-ranging consortium is not uncommon for DOE-backed research, development and demonstration projects, as 'it helps to strengthen projects and align the supply chain,' Greenberg told Reuters Events. It also helps to de-risk projects through commitments from each of the partners and 'could help to lower costs by more effectively reducing project risks,' Greenberg said. Partnering with SMR developers, their major industrial customers, and hyperscalers or other financial partners 'will be part of the business model moving forward,' said Fiedler.
Reuters
30-04-2025
- Business
- Reuters
US carbon capture storage hit by inflation, Trump
Summary Investment in large U.S. carbon capture storage facilities has been dented by inflation and Trump's spending freeze, impeding greener pathways for cement and other industries. April 30 - Carbon capture utilisation and storage (CCUS) is seen as a key tool to reduce carbon emissions from industrial operations and power plants, but making the leap to larger commercial projects is proving challenging. CCUS allows CO2 to be captured from burning fossil fuels and either stored or utilised in other industrial processes. Carbon capture technology is particularly useful in hard-to-abate sectors, such as cement, steel and chemical production. Tax credits introduced by the Biden administration helped to spur early projects but the future of support under President Donald Trump is uncertain. CCUS must be widely deployed at scale to become more economical and larger commercial projects are few and far between. Most operational CCUS projects are based on enhanced oil recovery in the oil industry. CHART: Sources of US CO2 emissions in 2022 While some customers are prepared to pay a premium for decarbonised products, CCUS requires large investments and attracting investors is difficult. Many companies have funded first of a kind projects from their own balance sheets, a spokesperson for energy technology firm Baker Hughes told Reuters Events. 'There is an established investment infrastructure and fundraising capability for traditional oil and gas and LNG projects, but for CCUS, clean power and other new technologies — it is far more challenging,' the spokesperson said. 'For unproven technology at scale, external funding is simply not there except for in very rare circumstances.' Join hundreds of senior executives across energy, industry and finance at Reuters Events Global Energy Transition 2025. Soaring power demand for AI and data centers may offer some additional pathways for CCUS projects. Last month, Baker Hughes signed a partnership with Frontier Infrastructure to develop integrated CCUS, gas-fired power and data center projects across the United States. "By integrating gas-fired energy with the potential for permanent carbon storage, we are creating a direct, reliable power solution tailored to evolving industrial needs," Frontier CEO Robby Rockey said in a statement. Tax credits The Biden administration boosted investment in CCUS projects by issuing 45Q tax credits and direct grants to encourage investment. The credits offer $85 per ton of CO2 sequestered providing wage and apprenticeship standards are met and they spurred the announcement of more than 270 projects that "span the carbon management value chain" and are at different levels of technology readiness, Christian Flinn, Public Policy Manager for the Carbon Capture Coalition, told Reuters Events. However, inflation has eroded the value of the tax credits and pushed up project prices. Developers face roughly 30% higher capital costs due to post-pandemic inflation, high interest rates and permitting difficulties, Howard Herzog, Senior Research Engineer with the MIT Energy Initiative, said. 'The optimism that the Bipartisan Infrastructure Bill and the Inflation Reduction Act generated is all but gone,' he said. Credits alone do not offer enough support for many projects, including most of the 90 U.S. cement plants in operation, according to Peter Findlay, Director, CCUS Economics at Wood Mackenzie. Wood Mackenzie forecasts U.S. CCUS capacity will double to 104 million tonnes a year by 2034. 'Increased and more certain incentives to decarbonise would spur this number higher," Findlay said. Funding unclear The Biden administration's Infrastructure Investments and Jobs Act has already spurred $1.7 billion of federal and private investment in CCUS projects, said Flinn. The act provides funding for CCUS power generation and industrial demonstration projects, CO2 pipelines and four regional Direct Air Capture Hubs. In December 2024, the Department of Energy (DOE) opened applications for $750 million of funding for commercial scale projects at one coal-fired plant or two industrial facilities; $450 million for large-scale CCUS pilot projects; and $100m for the design of CO2 transport and storage infrastructure. DOE said it had begun negotiations with Calpine over part financing the addition of 2 million tonnes a year CCUS capacity at its 896 MW gas combined heat and power facility in Baytown, Texas. However, the fate of the support announced in December is uncertain as a result of the Trump administration's spending review. For exclusive insights on the energy transition, sign up to our newsletter. State initiatives can also drive investment, such as California's low carbon fuel standard, and pressure on large companies by shareholders also plays a role, Herzog noted. The Trump administration may opt to keep the 45Q credit as many CCUS projects are in Republican states and the financing required is relatively small, Findlay said. DOE grant programs may be more at risk, he warned. Cement leaders CCUS is playing a growing role in decarbonising the global cement industry. The technology is essential for the cement industry to meet net zero, a spokesperson for German multinational Heidelberg Materials told Reuters Events. CCUS could account for 36% of global carbon reduction towards net zero carbon concrete by 2050, according to a roadmap set out by the Global Cement and Concrete Association. Heidelberg Materials has proposed a CCUS project at its Mitchell cement plant in Indiana that would supply 2 million tonnes of CO2 a year for storage or use from 2030. Test well drilling began in January with $8.9 million funding from the DOE's CarbonSAFE project. Heidelberg will open its first large scale CCUS facility this year at its Brevik plant in Norway in Northern Europe. The project will be able to capture 400,000 tonnes/year of carbon and was made possible by strong government support, the availability of co-funding and social acceptance for CCUS technology in Norway, the company spokesperson noted. The public sector plays an important role 'in ramping up green markets and accelerating the shift to climate-friendly products by adapting its procurement procedures," the spokesperson said. U.S. federal legislation over the past decade laid the groundwork for CCUS deployment but this must 'mark the beginning, not the end, of necessary efforts to build the portfolio of available federal policies for carbon management technology deployment," Flinn said.
Reuters
29-04-2025
- Business
- Reuters
Texas seeks to become epicenter of advanced nuclear
Summary Surging electricity demand from industries and data centers, as well as a supportive regulatory framework, have lured a spate of nuclear investors to Texas. April 29 - Governor Greg Abbott spelled out his nuclear ambitions for Texas in 2023, when he launched the Texas Advanced Nuclear Reactor Working Group to "position Texas as the national leader on advanced nuclear energy.' The group included advanced nuclear investors, manufacturing companies, state grid operator ERCOT, local policymakers and academia, among others. Their collaboration led to a blueprint unveiled last November that calls for the creation of the Texas Advanced Nuclear Energy Authority, a non-regulatory state entity to coordinate the state's strategic vision for advanced nuclear energy, as well as the Texas Nuclear Energy Fund, which could disburse $2 billion to help finance the development of small modular reactors (SMRs). X-energy CEO Clay Sell said the working group allowed SMR developers to strengthen ties with stakeholders in government, manufacturing, utilities and education, which will help accelerate deployment. 'X-energy believes that building and deploying advanced nuclear facilities in Texas will help push the industry towards scale, reducing costs and timeframe for future deployments by building a robust supply chain, and supportive policy framework for new nuclear technologies,' Sell told Reuters Events. SMR developers first set their eyes on Texas in 2022, when they helped establish the Texas Nuclear Alliance industry association with the goal of turning the Lone Star state into the "nuclear capital of the world." Join us at Reuters Events SMR and Advanced Reactor 2025, and network with over 600 utilities, developers, financiers, technology suppliers and regulators. Several alliance members including X-energy, TerraPower and Last Energy have announced investments in Texas in recent months. In a partnership with chemical manufacturer Dow, X-energy in March said it had filed a construction permit application with the Nuclear Regulatory Commission to build a nuclear project in Seadrift, Texas. In what could be the first co-location of a grid-scale advanced nuclear reactor in an industrial site in North America, X-energy's Xe-100 advanced SMR will supply power and steam to a Dow site that manufactures more than 4 billion pounds of chemicals and plastics a year for a variety of applications, including food packaging. 'Seadrift's power and steam demand aligns well with the expected generation from an X-Energy build, allowing Dow's reliability requirements to be met while also leaving a portion of the off-take available to the market,' said Edward Stones, business vice president, Energy and Climate, Dow. 'With additional growth coming to the site and existing energy and steam assets nearing their end-of-life, Dow saw the opportunity to replace end-of-life assets with safe, reliable, lower carbon emissions technology,' Stones told Reuters Events. MAP: US operational nuclear power plant sites TerraPower, an advanced nuclear power company backed by Bill Gates, and Sabey Data Centers, a U.S. data center owner, developer and operator, announced a partnership in January to co-locate SMRs and data centers in the Rocky Mountain states and Texas. 'Texas is a key market for future Natrium plant deployments, and TerraPower is actively exploring multiple siting opportunities across the state,' Jeff Miller, VP of Business Development at TerraPower, told Reuters Events. Texas has a number of energy sites that could potentially offer synergies and existing grid connections to SMR developers. These include two operating nuclear power plant sites – Comanche Peak and South Texas Project, each of which feature two AP-1000 reactors – as well as retired coal plants. Between 2018 and 2020, six coal-burning power plants, totaling 6.4 GW, were shuttered in Texas. Existing nuclear sites offer significant benefits for siting SMRs and preliminary analysis shows there may be room for 60 to 95 GW of new nuclear at existing sites nationwide, the Department of Energy said last year in its Advanced Nuclear Commercial Liftoff report. According to the report, generating costs at multi-unit nuclear plants are 30% cheaper per MWh than single unit plants. 'I'm certain that developers are looking into existing sites and the utilities that are operating these sites are evaluating those capabilities,' Elina Teplinsky, Partner, Pillsbury Winthrop Shaw Pittman LLP told Reuters Events. In addition, four companies have agreed to develop SMRs at the Texas A and M University System RELLIS technology campus. These are Kairos Power and Natura Resources, which are already deploying test reactors at the site, as well as Terrestrial Energy and Aalo Atomics. 'All of the universities in Texas have state of the art facilities, they have great engineering schools, they have a lot of space for demonstrations, they have the right departments and the right students to support these projects,' Teplinsky said. Growing demand States including New York, Tennessee, Utah, Wyoming, Michigan and Virginia have in recent months announced polices and strategies to attract SMR investments, but Texas has a head start due to its size. Strategies to overcome cost hurdles for new nuclear - download our webinar. Texas, a net energy exporter, already consumes more energy than any other U.S. state, in large part thanks to the industrial sector which accounts for more than half of the state's energy consumption, as well as residential areas – Texas is the second most populous U.S. state after California. ERCOT estimates that electricity demand will nearly double by 2030, with much of that new demand coming from data centers seeking an around-the-clock supply of low-carbon power, which has turned the state into a magnet for SMR investors. The Dallas-Fort metroplex in North Central Texas is home to more than 150 data centers from companies such as Google, Facebook and Verizon, making the area the second largest data center hub in the U.S. after Virginia. CHART: Forecast US data center electricity demand In February, Last Energy announced plans to construct 30 microreactors in Haskell County, in northwest Texas, to serve data center customers across the state. The 20-MW microreactors will be deployed in phases and provide power to data centers as well as the ERCOT grid. 'Last Energy chose to develop in Texas in response to an explosion of demand we've experienced from Texas-based data centre developers in the last year,' a Last Energy spokesperson told Reuters Events. For exclusive nuclear insights, sign up to our newsletter. ERCOT estimates that population growth, new investments from power-hungry industries such as petrochemical plants and refineries, and the need for more heating and cooling during extreme weather events will also drive demand growth in Texas. 'The state's significant heavy manufacturing base and its national leadership in materials production make it uniquely positioned to contribute to the success of the Natrium program,' Miller said. 'Together, these attributes make Texas an ideal location to host the next generation of nuclear energy.' Additional power will be needed to electrify the Permian Basin, the largest oil-producing basin in the U.S., and provide behind-the-meter power for larger manufacturing or desalination facilities, as well as to the ERCOT grid to meet demand from a growing population, said Reed Clay, President of the Texas Nuclear Alliance. 'Texas is the fastest growing state in the nation in regard to both individuals and industries, more people, jobs, and more innovation will require more power,' Clay told Reuters Events.
Reuters
14-04-2025
- Business
- Reuters
US steel tariffs set to hike costs, lead times in clean power
April 14 - Last month, President Donald Trump raised steel and aluminum tariffs by 25%, ending all country exemptions, in addition to higher tariffs on China already hitting the clean power sector. The Trump administration expanded the list of derivative products subject to tariffs, covering a broader range of manufactured goods, including items used by the energy industry. In a rapidly evolving tariff war, Trump on April 9 abruptly paused an additional hike in tariffs on global trading partners for 90 days, leaving an additional baseline 10% tariff on all imports from all countries in place, on top of the tariffs on steel and aluminium and tariffs imposed on individual countries like China, Canada and Mexico. The U.S. is the world's largest steel importer, excluding the European Union, with a total of 26.2 million tons of imported steel in 2024, up 2.5% from 2023, according to the U.S. Steel Imports Report from the U.S. Department of Commerce's International Trade Administration (ITA). Finished steel imports accounted for 23% of domestic consumption in 2024, according to the American Iron and Steel Institute. "From an energy perspective the impact will certainly be large, as we don't currently have the capacity to manufacture everything domestically," Lynlee Brown, partner in Ernst & Young LLP's Global Trade practice, told Reuters Events. CHART: Top sources of US steel imports Steel and aluminum are widely used in power grid projects, wind farms and solar farms. Affected components include cables, wires, conductors, generators, substations, transformers, energy storage systems, wind and transmission towers, solar racking and infrastructure. Transmission and wind power projects may be the most affected by the new tariffs due to large amounts of steel and aluminium required. "Tariffs are inherently inflationary and will drive up both domestic and imported steel prices," said Earl Simpkins, partner at PwC. "Overall, the supply chain will face increased costs and extended lead times as companies prioritize securing reliable supply and pricing stability," he said. Costs jump Building domestic production capacity can take time and broad tariff implementation across sectors without a strategic approach is likely to hurt American consumers and communities, according to Vanessa Sciarra, vice president of Trade & International Competitiveness for the American Clean Power Association (ACP). 'Just as other major sectors understand, history shows building a robust supply chain doesn't happen overnight,' Sciarra said in a statement. 'The policy whiplash from these tariffs will ultimately undermine the ability to realize a domestic supply chain and will constrain efforts to deliver energy security and reliability for Americans.' Join hundreds of senior executives across energy, industry and finance at Reuters Events Global Energy Transition 2025. Supply chain companies may try different valuation and classification cost methodologies to mitigate the impacts of tariffs on their product prices, but not every company will be able to absorb the tariff-related costs. The combination of tariff changes issued by the Trump administration could increase the total tariff burden for the Energy, Utilities and Resources Industry from $400 million a year to approximately $53 billion a year, according to PwC's US Tariff Industry Analysis. This does not include the latest universal 10% hike on a large number of countries. CHART: US annual clean power installations New tariffs on steel and aluminum will make it "more expensive to deploy wind in the US," according to Endri Lico, analyst of Wind Supply Chain & Technology, Power & Renewables at WoodMackenzie. The higher tariffs on metals alone could increase the cost of wind power projects by 1%, Lico said. 'The challenge is not only on the steel tariffs but also on all the tariffs that the new administration imposes," he noted. Uncertainty hurts President Trump's tariffs and reforms to energy policies will create uncertainty that affects decision-making and strategies in clean power deployment, according to David Victor, Professor of innovation and public policy at the University of California at San Diego's School of Global Policy and Strategy. "These tariffs will raise the costs of some of the technologies, so that will slow down the energy transition, but I think the much bigger impact is the uncertainty and the anxiety that is going to happen over the longer term," he said, referring to logistics and supply chain disruptions as industries try to adapt to the shifting tariff and policy scenarios. For exclusive insights on the energy transition, sign up to our newsletter. Developers are becoming more cautious about making significant financial commitments, Benjamin Snowden, Clean Energy and Environmental lawyer at Fox Rotshchild, said. Regulated contract structures like power purchase agreements (PPAs) should be adapted to account for changes to tariffs and other market drivers, Snowden said. These can be adapted at state or network level. Contract changes could include clauses that allow developers to terminate contracts under certain circumstances or price adjustment clauses that allow renegotiation following tariff and tax policy shifts that materially affect project costs. "We need to evolve our contract structures to have a more nuanced way to allocate risk that protects rate-payers, ensures reliability, and makes it possible to build these projects," Snowden said.
