Latest news with #WoodMacKenzie
Miami Herald
17-05-2025
- Business
- Miami Herald
Data centers' hunger for energy could raise all electric bills
Individuals and small businesses have been paying more for power in recent years, and their electricity rates may climb higher still. That's because the cost of the power plants, transmission lines and other equipment that utilities need to serve data centers, factories and other large users of electricity is likely to be spread to everybody who uses electricity, according to a new report. The report by Wood MacKenzie, an energy research firm, examined 20 large power users. In almost all of those cases, the firm found, the money that large energy users paid to electric utilities would not be enough to cover the cost of the equipment needed to serve them. The rest of the costs would be borne by other utility customers or the utility itself. The utilities 'either need to socialize the cost to other ratepayers or absorb that cost -- essentially, their shareholders would take the hit,' said Ben Hertz-Shargel, who is the global head of grid edge research for Wood MacKenzie. This is not a theoretical dilemma for utilities and the state officials who oversee their operations and approve or reject their rates. Electricity demand is expected to grow substantially over the next several decades as technology companies build large data centers for their artificial intelligence businesses. Electricity demand in some parts of the United States is expected to increase as much as 15% over the next four years after several decades of little or no growth. The rapid increase in data centers, which use electricity to power computer servers and keep them cool, has strained many utilities. Demand is also growing because of new factories and the greater use of electric cars and electric heating and cooling. In addition to investing to meet demand, utilities are spending billions of dollars to harden their systems against wildfires, hurricanes, heat waves, winter storms and other extreme weather. Natural disasters, many of which are linked to climate change, have made the United States' aging power grids less reliable. That spending is one of the main reasons that electricity rates have been rising in recent years. American homes that use a typical 1,000 kilowatt-hours of electricity a month paid, on average, about $164 in February, according to the Energy Information Administration. That was up more than $30 from five years ago. Dominion Energy, a large investor-owned utility based in Richmond, Virginia, is one of those that Wood MacKenzie expects will spend more on new infrastructure than it will be able to recover from selling electricity to data centers and other large users. More data centers have opened in Virginia than in any other state. Asked about Wood MacKenzie's filings, Dominion said that on April 1 it filed a proposal to electricity regulators in Virginia for requiring large-load customers to pay their 'fair share' of utility costs. 'Ensuring a fair allocation of costs and mitigating financial risk are not new concepts to the company,' Edward H. Baine, president of Dominion Energy Virginia, said in testimony that Dominion submitted to state regulators and provided to The New York Times. 'Addressing both the needs and the risks associated with growth in high-load electric customers with high-load factors is both a public policy and a regulatory priority for Virginia.' A 2024 analysis by Virginia officials concluded that data centers paid the full cost of the service they received. But that report warned that the addition of many more large users of electricity could raise rates for all users if the state did not make policy changes to protect individuals and small businesses. Wood MacKenzie's report found that some states do have policies to protect individuals and small businesses from higher rates. Chief among them is Texas, where customers can pick a power source that is different from the utility that maintains the lines that deliver electricity to their homes. This arrangement, according to Wood MacKenzie, helps protect individuals from having to pay for grid upgrades that mainly or entirely benefit large users. Hertz-Shargel said many utilities also had programs that allowed large electricity users to buy emissions-free energy directly from power producers like solar and wind farms. Such programs, he said, could be refashioned to help ensure that the cost of new power projects is largely or entirely borne by the users responsible for major grid upgrades. The policies that states and utilities have put in place will significantly reduce risks of spreading the costs of improvements for the large-load customers, but 'they do not provide complete protection,' Hertz-Shargel said. 'Only by removing data-center-caused infrastructure from utilities' books, such as by allowing large loads to contract with third parties for generation via clean transition tariffs, are both ratepayers and utility shareholders fully protected.' This article originally appeared in The New York Times. Copyright 2025
Gizmodo
16-05-2025
- Business
- Gizmodo
Solar Tax Credits Are on the Chopping Block—Install Soon or Pay the Price
For the last two decades, homeowners have been able to claim thousands of dollars in federal tax credits to help offset the high upfront costs of going solar. Things were supposed to stay that way through 2034. But, this week, the U.S. House of Representatives proposed abruptly ending the incentives at the end of the year. If this idea survives the House and passes the Senate, it could upend the economic calculus of powering your home with the sun. 'It would put solar out of reach for millions of people,' said Glen Brand, director of policy and advocacy at Solar United Neighbors, a non-profit that encourages adoption of the technology. 'What the House has done is to put ordinary Americans in a really hard place. They are basically saying they aren't going to help people with rising energy costs.' The country's first solar tax credits took effect in 1978, but were allowed to lapse in 1985, when President Ronald Regan was in office. In 2005, however, another Republican — President George W. Bush — revived them. Lawmakers have extended and tweaked the incentives ever since, mostly recently with the 2022 Inflation Reduction Act, or IRA, which set the credit at 30 percent of the cost of a system until 2032, before a two-year phase out. The average cost of a solar system in the U.S. right now is just north of $28,000, according to Zoë Gaston, a principal analyst for residential solar at the energy consultant Wood MacKenzie. That means a tax credit would be worth around $8,500. On Tuesday, the House Ways and Means Committee released an initial budget reconciliation proposal that would roll back large swaths of the IRA, including support for residential solar. The so-called 25D tax credit would still apply for systems that are installed this year, and then it would go away completely. Without the tax credits, solar systems might still make financial sense in places that get a lot of sun or have high electricity prices, or both, but the payback period will likely grow. For other people, the math may no longer work at all. 'We would expect sales and installation to surge this year, followed by a market contraction,' said Gaston. 'If a homeowner is thinking about solar and can afford it,' now would be the time.' The 25D credit isn't the only relevant tax break under threat. Another credit, 48E, is available to businesses that install solar on homes where the resident then either leases the equipment or enters into a power purchase agreement. This allows companies to reduce what they charge customers. According to Gaston, more than half of residential installations now follow this third-party ownership model. Instead of eliminating 48E, the House favors applying limits on where the material in photovoltaic panels comes from. While experts are still sorting out exactly what the proposed language means, it generally aims to bar participation of 'foreign entities of concern' — including those in China, where the vast majority of solar components are made. 'It puts the obligation on the installer or the developer to trace back the supply chain in a way that's completely impossible,' said Sean Gallagher, senior vice president of policy at the Solar Energy Industries Association, a trade group. This, he said, could effectively make the 48E credit effectively impossible to access starting in 2026. The current House language could at least temporarily push folks toward the third-party ownership options, said Gaston. But when Wood MacKenzie did an analysis, before the House draft, that assumed a phase out of credits by 2028, it still projected a 30 percent drop in installed residential capacity by the end of the decade. 'It's going to be devastating for companies, their employees, and their customers,' said Gallagher. 'It'll kill an industry that supports hundreds of thousands of workers and tens of billions of dollars in investment every year.' The House move isn't the only headwind the solar industry is facing. Some states, most notably California, for example, have lowered the amount the homeowners can earn selling power to the grid, making solar less lucrative. Even before Republicans took control of Congress and the White House, companies were starting to let employees go. More layoffs have ensued. Some Republicans have acknowledged the role that energy tax credits play in the economy, and their districts. Twenty-one House members of the party signed a letter to Ways and Means Chairman Jason Smith expressing concern about 'disruptive changes to our nation's energy tax structure.' Four Republican Senators also wrote to Majority Leader John Thune (R-SD) urging 'a targeted, pragmatic approach' to any changes. 'This is going to turn on what the Senate does,' said Brand, about the future of the solar credits. He believes it's unlikely that the House proposal will become law in its current form and is optimistic that the rollbacks will be rectified. 'This is a piece the Senate can get right.' But the harm to the solar industry is already being done, said Jacquelyn Pless, a professor who researches energy and environmental economics at the MIT Sloan School of Management. The constant back and forth over policy, she said, makes it extremely difficult for companies to plan ahead. 'Policy volatility is really my bigger concern,' Pless said. 'Policy uncertainty alone can start to freeze investment, raise costs, and damage market confidence.' This article originally appeared in Grist at Grist is a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future. Learn more at
New York Times
16-05-2025
- Business
- New York Times
Data Centers' Hunger for Energy Could Raise All Electric Bills
Individuals and small business have been paying more for power in recent years, and their electricity rates may climb higher still. That's because the cost of the power plants, transmission lines and other equipment that utilities need to serve data centers, factories and other large users of electricity is likely to be spread to everybody who uses electricity, according to a new report. The report by Wood MacKenzie, an energy research firm, examined 20 large power users. In almost all of those cases, the firm found, the money that large energy users paid to electric utilities would not be enough to cover the cost of the equipment needed to serve them. The rest of the costs would be borne by other utility customers or the utility itself. The utilities 'either need to socialize the cost to other ratepayers or absorb that cost — essentially, their shareholders would take the hit,' said Ben Hertz-Shargel, who is the global head of grid edge research for Wood MacKenzie. This is not a theoretical dilemma for utilities and the state officials who oversee their operations and approve or reject their rates. Electricity demand is expected to grow substantially over the next several decades as technology companies build large data centers for their artificial intelligence businesses. Electricity demand in some parts of the United States is expected to increase as much as 15 percent over just the next four years after several decades of little or no growth. The rapid increase in data centers, which use electricity to power computer servers and keep them cool, has strained many utilities. Demand is also growing because of new factories and the greater use of electric cars and electric heating and cooling. In addition to investing to meet demand, utilities are spending billions of dollars to harden their systems against wildfires, hurricanes, heat waves, winter storms and other extreme weather. Natural disasters, many of which are linked to climate change, have made the United States' aging power grids more unreliable. That spending is one of the main reasons that electricity rates have been rising in recent years. American homes that use a typical 1,000 kilowatt-hours of electricity a month paid, on average, about $164 in February, according to the Energy Information Administration. That was up more than $30 from five years ago. Dominion Energy, a large investor-owned utility based in Richmond, Va., is one of those that Wood MacKenzie expects will spend more on new infrastructure than it will be able to recover from selling electricity to data centers and other large users. More data centers have opened in Virginia than in any other state. Asked about Wood MacKenzie's filings, Dominion said that on April 1 it filed a proposal to electricity regulators in Virginia for requiring large-load customers to pay their 'fair share' of utility costs. 'Ensuring a fair allocation of costs and mitigating financial risk are not new concepts to the company,' Edward H. Baine, president of Dominion Energy Virginia, said in testimony that Dominion submitted to state regulators and provided to The New York Times. 'Addressing both the needs and the risks associated with growth in high-load electric customers with high-load factors is both a public policy and a regulatory priority for Virginia.' A 2024 analysis by Virginia officials concluded that data centers paid the full cost of the service they received. But that report warned that the addition of many more large users of electricity could raise rates for all users if the state did not make policy changes to protect individuals and small businesses. Wood MacKenzie's report found that some states do have policies to protect individuals and small businesses from higher rates. Chief among them is Texas, where customers can pick a power source that is different from the utility that maintains the lines that deliver electricity to their homes. This arrangement, according to Wood MacKenzie, helps protect individuals from having to pay for grid upgrades that mainly or entirely benefit large users. Mr. Hertz-Shargel said many utilities also had programs that allowed large electricity users to buy emissions-free energy directly from power producers like solar and wind farms. Such programs, he said, could be refashioned to help ensure that the cost of new power projects is largely or entirely borne by the users responsible for major grid upgrades. The policies that states and utilities have put in place will significantly reduce risks of spreading the costs of improvements for the large-load customers, but 'they do not provide complete protection,' Mr. Hertz-Shargel said. 'Only by removing data-center-caused infrastructure from utilities books, such as by allowing large loads to contract with third parties for generation via clean transition tariffs, are both ratepayers and utility shareholders fully protected.'
Sky News
09-04-2025
- Business
- Sky News
The good, the bad and the ugly in Donald Trump's coal plans
While wealthy Western countries have been weaning themselves off coal for the last two decades, Donald Trump is now trying to take the US in the opposite direction. The president is issuing further orders to start digging and burning more of what he calls "beautiful, clean coal". The good Why? The "good" thing about coal is that it is cheap, reliable and abundant. It still provides just over a third of global electricity, and the US has masses of it. Supporters say its existing coal plants only provide power to the grid about 40% of the time, which could easily be boosted by slashing regulation - something which he has already started. The bad But coal is a disaster for the climate - releasing more planet-heating carbon dioxide than oil and gas, and plenty of sooty air pollution. As a result, it's been in decline in richer, Western countries (including the US) since around 2008 - helped by plummeting costs of clean power. It's also why the world (including the US) pledged to "phase down" coal at the COP26 climate summit in Glasgow in 2021. 16:36 But fast forward around three years, and the world's appetite for electricity is bigger than expected. In the US, electricity demand, after plateauing for years, is now rising at speed. It has been driven not just by energy-hungry AI data centres, which tend to grab the headlines, but things like cloud computing, electric vehicles and a revitalised industrial sector. Like the UK, the US wants to lure AI companies to build on there to bolster economic growth, and to compete with China. Mr Trump sees coal as a cheap way to power all these things. It's a case of "if China can have it, why can't we?" - or at least that's what he says on social media. China has continued to build scores of new coal power plants (though it is also building jaw-dropping amounts of solar and wind power). But "just because they can have lots of coal and lots of renewables in China, doesn't mean that you can do the same in the US", says Dan Quiggin from the thinktank Chatham House. "Apart from one thing, the Chinese economy is massive and has grown lots over the years and is continuing to grow." The ugly So here's the potentially ugly part for Mr Trump: it's possible the orders have little impact. Gas, wind and solar in the US are largely cheaper than coal power, and are more attractive investments. "From an economic standpoint, an investment standpoint, coal is orders of magnitude away from alternative energy sources" like wind, solar, storage and gas, said Sam Berman, from energy consultancy Wood MacKenzie in Boston. "Executive orders may create a little bit of buzz in the near term. But you need long certainty for these types of investments and shifts, and it's not likely that we'll get there from an executive order." Mr Trump also tried this before, attempting to revive the industry during his last presidential term in 2017. No new major coal plants have been built in the US since then - the economics just don't stack up, says Mr Berman. Existing plants could see their lifespans extended after this news. But it all looks like more of a prolonging than a comeback for coal. As ever with Mr Trump, the future is highly unpredictable. But like other energy announcements, the latest should be taken with a pinch of salt.
Sky News
08-04-2025
- Business
- Sky News
The good, the bad and the ugly in President Trump's coal plans
While wealthy Western countries have been weaning themselves off coal for the last two decades, Donald Trump is now trying to take the US in the opposite direction. The president is issuing further orders to start digging and burning more of what he calls "beautiful, clean coal". The good Why? The "good" thing about coal is that it is cheap, reliable and abundant. It still provides just over a third of global electricity, and the US has masses of it. Supporters say its existing coal plants only provide power to the grid about 40% of the time, which could easily be boosted by slashing regulation - something which he has already started. The bad But coal is a disaster for the climate: releasing more planet-heating carbon dioxide than oil and gas, and plenty of sooty air pollution. Hence it's been in decline in richer, Western countries (including the US) since around 2008 - helped by plummeting costs of clean power. It's also why the world (including the US) pledged to "phase down" coal at the COP26 climate summit in Glasgow in 2021. 16:36 But fast forward around three years, and the world's appetite for electricity is bigger than expected. In the US, electricity demand, after plateauing for years, is now rising at speed. That's driven not just by energy-hungry AI data centres, which tend to grab the headlines, but things like cloud computing, electric vehicles and a revitalised industrial sector. Like the UK, the US wants to lure AI companies to build on there to bolster economic growth, and to compete with China. Mr Trump sees coal as a cheap way to power all these things. It's a case of "if China can have it, why can't we?" - or at least that's what he says on social media. China has continued to build scores of new coal power plants (though it is also building jaw-dropping amounts of solar and wind power). But "just because they can have lots of coal and lots of renewables in China, doesn't mean that you can do the same in the US," says Dan Quiggin from the thinktank Chatham House. "Apart from one thing, the Chinese economy is massive and has grown lots over the years and is continuing to grow." The ugly So here's the potentially ugly part for Mr Trump: it's possible the orders have little impact. Gas, wind and solar in the US are largely cheaper than coal power, and are more attractive investments. "From an economic standpoint, an investment standpoint, coal is orders of magnitude away from alternative energy sources" like wind, solar, storage and gas, said Sam Berman, from energy consultancy Wood MacKenzie in Boston. "Executive orders may create a little bit of buzz in the near term. But you need long certainty for these types of investments and shifts, and it's not likely that we'll get there from an executive order." Mr Trump also tried this before, attempting to revive the industry during his last presidential term in 2017. No new major coal plants have been built in the US since then - the economics just don't stack up, says Mr Berman. Existing plants could see their lifespans extended after this news. But it all looks like more of a prolonging than a comeback for coal. As ever with Mr Trump, the future is highly unpredictable. But like other energy announcements, the latest should be taken with a pinch of salt.
