Clean energy tax credits are on the chopping block, national power demand is rising fast for the first time in two decades, and PJM just told a coalition of power players and data center reps to pound sand. If you're wondering how far grid politics has moved in just two years, look no further than the House budget—or Google Maps, where your nearest transformer is probably being upgraded for someone else’s server farm.

GOP Budget Proposes Early Death for Clean Energy Tax Credits

The House Ways and Means Committee just dropped a draft budget that would begin phasing out 45Y and 48E tax credits—core to the Inflation Reduction Act—a full four years early. If it passes, the credits for nuclear, solar, wind, battery, and geothermal start stepping down in 2029 and disappear entirely by 2032.

What survives? Carbon capture and clean fuels. What dies fastest? Hydrogen, solar, and small-scale developers dependent on the now-jeopardized credit transferability clause.

The real kicker: New eligibility rules mean only projects in service (not just under construction) by 2028 get the full credit. That’s a major blow for technologies like advanced nuclear and geothermal with long lead times. And it tilts the table toward incumbent utilities, leaving emerging developers staring at an empty plate.

Grid implications: Without these credits, expect a chill in the interconnection queue. Big players might weather it. Small innovators likely won’t.

Electricity Demand Is Rising Again—Fast

After two decades of flat growth, U.S. electricity demand is climbing again, with 2024 setting a new high and 2025–26 forecast to blow past it.

Commercial and industrial sectors are leading the charge—no surprise, given the AI boom, the manufacturing reshoring craze, and electric everything. EIA expects a 1.7% average annual growth through 2026, with data centers and industrials pulling more than their weight.

Translation: The grid is back in expansion mode, transmission constraints are becoming national policy problems, and regional load profiles are diverging—hard.

Solar and battery capacity are scaling fast in Texas, California, the Midwest, and the Northeast. But reliability still depends on big steel-in-the-ground assets and regulatory green lights, both of which are moving slower than the bots.

PJM Says “No Thanks” to Co-Location Compromise

A who’s-who of energy producers and data center groups begged FERC to pause and enter settlement talks on colocating hyperscale loads at power plants. PJM and its transmission owners replied with a firm “not happening.”

Their reasoning? Colocation is a safety and reliability risk—and the market needs clarity, not consensus. The filing urged FERC to affirm current rules and move on.

Behind the posturing: Constellation, Vistra, and others are deep in negotiations with data center clients—on their own terms. They want front-of-the-meter deals (i.e., clean, profitable, long-term PPAs), not regulatory mud-wrestling over special colocated access.

Pricing for those deals? Around $80–$90/MWh, according to Jefferies.

New Jersey’s PSEG, meanwhile, is backing away from data center partnerships at its nukes, citing the state’s “affordability crisis.” When even New Jersey says “too expensive,” you know something’s up.

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Conversation Starters

• Reason – The New Stadium Scam Is a Server Farm: Why towns chasing data centers might be tomorrow’s economic development punchlines. Tax abatements, public infrastructure, and power bill hikes. (Yes, I wrote this one.)

• Heritage Foundation – U.S. Could Face Spain-Style Grid Failure: A cautionary tale. Spain lost its grid to solar-triggered instability. Now GOP lawmakers and think tanks are citing it to justify reliability-first reforms.

• The Independent – Russia Wants to Run Africa’s Nuclear Future: Rosatom has inked reactor deals with 20+ African nations. With U.S. funding slowing and Russia offering generous terms, the geopolitical gridlines are shifting south.

Good Bet, Bad Bet

Good Bet: Fluence Energy (FLNC)
With tax credit transferability on the ropes and utility-scale solar facing new eligibility hurdles, batteries may look like collateral damage—but don’t count out Fluence. Their platform-driven storage business is uniquely capital-light, and their global backlog gives them room to pivot. More importantly, rising demand + interconnection delays = a golden era for flexible capacity. Watch them scoop up deals from developers now frozen out of solar buildouts.

Bad Bet: Sunrun (RUN)
Distributed solar doesn’t survive without capital velocity—and Ways and Means just proposed decapitating the IRA’s most innovative financing tool. Transferability let small developers trade tax credits like cash; now it may disappear in 2027. Sunrun says it’ll shift strategies. But shrinking liquidity and a “flight to quality” favor utilities and megafunds, not distributed outfits built on volume and velocity. In a tightened market, Sunrun may find itself with rooftop panels and no buyer.

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