Currents - Energy Industry Insights, V 9, Issue 1, January 2025

Hikmat Al-Chami, Stephanie Eaton, Mark Heath, Steven Lee, Brienne Marco, Nicholas Muto, Barry Naum, Joseph Unger, Derrick Price Williamson, David Yaussy
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Volume 9, Issue 1

● Welcome

Welcome to our first Issue of Currents 2025, our energy e-newsletter. While our energy practice is constantly changing and evolving, we too have expanded our focus for 2025 with some new editors involved with this publication. Derrick Price Williamson remains Senior Editor, Barry Naum is now serving as Chief Content Editor, and Hikmat Al-Chami and Steven Lee are Assistant Editors.

Again, thank you for reading!

Concern and Conflict Over New PJM Market Strategies

By Barry A. Naum

In recent months, PJM Interconnection has been at the center of concern and conflict over market planning strategies intended to address the changing landscape of generation and transmission through the country, particularly for the millions of customers in the mid-Atlantic region. At the center of these developments is the potential impact of emerging load growth against a backlogged queue of capacity projects that might serve this load and the increasing trend of early generation retirements, all at a strain on the system that poses significant costs to the customers within the region.

Click here to read the entire article.

Lone Star Adoption: Texas Microgrid Growth Up Nearly 20X in Past 10 Years

“Since early 2021, when Winter Storm Uri’s extended freeze caused 52 GW in lost grid capacity and eventually led to more than 100 deaths, commercial customers have added nearly 100 defined microgrids statewide.”

Why this is important: The article details efforts in Texas to pursue “microgrids,” which are essentially a campus of end-users served by a dedicated electric generation source. The explosive microgrid growth in Texas has been spurred in part by the loss of power that occurred during Winter Storm Uri; a microgrid or campus with its own dedicated on-site or near-site power supply can avoid outages caused by reliance on a large-scale wholesale power grid or when there simply is not enough electric generation capacity available or affordable within that larger grid. Microgrid campuses can also stabilize the price of power compared to taking power from a wholesale power market. This is important because various regions anticipate that there will not be enough electric generation production capacity to meet the growth in electric demand. For existing and new large manufacturing, industrial, chemical, and data intensive users, microgrid development can ensure a steady, evenly priced power supply without depending on the monopoly utilities to build or purchase new power generation sources. In turn, this will advance the economic growth and strength of the states in which microgrids are embraced. --- Derrick Price Williamson

Trump Says He Wants No Wind Farms Built During Presidency

“As president, Trump will have broad authority over the approval of multi-billion dollar projects being planned off the US coast as well as wind farms proposed for large swaths of federal land.”

Why this is important: Someone has said that President Trump should be taken seriously, but not literally. He does not have the power to unilaterally prohibit construction of wind turbines in the United States. What he can do is to make most wind farms uneconomical by supporting the elimination of subsidies for their construction and for the power they generate. Wind farms, particularly those offshore, are already being canceled because costs have risen and the electricity they produce will be expensive. Without subsidies, many more are likely to be canceled. --- David L. Yaussy

Global Coal Demand is Set to Plateau Through 2027

“New IEA report finds that strong deployment of renewables is set to curb growth in coal use even as electricity demand surges, with China – the world’s biggest coal consumer – remaining pivotal.”

Why this is important: The International Energy Agency believes that the global demand for steam (thermal) coal used for electrical generation will plateau for the next three years at peak levels that were set in 2024. Thermal coal usage levels worldwide peaked at 8.77 billion tons in 2024. This record level was caused by increasing electrical demands throughout the world, including in developing countries. The growing demand for electricity is expected to keep this level steady through 2027.

The IEA says that the increasing development of renewables (solar and wind) and additional nuclear plants are keeping coal levels from rising further. The agency also notes that weather can have a significant impact on worldwide coal usage. For instance, severe heat and cold weather can cause a 140 million-ton increase in coal usage in China in one year.

The agency also noted that steam coal prices are 50 percent higher than they were in the 2017 to 2019 period. IEA believes that pricing will continue.

Electricity use worldwide is increasing rapidly due to electricity demands for transportation and heating, rising demand for cooling, and increasing demands from data centers. --- Mark E. Heath

What to Watch: Climate and Renewable Energy in 2025

“Here’s what the future might hold for electric vehicles, nuclear energy, and solar power in the United States.”

Why this is important: This article discusses what experts and business leaders predict for electric vehicles (EVs), nuclear energy, and solar power in 2025 and beyond. For EVs, there is an expectation that slowing sales growth in 2024 will continue into 2025. This slowing growth is due in part to the need for additional EV infrastructure build-out to address consumers' range anxiety when considering buying an EV. The article also discusses that President-elect Donald Trump has not been particularly friendly to the EV sector, so much remains unknown in the near term.

For the nuclear industry, experts anticipate continued significant growth as major technology companies invest in nuclear power to meet the growing needs of data centers and artificial intelligence.

Finally, the experts interviewed for the article believe that the solar industry will grow in the coming years thanks to the increasingly low cost of solar generation.

Regardless of the growth trajectory of these energy industries, such growth will require significant time, and the investment in this generation will require substantial capital that will likely be imposed on ratepayers/consumers. --- Steven W. Lee

Community Solar is Filling an Important Gap in the Clean Energy Transition

“With new projects coming online this year, experts predict that U.S. solar power generation will grow 75% from 163 billion kilowatt hours in 2023 to 286 billion kWh in 2025.”

Why this is important: What is community solar, and why is it important? Good questions. Community solar refers to solar facilities that are constructed so that more than one electric customer subscribes to or owns a portion of the energy generated by a solar facility. Some community solar owners or subscribers are individual customers who may not be financially or physically able to install solar at their homes or businesses, such as low income residential customers, renters, or those living or operating businesses with restrictive covenants that disallow solar panels on homes or buildings. Other community solar participants are municipalities and governments who own public buildings that may be physically unable to support solar panels, for which there is insufficient land on which to site a solar facility, or for which funding to keep solar panels in operational condition is lacking. Still, other community solar participants are businesses that purchase renewable energy credits, or RECs, generated by community solar facilities to help them achieve renewable energy and sustainability goals.

Community solar facilities and programs are all shapes and sizes. Some community solar facilities are constructed on land that may be unusable for other purposes, on brownfields, on existing farmland, and even on marshy/boggy land. Some community solar arrays are small in size – less than 5 megawatts – and are constructed in small spaces up to a few dozen acres. In some cases, local utilities pay the community solar provider for the energy generated, and each subscriber in that community solar program receives a bill credit for a portion of the funds generated by the community solar array. These credits are typically applied to the subscribing customer’s bill to reduce overall electricity costs.

Community solar can provide resilience to communities faced with blackouts or extreme weather events, help create local jobs, and build wealth in the community served by the solar array. Despite these positive attributes of community solar, and the Department of Energy’s goal of installing 20 gigawatts of community solar by 2025, there are only about 7 gigawatts online today. In part, that is because smaller community solar developers can encounter zoning problems, lengthy interconnection times and land use hurdles.

Still, there has been progress, especially in states that have or support community solar programs such as Florida, New York, Massachusetts, and Minnesota. The construction of utility-scale solar facilities that are open to customers in that utility’s service territory is making a difference in the amount of solar generation and availability of the benefits of the solar generation to customers who otherwise did not have an opportunity to participate in smaller, private solar development or in rooftop solar. See, for example, information regarding community solar programs implemented by Florida Power and Light Co. and Duke Energy Florida, LLC.

As noted in the article, Jeff Cramer, President and CEO for the Coalition for Community Solar Access (CCSA) opined that, “Really the only barrier to the deployment of community solar is states creating programs to meet the growing customer demand.”

As we begin this new year, it is almost certain that community solar will play an important part in the reduction in fossil fuel usage to reduce greenhouse gas emissions by certain target dates established by federal, state, and/or local governments, businesses and individuals. According to this article, some experts are predicting a 75 percent increase in solar power generation from 2023 to 2025. We shall watch and report back. --- Stephanie U. Eaton

Challenges and Progress in Pennsylvania's Transition to EVs and Clean Energy

“In 2024, PA faced a pivotal energy journey, grappling with the demands of clean energy and electric vehicles while navigating legislative gridlock and shifting federal priorities.”

Why this is important: Pennsylvania, like many other states, stands at a pivotal crossroads when it comes to electric vehicles (EVs). States have struggled with balancing the push for clean energy and the concerns about its affordability and infrastructure. The existing EV infrastructure raises concerns that discourage drivers from transitioning to electric vehicles. There are not nearly enough charging stations within the state to alleviate these concerns. To fund the state's EV infrastructure, the state passed a law imposing a $200 fee on EV registration which will increase to $286 in 2030. This new law replaces the alternative fuels tax on at-home EV chargers. Another problem with infrastructure is the lack of options for renters. Homeowners are six times more likely to purchase EVs due to the ability to install and possess an at-home charger. Another concern consumers have is the financial risk of buying an EV. Consumers question the longevity of EV batteries, their warranty coverage, and resale values. The cost to replace a battery can range from $5,000 to $20,000, which is sometimes more than the car is worth. EVs being so new and lack of historical data are enough to scare away potential customers. The EV battery supply chain faces several challenges, including mining shortages, skill gaps, and a lack of standardization, which have stalled progress. States like New Jersey and Maryland have combatted these challenges by implementing battery recycling initiatives.

There is a growing trend to transition to clean energy, not only at the state and federal level but also globally. Whoever can find the balance of affordability, reliability, and sustainability will become the leader in the clean energy industry. States have passed laws to slowly phase out gas-powered vehicles in the future, but it is proving to be a much larger task than expected. Federal and state governments can encourage hesitant consumers to transition by offering incentives and investing in EV infrastructure.

Lawyers play a critical role in addressing the challenges not only of Pennsylvania's transition to clean energy and electric vehicles but also those faced by other states. They help navigate complex environmental regulations, ensure projects comply with legal standards, and assist in securing permits and funding for infrastructure development. Lawyers advocate for policy improvements by collaborating with lawmakers and organizations to shape legislation that supports clean energy adoption. They also represent stakeholders in legal proceedings, balancing environmental goals with public concerns about affordability and reliability. --- Nicholas A. Muto

Biden to Push Geothermal Energy to Boost AI Growth

“The measures include establishing a competitive process for companies to build data centers on federal land, as well as steps to speed approvals for geothermal and nuclear energy development.”

Why this is important: The initiative represents a significant shift in federal energy policy to address the massive power requirements of artificial intelligence (AI) development, while highlighting growing bipartisan recognition of AI infrastructure as a national security priority.

The Biden administration is preparing to issue an executive order that would accelerate geothermal energy development and establish a framework for building data centers on federal land. The order, expected within the week, aims to meet the escalating energy demands of AI systems through a multi-pronged approach to infrastructure development.

Key measures include creating geothermal energy priority zones through the Department of the Interior and identifying potential data center sites on federal property through the Departments of Defense and Energy. Companies building facilities on government land would need to meet specific security requirements and dedicate a portion of computing power to national AI research while covering infrastructure costs.

Tech industry leaders, including OpenAI's Sam Altman and Nvidia CEO Jensen Huang, have advocated for such measures, pressing the White House to develop a comprehensive domestic AI infrastructure strategy. The initiative has found rare bipartisan support, with President-elect Trump also identifying data center development as a national security priority and pledging to support energy development for AI applications.

While the Trump administration is expected to reverse some Biden-era AI regulations, both administrations recognize the critical infrastructure challenges posed by artificial intelligence. As Trump noted at a recent press conference discussing a potential $20 billion data center investment, "AI is going to be a big thing, but you'll need double the electricity at least that we have right now." --- Hikmat N. Al-Chami

Technology Breakthroughs are Unlocking Geothermal Energy’s Vast Potential in Countries Across the Globe

“Largely untapped underground energy source can help meet world’s rapidly growing demand for electricity, but cost reductions are needed to drive new generation of projects.”

Why this is important: As global electricity demand continues to grow, the desire for new technologies to address rising energy needs is increasing. According to a recent International Energy Agency (IEA) report, there is potential for geothermal energy to provide continuous clean power to meet significant portions of global electricity demand growth. The IEA estimates that as much as 15 percent of electricity demand growth between now and 2050 could be met by geothermal energy.

The article notes, however, that this trajectory depends on geothermal technology costs declining in the coming years. As such, while geothermal energy appears to be a promising technology, the need for more cost-effective advancements may delay its ability to meet growing electricity demand in the coming years. --- Steven W. Lee

Duke to Retire Coal-Fired Plant in Gaston County and Replace It with Battery Storage

“It's shutting down along with other coal plants as Duke shifts to energy sources that emit less of the carbon pollution that causes climate change.”

Why this is important: Duke Energy will close the last 426 MW coal-fired generating unit at its Allen plant near Charlotte, North Carolina by the end of this year. The Allen plant’s electrical generation is being replaced with natural gas-fired units. The coal-fired plant, which opened in 1957, was at the end of its useful life.

The original coal-fired plant site will now be converted to store coal ash and have two large battery storage units built that will ultimately store 217 MW of electricity. The lithium ion battery storage facilities being built on the plant grounds are very large. The first battery array will store 50 MW of electricity on a 7.5 acre site. That is enough electricity to power 50,000 homes for approximately four hours. The battery array will store both nuclear and solar generation. A second battery array will then be built on 10 acres of the site that will store 167 MW of electricity when it is completed.

The Inflation Reduction Act paid for 40 percent of the cost. The high rate of coal-fired plant closures continues around the country as most of the plants are at the end of their useful life cycles. --- Mark E. Heath

Texas, Utah, Last Energy Challenge NRC’s ‘Overburdensome’ Microreactor Regulations

“The Nuclear Regulatory Commission’s ‘incredibly costly’ licensing process hinders the U.S. nuclear industry, the two states and nuclear developer said in a federal lawsuit filed Dec. 30.”

Why this is important: Perhaps the biggest impediment to the development of nuclear power in the U.S. is the extensive review and licensing imposed by the Nuclear Regulatory Commission (NRC). States are now pushing back on that regulatory process, arguing that the NRC is only to regulate significant sources of nuclear power, not the small modular reactors that pose little danger, due to their designs and size. The NRC is proposing to change its rules to be less of a roadblock, but it has been and will be a slow process. Hence the states’ lawsuit to speed things up and eliminate unnecessary oversight for small units. --- David L. Yaussy

Artificial Intelligence Energy Demand is Driving Climate Tech Investing

“They’ve done so as the growing demand for artificial intelligence has driven interest in technologies that can power data centers with less emissions.”

Why this is important: The surge in AI development is reshaping climate technology investment patterns, with energy infrastructure becoming critical to support AI's growing power needs while meeting environmental goals.

Energy startups have emerged as the leading destination for climate tech investment in 2024, surpassing electric vehicle and battery companies for the first time since 2020. Venture funding for energy companies reached $9.4 billion last year, marking a 12 percent increase from 2023, with nuclear investment nearly doubling to $1.9 billion.

The shift comes amid an overall decline in climate tech funding, as venture capitalists maintain caution due to political uncertainty and challenging business conditions. While total climate tech investment fell 14 percent below 2023 levels, following a 24 percent drop the previous year, energy investments bucked this downward trend.

This realignment of investment priorities reflects the growing recognition of AI's massive energy requirements. Tech companies are increasingly committing to purchasing clean power and exploring emerging technologies like nuclear fusion to meet their expanding needs. Industry analysts expect this trend to continue through 2025 as AI development accelerates.

Market researchers at Sightline suggest that while overall venture funding may remain at lower levels compared to recent years, the dramatic funding decreases seen in 2023 are unlikely to repeat as the industry stabilizes into what they term "a new normal." --- Hikmat N. Al-Chami

Beyond China: Which Countries Hold the Key to Future Rare Earth Supplies?

“Western powers are concerned about China's control over rare earth supply chains and are seeking to diversify sources and develop their own refining capabilities.”

Why this is important: Rare earth metals (REMs) are critical to the manufacturing of batteries and other clean energy technologies. One aspect of China’s renewable energy dominance is its control of REMs supply chains. Currently, China provides about 38 percent of the world’s REMs compared to the U.S.’s 1.3 percent. China’s REM dominance has been longstanding. For example, the Bayan Obo Mine in China alone comprised 45 percent of global rare earth mine production in 2019. While the Executive Branch has been responsible for funding needed REM projects in the U.S., Congress has been largely inactive. Several bills supporting U.S. REM production have been introduced in Congress throughout the years, but few have become law. If the U.S. is going to seriously contend with China in renewable energy development, Congress needs to kickstart domestic production of REMs. --- Joseph C. Unger

Corporate Transparency Act Nationwide Injunction Reinstated

Originally published December 27, 2024

By Brienne T. Marco

If you are feeling a bit of whiplash today, you are not alone. The United States Court of Appeals for the Fifth Circuit has reinstated a preliminary nationwide injunction of the Corporate Transparency Act (“CTA”).

Click here to read the entire article.

● EIA Energy Statistics

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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