U.S. Clean Energy Financing: Rising Demand Yet Uncertainty

U.S. electricity demand is increasing through the tailwinds of artificial intelligence, data centers, and consistent economic growth. However, while electricity needs have increased, the clean energy sector stands at a crossroads. Federal and state policies have created uncertainty for renewable energy projects, with federal proposals indicating rollbacks in key provisions of the Inflation Reduction Act (IRA) (Reuters).

Specifically, these rollbacks are targeting the tax credits that former President Joe Biden signed in, hoping to phase them out by 2031. Federal policies also aim to claw back climate spending by repealing the Environmental Protection Agency’s (EPA) emission cuts for light and medium-duty vehicles. These policies also aim to speed up permitting for liquefied natural gas exports. 

Meanwhile, renewable consumption has been increasing steadily. The “US Energy Information Administration (EIA) expects wind capacity to rise to 153.8 GW, up by 6.5 GW from a year earlier,” solar to rise by 38.4 GW to 128.2 GW, and battery storage to rise from 14.9 GW to 30.9 GW (Deloitte).

Why This Matters

• Rising Consumption of Renewables: With renewable consumption rising consistently, it would cripple warming prevention efforts if these policies were implemented. The U.S. grid already requires substantial upgrades to accommodate an increase in demand, and current policy implementation would detract from this effort.

• Policy Uncertainty: As mentioned above, the U.S. grid requires substantial upgrades. Most of the U.S. grid was built in the 1960s and 70s, so the infrastructure is struggling to match the demand (US Department of Energy). If policies are implemented to remove previous policies under the Biden administration, it would signal a shift in policy and thus create an unpredictable environment for investors and developers. They then might choose not to invest, which leaves our grid vulnerable and hinders our progress towards a net positive economy.

• Increase Reliance on Fossil Fuels: Finally, a shift away from renewables would lead back to a reliance on fossil fuels. This would lead to high risks of pollution and continued environmental degradation. We have seen this play out in extreme weather events across the world, with wildfires in California, monsoon rains in Australia, and storms in the United Kingdom. Responsible Alpha has talked more about this in their previous blog, “Climate Risks: Worse Than Imagined – What Now?,” which can be found here (Responsible Alpha).

With U.S. electricity consumption also rising, there is no more room for renewables to be pushed out of the equation. US electricity consumption was stagnant for the 2000s and 2010s, but as the commercial and industrial sector began to boom, demand increases stopped being offset by efficiency improvements (EIA). Those sectors will continue to grow in 2025 and 2026, which means we need renewables to match that growth.

Action Items: Companies and Policymakers

• Provide Consistent Policies: Policymakers should delineate clear policies that support clean energy investment. They should also stick to policies that have been announced and supported in the past. With consistent policies, investors and corporations can safely continue to invest in renewable projects.

• Increase Investment in Renewables: As electricity consumption increases in the commercial and industrial sectors, the U.S. should push towards an increased reliance on renewable energy and shift away from fossil fuels. By using more renewables, we can avoid the catastrophic consequences that fossil fuels, environmental degradation, and climate change bring, saving the world.