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U.S. utilities are spending more than ever on their transmission grids. So why has the construction of new long-range, high-voltage power lines — the kind that experts say the country desperately needs — slowed over the past decade?
Claire Wayner, a senior associate at think tank RMI, says one big reason is that utilities are opting to build smaller-scale transmission projects that earn them guaranteed profits instead of large ones that are more difficult to plan but deliver greater benefits for ratepayers.
In a November report, Wayner and her co-authors examine the blind spot in utility regulation that they say is at the root of the problem — a “regulatory gap” that prevents both federal and state regulators from exercising meaningful oversight of the smaller transmission projects utilities build within their own territories.
Many of these projects are clearly needed to bolster parts of the grid that were built more than half a century ago. But with less oversight, they tend to cost utility customers more than bigger, regionally planned grid projects, which require utilities, state regulators, and regional grid operators to assess costs and benefits and agree on how to share construction expenses.
That’s a complex and time-consuming process. But the longer-range, higher-voltage power lines that typically result can deliver far greater benefits per dollar of investment than piecemeal, utility-by-utility buildouts, according to analysis of previous regional expansions by the grid operators responsible for managing them.
Wayner thinks reforms are needed to push utilities and grid operators to take what RMI’s report calls a “regional-first” approach. “You could be addressing local and regional needs simultaneously and meeting both needs in a more efficient manner,” she said.
Today, however, transmission planning is like “two different cars being driven on two different roads in parallel. The regional road is like a toll road with all these checkpoints: identify regional needs, open competitive bidding windows, identify the costs and benefits,” she said. “The local road has no speed limits. [Utilities] can build as much as they want.”
The U.S. needs more regional transmission than ever to allow clean energy to replace retiring fossil-fuel power plants, to transmit energy further and clear grid congestion spots, and to make the grid more resilient against extreme weather. But the more local projects eat up money, the less there is for projects that could deliver bigger benefits.
The result, Wayner said, has been “rapidly increasing transmission rates, while the buildout of mileage of high-voltage transmission lines is at an all-time low.”
The regulatory gap identified in the RMI report stems from the Federal Energy Regulatory Commission’s Order 1000, which, somewhat ironically, intended to push utilities, state regulators, and regional grid operators to do more cost-effective regional grid planning.
The order, passed in 2011 and put into effect in 2014 after overcoming court challenges, created regional grid planning entities across almost all of the country. States and utilities within them must undertake coordinated planning of grid projects and agree on methods to share the costs of building them.
But Order 1000 also included exemptions. “Local” projects under certain voltage thresholds within individual utilities’ service territories don’t have to be part of regional planning. Neither do “asset management” projects that rebuild or refurbish existing transmission lines. Perhaps not coincidentally, since the order went into effect, these exempted projects have grown to make up most transmission investment.
FERC Order 1000 also requires that regional transmission projects be opened to competition from independent transmission developers, with the goal of driving down costs. But grid experts, including former FERC commissioners involved in crafting the rule, have conceded that this provision has driven utilities to seek out local and asset-management projects that evade competitive bidding.
These various policies and exemptions — and their implications for federal, regional, and state authorities — are at the heart of the regulatory gap, Wayner explained in a December webinar discussing RMI’s report.
At the federal level, FERC allows utilities to earn guaranteed profits on exempted projects under a so-called “formula rate” structure, which “does not require project-level scrutiny,” Wayner said. Thus, “most local projects receive virtually automatic rate approval.”
At the state level, utility regulators can require local projects to secure state permits. But many exempted projects are bundled into infrastructure spending requests within sprawling and complex utility rate cases, which makes it much harder for regulators to demand more information about them.
What’s more, FERC sets the rates of return that utilities can earn from these small-scale transmission investments, so states have few openings to demand that utilities prove they’re the most cost-effective option, Wayner said.
As for the planning entities and grid operators that manage regional planning, they’re not actually regulators, said Ari Peskoe, director of the Electricity Law Initiative at Harvard University. Instead, they’re organizations made up of the same utilities that are incentivized to push projects that maximize profits.
“There are lots of reasons why these projects are more attractive financially for the utilities than more ambitious regional projects that we might need for clean energy and reliability,” said Peskoe, who is a longtime critic of monopoly-utility transmission policies. “They’re easier to execute. You don’t have to publicly disclose details that could bring more scrutiny. You may need no state or local permits, particularly if you’re rebuilding existing infrastructure.”
These are all well-known problems, and FERC held a technical conference in 2022 that allowed critics to lay out proposals for fixing them, he said. But it’s not clear if or how FERC might initiate a proceeding to take further steps to reform the status quo.
“The real problem with this local spending is that we have no idea what value the public might be getting,” Peskoe said. “It’s hard to even tally up the bills.”
There’s no doubt that costs are growing. Consultancy The Brattle Group has tracked data from FERC and utility trade group Edison Electric Institute showing a steady rise in U.S. transmission spending over the past two decades. Since FERC Order 1000 went into effect, more than 90% of transmission spending has gone to projects that don’t undergo cost-benefit analysis, and about half of those investments are in local and asset-management projects that fall into the regulatory gap.
There’s also been a steady decline in new high-voltage transmission projects over the past decade. According to RMI’s November report, spending on projects of 230 kilovolts and above — the kind typically built in regional grid projects — has fallen from 72% of total transmission spending in 2014 to 34% of spending in 2021.
And a July report from consultancy Grid Strategies found projects of 345 kilovolts and above have fallen from an average of 1,700 miles per year from 2010 to 2014 to 350 miles per year from 2020 to 2023, including an all-time low of 55 new miles in 2023.
That’s not to say that regional grid expansions aren’t happening. In some parts of the country, including much of the Midwest, utilities and state regulators have agreed to tens of billions of dollars of grid projects expected to yield cost, climate, and reliability improvements. FERC Order 1920, passed last year, orders grid operators and utilities across the country to undertake similarly ambitious efforts.
But elsewhere, the chasm between regional and local projects has become extreme. In the territory of PJM, the grid operator that serves Washington, D.C., and 13 states from Illinois to Virginia, RMI calculated that the five-year averages for spending on “supplemental” projects — PJM’s term for local projects — ballooned from less than $1 billion per year in 2010 to more than $8 billion per year since 2020. Meanwhile, the same averages for spending on “baseline” projects not subject to Order 1000’s exemptions declined.
Just because a transmission project falls into the regulatory gap doesn’t mean it shouldn’t be built, said Rob Gramlich, president of Grid Strategies. For one thing, much of the money spent on local projects over the past decade has gone to “replacing assets that are 50 or 60 or more years old,” he said.
But Tyson Slocum, director of the energy program at nonprofit watchdog group Public Citizen, said the inability to review or challenge these projects is a problem.
“Transmission owners, and [regional transmission organizations] to a certain extent, have lots of incentives to prioritize the projects that maximize returns for them but not necessarily for the consumers,” he said. It’s particularly troubling when utilities may be using that lack of transparency to squeeze their customers for more money than they really need.
Slocum suspects that’s what happened with a transmission project at the heart of a December settlement agreement between FERC and New Jersey utility Public Service Electric and Gas Co. (PSE&G). The utility agreed to pay a $6.6 million fine to settle allegations that it failed to provide “accurate and factual information” regarding a $546 million project to rebuild a transmission line with towers built nearly a century ago.
Among the disclosure failures cited in FERC’s enforcement action was PSE&G’s presentation to PJM stating that a consultant had found that 67 of those towers needed extensive foundation retrofits. In fact, the consultant had found only eight towers needed such work — presumably a much less costly scope of work than what PSE&G ended up doing.
PSE&G neither admitted nor denied the allegations, and the settlement with FERC does not require it to forgo revenues it will receive for the project under FERC’s formula rates. Public Citizen filed a protest with FERC this month challenging PJM’s plan to assign those costs to ratepayers, citing PSE&G’s December settlement agreement as evidence of “harrowing fraud” from the utility and a failure by PJM to “perform a modicum of independent oversight.” PSE&G told Utility Dive that it will “vigorously defend” against Public Citizen’s allegations of imprudence.
Slocum called the PSE&G case “an easy-to-understand example of how bad things can get when you don’t have independence in assessing these transmission projects, when you don’t have someone in the room asking hard questions.”
PJM spokesperson Jeff Shields told Canary Media that PJM has “enhanced the transparency of its supplemental projects processes” in recent years. But he added that “authority and expertise for certain asset management decisions remain with transmission owners under settled FERC precedent.”
Nor can New Jersey utility regulators challenge the utility’s rate recovery on their own. Harvard’s Peskoe highlighted this as a problem that FERC will need to step in to solve since the agency regulates these rates. “If you find that utilities went way over budget on a project, there’s nothing the state can do but go to FERC and complain about it,” he said
State regulators sometimes take actions that undermine what little oversight they do have over utility investments. Utility Florida Power & Light has faced criticism over a 176-mile transmission line that it designed at an unusually low voltage, allowing the endeavor to skirt the rigorous review required for higher-voltage regional projects. Critics say that earlier decisions by the Florida Public Service Commission paved the way for that project to escape more scrutiny.
Other states have taken more aggressive steps to demand better transparency. RMI’s report highlights Kansas, which passed a law in 2023 giving regulators authority to demand that utilities provide detailed information, hold public workshops, and accept a state-set rate of return if they want to pursue a streamlined process to earn revenues on money spent on local transmission projects.
But watchdogging individual local transmission projects doesn’t fix the underlying problem described in RMI’s report: Regional planning has been relegated to second-run status behind local projects.
Instead of executing local projects on a separate track from regional projects, utilities and regional planning organizations should be required to “first look at how regional projects could holistically meet local and regional needs, and then build any local projects necessary to meet remaining local needs,” Wayner said during the December webinar.
FERC Order 1920 does require utilities, planning entities, and grid operators to undertake some major long-term grid planning reforms. But Wayner and Peskoe agreed that its adjustments don’t close the local-project regulatory gap.
Most notably, when grid operators hold meetings to share local transmission project data with state regulators and other stakeholders, utilities and the grid operator don’t have to respond to any questions or data requests from stakeholders.
FERC’s order modeled this approach on PJM’s method for managing those meetings, which have been a longtime frustration for Greg Poulos, the executive director of the nonprofit Consumer Advocates of the PJM States. “We are given a sticker price of projects,” he said during the December webinar. “We can’t get any other information. We can ask questions. They do not have to be answered.”
That lack of transparency is a big problem, said Kent Chandler, a former chairman for the Kentucky Public Service Commission and resident senior fellow at free market-oriented think tank R Street Institute. Utilities are monopolies that get to charge captive customers for reliable and affordable power, he said during the December webinar. “It shouldn’t be on us to have to prove the negative on why we’re not getting the best value for our money.”
These concerns have spurred a new effort to get FERC to intervene. In December, R Street Institute, consumer advocates including Public Citizen, and groups representing industrial energy consumers filed a complaint asking FERC to require that lower-voltage lines typically built under the “local” designation be brought into the same regional planning structures that govern higher-voltage lines.
It also calls for “independent transmission system planners,” a new kind of regional planner watchdog that would counterbalance “the self-interest and undue influence of existing transmission providers.”
Maryland’s Office of People’s Counsel, which advocates for residential utility consumers in the state, joined that complaint. David Lapp, who leads the office, said the goal is to “stop being nickel and dimed in massive amounts” for local transmission projects.
Under today’s regulatory gap, “we have situations where two adjacent utilities might be spending hundreds of millions each,” he said. “You might be able to have a project that cuts those costs in half if they were part of a regional plan.”
Lapp noted that in PJM’s territory, “investments made at a higher cost are lost opportunities for better spending on what’s really going to help customers going forward as well as advance climate policy.”
PJM is facing a massive backlog in processing hundreds of gigawatts of clean energy projects seeking to interconnect to its grid, a lag that some analysts say has been exacerbated by its refusal to engage in large-scale regional grid planning and expansions. “We may be looking at that lost-opportunity cost with the stalled interconnection queue and the inability to get more clean energy on the grid,” Lapp said.
Canary Media’s Electrified Life column shares real-world tales, tips, and insights to demystify what individuals can do to shift their homes and lives to clean electric power.
Micah Parkin wanted to quash her home’s carbon pollution to help fight climate change. So she took a familiar step among climate-inclined homeowners: She got a heat pump — just not the typical variety.
Her heat pump pulls warmth from the ground, rather than the air, and the appliance “has been doing wonderfully well,” Parkin, the executive director of grassroots climate-action group 350 Colorado, told me from her home on a snowy January day. “It’s had no problem keeping up with these zero and negative temperatures.”
Heat pumps, whatever their heat source, are critical for decarbonizing space and water heating, which accounts for more than 60% of the energy homes consume in the U.S. Switching from gas, propane, and fuel-oil systems can save homeowners money and is guaranteed to have health benefits given the toxic pollutants fossil-fuel systems emit.
Ground-source, or geothermal, heat pumps have a superpower over the much more common air-based systems: efficiency. While air-source heat pumps can perform two to three times as efficiently as fossil-fuel systems in cold weather, ground-source heat pumps can perform about twice as efficiently again. To put it in dollar terms: That means cutting the heating bill from an air-source heat pump in half.
That efficiency is what won Parkin over. She has a 7-kilowatt solar panel system on her roof, and she and her husband wanted a heat pump that would minimize their reliance on comparatively dirty grid power by staying within the budget of what their solar produces. “It was really important to us that it be the most efficient system possible to use as little electricity as possible,” she said.
But for all their efficiency gains, geothermal heat pumps have one big thing holding them back: They cost roughly double to install compared with air-source systems.
Out of 123.5 million U.S. homes, just 1.3 million — or about 1% — rely on a geothermal heat pump, according to a January report by the Department of Energy. Air-source heat pumps provide primary heat for 13% of homes and are outselling fossil-gas furnaces by a wider margin than ever.
The DOE sees ample room for geothermal heat pumps to take off though. With the right policies and investments, annual adoption of the tech could double, with the equivalent of 7 million more American homes installing geothermal heat pumps by 2035.
“In the next five or 10 years, you’re really going to see these become much more of a household name as a way to heat and cool your home,” said Timothy Steeves, report co-author and geothermal fellow at the DOE.
The benefits could be enormous not only for the homeowners involved but for the power system overall. Geothermal heat pumps are way less of a burden on the grid due to their efficiency, the report found — enough to net roughly $4 billion in annual savings on grid system costs, which could be passed on to utility customers.
Could geothermal heat pumps, with their unrivaled efficiency and grid and climate advantages, be a good fit for you? Let’s dig into the details of this clean-heating tech.
Ground-source heat pumps, also called geo-exchange, earth-coupled, and earth-energy heat pumps, are so efficient because they tap heat where it’s steady and abundant: underground.
The appliances connect to flexible plastic pipes that delve into the earth. These ground loops, laid horizontally in trenches less than 10 feet deep or vertically in boreholes 100-plus feet deep, carry a nontoxic mix of water and glycol to absorb thermal energy from the ground. That energy is then delivered indoors and transferred to refrigerant in the heat pump unit. A compressor squeezes the refrigerant gas, raising the temperature further to provide heating that can flow through ducts, mini-splits, or radiators.
Drawing heat from underground is a winning strategy because the shallow earth stays at a fairly constant temperature of somewhere between 40 and 70 degrees Fahrenheit. In the winter, it’s easier to find heat in the ground than it is in the volatile — and often chilly — air. Conversely, in the summer, the ground is cooler, making it a better heat sink.
Some geothermal heat pumps draw energy from water bodies, rather than the ground, through a similar process.
Another selling point for ground-source heat pumps is their longevity. The heat pump unit itself has a slightly better average lifespan — around 20-plus years for ground-source heat pumps compared with 15 years for air-source heat pumps, according to the DOE. But the underground infrastructure can last 50 years, potentially more, said Kathy Hannun, founder and president of Dandelion Energy, a home-geothermal company and spinout from X, Google’s “moonshot factory.”
Ground-source heat pumps can also simplify some aspects of installation, Hannun said. Dandelion designed a ground-source heat pump that doesn’t need as much electrical capacity and can produce warmer air than typical heat pumps, making it more compatible with existing ductwork, she said.
The reason ground-source heat pumps tend to be much more expensive upfront is their drilling costs.
On average and before incentives, air-source heat-pump systems cost $12,000 to $20,000, according to Joe Parsons, senior marketing sustainability manager at the Climate Control Group, a geothermal-heat-pump manufacturer. A ground-source heat pump system costs between $25,000 and $40,000, he noted.
The typical payback period for home systems ranges from 3 to 10 years, depending on the location, the kind of ground loop required, and available incentives, according to experts.
A big factor affecting installation costs is the physical environment. “If you live in a very rural community, one type of geo[thermal system] that people can consider is horizontal loops,” Hannun said. They “take a lot of space, but you can install them using an excavator” instead of a drilling rig. Digging a horizontal loop field, which could cost around $5,000, is “much less expensive, lower-skilled work” compared with installing a vertical loop.
But if you’re in a dense residential neighborhood where labor costs are high, and you use a lot of heat in the winter, “it might cost more like $20,000 to put in your ground loop,” Hannun said.
The good news is that costs are coming down, Hannun pointed out. Dandelion has gotten better at taking geology into account; a home on bedrock, a great thermal conductor, doesn’t need as much ground loop as a similar home on clay. And the company has moved from water-well drilling rigs to more-compact ones that can be operated by fewer people, she said. Today, drilling costs are about two-thirds of what they were when the company started in 2017.
The beloved TV show This Old House showcases home-geothermal company Dandelion drilling boreholes in a tight space for a ground-source heat pump system in 2019.
Reducing a home’s heating demands by weatherizing it first can help you spend less on a heat pump and energy bills, whether you choose an air-source or ground-source system.
Homeowners can take advantage of thousands of dollars in tax credits and rebates from the federal government, states, and utilities to get ground-source heat pumps.
The biggest incentive is the federal Residential Clean Energy Credit, called 25D after its section of the tax code. Offering 30% of the cost of installing a geothermal heat pump off your federal tax bill, 25D is uncapped. By contrast, the tax credit for air-source heat pumps, 25C, is limited to $2,000.
The 25D tax credit first took effect in 2008 and was extended by the 2022 Inflation Reduction Act at full value through 2032, though the Trump administration has blustered about killing the IRA’s clean-energy tax credits.
Even if Congress does repeal the tax credit, homeowners should still be able to claim the credit next year as long as they have finished installing their ground-source heat pump systems while 25D is still on the books, according to Ryan Dougherty, president of the nonprofit trade association Geothermal Exchange Organization. “It would be unprecedented for Congress to retroactively revoke a tax credit for systems that were installed in good faith in accordance with existing law,” he added.
Generous, even enormous incentives can also be found elsewhere, especially in the Northeast with its cold winters and a legacy of expensive fuel-oil systems. New York offers a $5,000 state tax credit on top of utility Con Edison’s eye-popping rebate covering 50% of total project costs, with a cap of $25,000. For households in disadvantaged communities, the rebate maximum climbs to $35,000.
Check with reputable contractors about what financial help you can get, and search the Database of State Incentives for Renewables & Efficiency for incentives in your area.
If you’re considering geothermal heat pumps, look for experienced contractors who will calculate the heat load of your home to accurately size the system. Ask about the projected total lifetime cost; it could be lower for a geothermal heat pump than for an air-source system because of its low operating costs, especially after incentives. And as with any major home project, get multiple quotes.
Geothermal heat pumps are the most efficient home-heating systems available. But only you can decide whether they make sense for you, your goals, and your budget.
For her part, Parkin of 350 Colorado is thrilled that her ground-source heat pump keeps her home cozy while using little enough power that she can offset it with her solar panels. She put it simply: “I’m super pleased with it.”
Correction: This article initially identified Climate Control Group as a trade organization. It has been updated to reflect that it is a heat-pump manufacturer.
OFFSHORE WIND: Shell withdraws from its partnership in an offshore wind farm off New Jersey, claiming a loss of $1 billion, but the developers say they will still proceed with the project. (New Jersey Monitor)
ALSO:
GRID: Pennsylvania Gov. Josh Shapiro announces a plan to fast-track the development of power plants and offer hefty tax incentives to new generators and projects that use hydrogen fuel. (Associated Press)CLIMATE:
TRANSPORTATION: Trump considers revoking a key federal approval for New York’s congestion pricing program. (New York Times)
AFFORDABILITY: Trump’s proposed tariffs on imports from Canada could increase energy bills for Maine residents drawing power from across the border or using electricity from power plants fueled by gas coming from Nova Scotia. (Portland Press Herald, subscription)
UTILITIES: Two utilities file suit against a Connecticut regulatory agency, saying the chairperson is unfairly taking control of all decisions made by the body. (CT Insider)
STORAGE: A New England hydropower company lays out plans to build its first battery storage installation at one of its stations in western Massachusetts. (Greenfield Recorder)
EMISSIONS: A Massachusetts metal production company says it has developed processes to refine rare earth metals, used in technologies including electric vehicle batteries, without producing any emissions or toxic waste. (New Hampshire Public)
EFFICIENCY: A new program in New Haven, Connecticut, uses $1.5 million in federal funds to help low-income residents access weatherization, heat pumps, and other energy efficiency measures. (NBC Connecticut)
COMMENTARY: Pennsylvania lawmakers should prioritize bills that promote renewable power so the state doesn’t miss out on environmental benefits, job creation, and lower energy prices during the Trump administration, says an environmental advocate. (Pittsburgh Post-Gazette)
FOSSIL FUELS: Interconnection delays for renewable energy and rising demand from data centers are prolonging Illinois’ clean energy transition and extending the life of coal and gas plants. (Chicago Sun-Times)
ALSO: Former North Dakota Gov. Doug Burgum is confirmed as the Trump administration’s Interior Secretary, a role that Republican supporters say can help advance oil, gas and coal production on federal land. (North Dakota Monitor)
EMISSIONS: Minnesota’s greenhouse gas emissions increased 6.4% from the end of 2020 to the end of 2022, signaling a return to activity coming out of the pandemic but that state officials say doesn’t reflect recent climate investments. (Star Tribune)
ELECTRIC VEHICLES: Panasonic officials are optimistic that the company’s new $4 billion electric vehicle battery plant outside Kansas City will be able to ramp up to full production even as the Trump administration targets EV incentives. (Flatland)
CARBON CAPTURE: Opponents of North Dakota legislation to ban eminent domain for carbon pipelines cite a recent study claiming enhanced oil recovery using carbon dioxide could generate billions in new tax revenue. (North Dakota Monitor)
CLEAN ENERGY:
CLIMATE: A Nebraska lawmaker wants to join 26 other states in creating a dedicated climate office that could help leverage federal funds for climate initiatives. (Nebraska Examiner)
NUCLEAR: The owner of a shuttered southwestern Michigan nuclear plant that secured a $1.5 billion loan from the Biden administration to restart the facility is not concerned about the Trump administration attempting to claw back the financing. (Grist/Interlochen Public Radio)
OVERSIGHT: Minnesota Gov. Tim Walz appoints an energy efficiency expert focused on the gas industry to an open seat on the state’s Public Utilities Commission. (Star Tribune)
SOLAR: A developer brings online two solar projects totaling 95 MW of capacity in southern Minnesota. (Solar Power World)
GRID:
BIOFUELS: A company cites the oversaturated ethanol market as a main reason for temporarily closing a Minnesota biofuel plant. (Star Tribune)
FINANCE: The Trump administration’s reversal of its federal funding freeze doesn’t extend to climate spending allocated under the Inflation Reduction Act and sets the administration up for a fight over Congress’ constitutional spending authority. (Canary Media)
ALSO:
POLITICS:
OIL & GAS:
STORAGE: Tesla installed 31.4 GWh of battery storage last year, double its total in 2023, and the company told analysts that it expects installations to grow another 50% this year. (Utility Dive)
HYDROGEN: Two southern California cities launch the nation’s first public hydrogen utility, saying they hope to make the fuel more accessible, affordable and transparent. (Utility Dive)
NUCLEAR:
OFFSHORE WIND: Shell withdraws from its partnership in an offshore wind farm off New Jersey, claiming a loss of $1 billion, but the developers say they will still proceed with the project. (New Jersey Monitor)
UTILITIES: North Carolina clean energy advocates are angry after Duke Energy joins other utilities calling on the U.S. EPA to weaken coal ash and gas regulations that would affect 31 unlined coal ash ponds and plans for four new gas plants in the state. (Inside Climate News)
CARBON CAPTURE: A carbon capture company signs a deal with Microsoft to provide the tech company with more than seven million tons of carbon removal credits from projects in Arkansas, Louisiana and Texas. (Axios)
TRANSPORTATION:
A state-funded climate financing authority will begin ramping up lending in Minnesota this year after hiring its first executive director in October.
The Minnesota Climate Innovation Finance Authority, established by state legislators as part of a flurry of climate and clean energy bills in 2023, is charged with annually lending at least $25 million to stimulate clean energy development and greenhouse gas emissions reduction projects.
The timing — as the Trump administration sows chaos and confusion around federal grant funding — is coincidental, but could help some projects withstand the uncertainty.
Kari Groth Swan, the state authority’s executive director, said she hopes to use her background in banking and community development to help connect promising projects with state and private money.
She recently spoke with the Energy News Network about the launch of the program, which has already drawn dozens of applications.
What kind of projects are eligible?
The finance authority seeks to fund projects that help Minnesota meet its climate action goals, including the Climate Action Framework. The green bank has received applications for district hydrothermal energy, solar gardens, new energy-efficient construction, electric vehicle charging stations, air source heat pumps, battery manufacturing, and the Solar on Schools program.
How does it work?
The funding process is similar to what conventional lenders use. Applicants provide two years of financials, a narrative, a project budget, a list of commitments from other funders, and other financial information.
“We’re not funding ideas,” Swan said. “We’re funding viable, actionable projects that can get done and create jobs.”
A governing board appointed by Gov. Tim Walz makes the final lending decisions. The board includes representatives of state agencies, industry organizations, tribal nations, labor unions and people from other professions.
Why does the state need a green bank?
Green banks are mission-driven to promote clean energy projects, and have technical expertise in energy lending. Minnesota’s green bank intentionally focuses on underserved markets unlikely to receive all their capital from private lenders. By deploying a lending institution rather than relying on grants for clean energy projects, the state creates a revolving fund as loans are repaid.
The finance authority won’t ever be the primary lender on a project, but having the state involved helps move projects forward, Swan said. The green bank has a pipeline of $25 million in loan applications from projects worth over $265 million.
Swan said the first wave of applicants came fully formed and with significant capital in place. The second wave might need some additional advocacy with lenders. “I will be out talking to the traditional lenders, saying, ‘Here’s an example of a project and here’s what the capital stack looks like. Will you partner with us?’”
How large are the loans?
A wide range of loan amounts are available. The green bank requires a minimum loan amount of $250,000, and while the first three loans it issued were all over $1 million, Swan expects a greater variety of loan amounts now that the bank is fully operational. In addition, no loan can exceed 10% of the amount the bank loans annually. The bank may also fund nonprofit lenders who could provide capital to smaller clean energy projects.
How much money is available?
By statute, the bank must lend at least $25 million annually. The Legislature allocated $45 million in 2024 to get the green bank going. Last year, the state competitiveness fund provided $60 million and the federal government added $25 million.
What other requirements are there?
Half of the loans must meet guidelines for environmental justice communities based on the U.S. Department of Energy’s current definition. To qualify, a community’s non-White population must be at least 40%, and 35% of the population must have an income at or below 200% of the poverty level.
How could President Trump’s attacks on federal clean energy affect the program?
Swan thinks federal investment tax credits for clean energy will survive under Trump, adding that unwinding them quickly will be challenging because they’re part of the tax code. But the Trump administration has already signaled a willingness to usurp Congress’ constitutional spending authority when it comes to clean energy, which could mean a greater need for money but also fewer projects ready to fund in Minnesota.
SOLAR: Virginia lawmakers and lobbyists back a proposed state board that would weigh in on proposed solar and battery storage projects but leave final decisions to localities, although its creation could be vetoed by Gov. Glenn Youngkin. (Inside Climate News)
ALSO: Duke Energy announces it’s completed its 10th solar farm in Florida, making good on its 2020 pledge to state regulators to build nearly 750 MW of solar generation in the state. (Panama City News Herald)
COAL ASH: Duke Energy, Louisville Gas & Electric/Kentucky Utilities and other power companies send a letter to Trump’s EPA nominee asking for“immediate action” to roll back federal regulation of toxic coal ash and rescind recent enforcement actions. (Canary Media)
STORAGE:
GRID:
ELECTRIC VEHICLES: Alabama suspends its electric vehicle charger installation program, citing President Trump’s order pausing its federal funding. (E&E News, subscription)
COAL:
EFFICIENCY: A new report finds Tennessee residents use 30% more electricity than the national average, largely because of the state’s lagging energy-efficiency building standards. (Knoxville News Sentinel)
NUCLEAR: South Carolina Gov. Henry McMaster calls for the expansion of the VC Summer nuclear plant, which previously collapsed in the “Nukegate” controversy but recently has been revived by state-owned utility Santee Cooper. (Post and Courier, South Carolina Daily Gazette)
OIL & GAS: A Texas city council approves a gas company’s proposal to expand its fracking operations near a daycare center and neighborhood. (Inside Climate News)
BIOMASS: South Carolina residents deal with noise, dust and pollution from a nearby wood-pellet plant, one of 28 similar facilities across the Southeast and seven in the Carolinas. (WSOC)
HYDROGEN: The U.S. Energy Department collects public input on plans to produce hydrogen from natural gas at multiple sites in West Virginia, Ohio and Pennsylvania that are part of the Appalachian Regional Clean Hydrogen Hub. (WYSO)
COAL: Executives from a dozen U.S. power companies urge the Trump administration to roll back federal regulations on coal ash disposal and rescind recent enforcement action. (Energy News Network)
ELECTRIC VEHICLES: The Trump administration’s efforts to claw back upwards of $7.5 billion in federal electric vehicle charging funding from states will likely be met with legal challenges, experts say. (Canary Media)
NUCLEAR: Home electrification, electric vehicles, new data centers and a 2040 carbon-free power mandate are putting pressure on Minnesota lawmakers to lift the state’s ban on new nuclear plants. (Minnesota Reformer)
UTILITIES: Missouri’s two largest utilities want state permission to charge customers for new gas plants before they’re built, which consumer advocates slam as a scheme to increase utility profits. (Missouri Independent)
GRID:
SOLAR: Consumers Energy breaks ground on a 360 MW solar project in southwestern Michigan that the utility says will help meet its goal of 8,000 MW of solar by 2040. (WWMT)
POLITICS: Jurors begin to deliberate in the corruption trial of former Illinois House Speaker Michael Madigan, who is accused of ushering favorable legislation for ComEd in exchange for jobs for associates. (Chicago Sun-Times)
COMMENTARY: A lung cancer specialist says Wisconsin utilities’ plans to prolong the life of coal plants and open new gas plants will harm public health. (Wisconsin Examiner)
ELECTRIC VEHICLES: The Trump administration singled out funding for electric vehicle chargers in his orders halting climate and clean energy spending, but experts say agencies legally can’t hold back these “mandatory” grants allocated by Congress. (Canary Media)
POLITICS:
SOLAR:
OIL & GAS: The Trump administration directs the Army Corps of Engineers to use emergency powers to sidestep the Clean Water Act to build gas pipelines, but environmentalists say they don’t have that authority. (E&E News)
GRID:
HYDROGEN: A last-minute infusion of funds from the Biden administration will allow the Mid-Atlantic Hydrogen Hub to begin planning and collecting community input, though some environmental advocates are skeptical the process will truly be climate-friendly. (Delaware Public Media)NUCLEAR: South Carolina Gov. Henry McMaster calls for the expansion of the VC Summer nuclear plant, which previously collapsed in the “Nukegate” controversy but recently has been revived by state-owned utility Santee Cooper. (Post and Courier, South Carolina Daily Gazette)
NUCLEAR: The Navajo Nation agrees to allow Energy Fuels to transport uranium ore across tribal land from the company’s Grand Canyon-area mine to its Utah mill. (AZ Mirror)
ALSO: Wyoming lawmakers kill legislation that would have encouraged the federal government to establish an interim nuclear waste repository in the state, citing concerns it would end up being permanent. (WyoFile)
UTILITIES:
COAL:
SOLAR:
CLEAN ENERGY: Hawaii Gov. Josh Green signs an order aimed at accelerating clean energy targets and setting a goal of 50,000 distributed solar and battery installations by 2030. (Maui Now)
STORAGE: A Utah utility and a firm look to develop 70 MW of demand response capacity using flywheel energy storage systems. (news release)OIL & GAS: The U.S. EPA reports seven methane super-emission events over one week near oil fields and refineries in a southern California county. (KBAK, news release)
BIOFUELS:
CARBON CAPTURE: Northwestern New Mexico officials hope a direct air carbon capture hub proposed for the area will replace declining coal industry jobs. (New Mexico Political Report)
COMMENTARY: Colorado labor advocates say a new pro-clean energy union coalition aims to tackle the climate crisis while ensuring green jobs also prioritize workers. (Colorado Newsline)
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