The US is rapidly curtailing subsidies for renewable energy and putting obstacles in the way of new wind and solar projects. Unpredictable swings in tariffs are adding to the turbulence. Most projects in the market for financing this year were already fully baked before the current turbulence. Next year will be an active year for the same reason. The big question is what happens after 2026.

A panel of five renewable energy industry CEOs talked about that and other subjects at our 34th annual energy finance conference in San Diego in June. The following is an edited transcript.

The panelists are Sarah Slusser, CEO of Cypress Creek Renewables, Steve Vavrik, CEO of Earthrise Energy, Caton Fenz, then-CEO of Repsol Renewables North America, Cassidy DeLine, CEO of Linea Energy, and Jason Allen, CEO of Leeward Renewable Energy. The moderator is Sameer Ghaznavi, a partner with Norton Rose Fulbright in Chicago.

Outlook

MR. GHAZNAVI: Do you think the renewable energy industry is better prepared for the uncertainty that a Trump presidency brings having lived through his first term from 2016 through 2020?

MS. SLUSSER: Yes. I remain bullish on the sector. I feel like we have collaborated across industries more than we used to do. We used to have different associations fighting against each other. We are all together now.

MR. VAVRIK: The answer is yes. Hell yes, frankly. Technology is key. The advances in the material science in the last four years in the storage sector alone have been an incredible gift. The advances will continue. We have strong fundamentals.

MR. GHAZNAVI: It seems like tariffs change every day, and sometimes even more than once during the day. It is like watching a US and China table tennis match with your head moving back and forth.

MR. FENZ: Yes. We are more creative on the procurement side and in thinking of ways that we can continue to move projects forward. For example, we have about 1,500 megawatts of projects under construction. We are not stopping that work, because we have learned from the past how to solve issues that may arise with those projects. We also are more creative as an industry about how to manage risks around new investments. That will help us manage through the current turbulence.

MS. DELINE: Tariffs are an excellent example of how we are more prepared than during the last Trump administration. We are probably more prepared than any other industry because we have been dealing with tariffs for the greater part of the last decade.

The supply chain has demonstrated an incredible amount of nimbleness as lines are being picked up and relocated. When we talk about the supply chain now, we are talking about Saudi Arabia and Ethiopia. It is not just China and Southeast Asia. The battery suppliers are learning very quickly from the solar experience. Contracting gets more and more complicated by the day. It requires keeping your eyes on the ball, but it is possible to get deals done.

Head Down

MR. GHAZNAVI: A lot of projects were being put into the ground last year. What do you think 2025 will ultimately end up looking like?

MR. ALLEN: Capacity additions in 2025 and 2026 are baked. Those projects are head down, moving forward. We are working on 2027 and 2028. We are used to living in a world of volatility. It has been like that for the last decade. We are busy implementing our business plan and working with our partners to navigate the uncertainty.

MS. SLUSSER: And then after 2028, it will be a new administration.

MR. VAVRIK: It does not matter. Let's assume the government subsidies are never coming back. Why don’t we just live in that world? And guess what? It is fine. This is where I think the nimbleness comes in. Let's plan rather than hope. There are certainly disruptions. I do not want to discount them, but there is so much opportunity if we take it upon ourselves to change how we think about what our mission is. Our mission is keeping focused on the technologies we use, the partnerships we make and the investors with whom we work.

The last few years have been a boon for a type of investor with a short holding period. That type of investor has done very well with the tailwind from the Inflation Reduction Act. If the IRA tailwind is gone, there is still opportunity, but it requires a different sort of investor, one that is used to longer-term cycles, one that is used to 10 or 15-year holding periods rather than five years. We are building 50-year businesses. We are not building five-year businesses.

Focus on the signal and not the noise.

MS. DELINE: We have had the benefit of a favorable tax policy for a long time, and it has been extended multiple times. We develop zero marginal cost energy. There will always be a place for zero marginal cost energy.

A new power contract was signed for power from an existing nuclear power plant at something like $85 a megawatt hour, which is about a $20 premium to what newly built renewables would charge in MISO central. We can make that up. We can beat that even without the tax credit, not to mention that we account for a majority of the interconnection queue.

We are the most ready to provide the energy that AI needs over the next four years.

There are a few things that I think we will see during that period.

We will see consolidation. We will see acceleration of deal flow of projects that are on the cusp of being 2028 projects. We will see queue attrition, which we all know needs to happen. There are lots of projects that should not be in the queue. Projects that should be in the queue can benefit from the attrition.

MR. ALLEN: I could not agree more. The tax incentives have given us certainty. We are investing hundreds of millions of dollars in these projects. We just need to know what rules we are playing by.

We have benefited from a massive tailwind the last couple years. During that time, more than 80% of the projects we have built have enough domestic content to qualify for bonus tax credits. I am not that worried about tariffs. I am not worried about the project returns because the return is tied largely to use of US equipment.

MR. VAVRIK: FEOC is a problem.

MS. DELINE: The licensing and subcomponent language is a potential problem. There is a lot of focus on bringing refining of critical minerals to the US in short order. There is not a solar panel or a battery in the world that does not touch Chinese critical minerals.

MR. GHAZNAVI: What is more concerning for you: FEOC or the tax credit cliff for wind and solar?

MR. VAVRIK: FEOC.

MR. ALLEN: Agree.

New PPAs

MR. GHAZNAVI: Let’s move to utilities. Have you noticed any change in the pace with which you are entering into new power contracts or how utilities are approaching these agreements?

MR. FENZ: It is an interesting time to be having these conversations. If you want to sign a contract today, you have to think about how to mitigate the risks we have been talking about. Is mitigation possible? Yes. That is what we are working through now. We have not signed a PPA in the last 90 days, but will we sign one in the next 180 days? I think so. I think we are going to figure it out.

Chris Seiple's presentation before this panel showed the utilities are having to cope with increasing demand for electricity. They want to try to solve this problem, so we are having interesting conversations about how to do that.

The trick is connecting the dots to the supply chain. How much of the risk tied to uncertainty about supply chain costs will be borne by us and how much will be borne by the customer?

There are no answers yet, but we are going to try to get some deals done this year.

MS. SLUSSER: Same with us. I have also not signed a PPA in the last 90 days. We are seeing a lot more flexibility than we saw before.

MR. VAVIRK: Thank goodness. At last. Ultimately do you sign it? What is your risk exposure?

The good news is we are short energy. Prices should be going up. So the worst case is we have lost a PPA, but the next PPA is likely to be even higher.

If you are a small company, posting credit support to backstop obligations under a PPA is a big deal. It is usually at a cost of equity.

The winners are going to be bigger companies.

Everyone is culling their pipelines. We are picking our best 20% and focusing solely on them. We have frozen hiring apart from a few strategic hires. It is going to feel like the old wind days, maybe 15 years ago. You had the big guys and then you had a bunch of wildcatters who were double-liening their projects just to sign a PPA because that is what wildcatters do.

The disruption is going to be personal. There will be a lot of companies that were created in the last five to seven years that are not going to make it. It is an opportunity for the survivors because there will be projects for sale and good people available. Look for disruption as we shift to a better business model.

Data Centers

MR. GHAZNAVI: Chris Seiple talked a lot about data centers this morning. Is there a path for a partnership between developers and data center owners and operators to work together to help renewables?

MR. ALLEN: Yes, but what does that path look like? I agree with Chris's comments that data centers are likely to rely more heavily on grid electricity than behind-the-meter power supplies.

There are benefits to being connected to the network.

Our conversations with data center developers have been about where they have their loads, where we have our projects and where it makes sense to partner together. It is opportunistic.

MS. DELINE: I agree. We are spending a good amount of time on such partnerships. The private sector is usually a much better barometer than the public sector for where things are headed. If you look at how data centers are constructing their power supplies, it is an all-of-the-above approach because they have no other choice.

They are thinking about backup and redundancy in energy supply. They need black start. They need batteries to do black start. Deisel can’t ramp fast enough for them. There are going to be some really fun problems to solve.

MR. GHAZNAVI: We heard this morning that Amazon wants you to take on all of the development risk. Speaking from personal experience in working with data center companies, they are tech companies. They are not used to building power projects. They are less efficient in how they do it and how they manage construction risks and costs.

Would you consider some sort of build-transfer structure where you help the data center company by building the project and then selling the project at somewhat of a premium to mitigate against tariff and other risks?

MR. VAVRIK: Yes. That is part of being nimble. If that is what gets the project built, then let’s do it. Ultimately, it achieves the mission of cleaner capacity on the grid, which we know is where this is going.

Wind plus solar plus batteries plus nukes plus a little bit of natural gas. That is where we are headed.

Let's focus on our core competencies. They are real estate development, local permitting and maybe a bit of origination. The IRA lulled us into some rigid thinking that has just been disrupted, but that's okay because we are all intelligent people who can communicate well and can lead. For those of us who have been doing this for a few years, it is muscle memory. It is familiar territory. We have had to do this again and again and we have been successful at it.

MS. SLUSSER: A build-transfer agreement is a nice solution to the tariff and the IRA risk. The risk can be shared that way.

MR. GHAZNAVI: Let’s go to small modular reactors. We hear about these all the time. How real are SMR projects?

MS. DELINE: They are not expected to be economic at scale until mid-2035. There is a lot of runway between now and then. Nuclear got a little longer runway in the tax credit than wind and solar did, but not that much longer and nuclear needs it much more than we do. We are a long way from seeing SMRs to scale. The problem is not permitting but cost. SMRs are not competitive by a long shot.

Electricity Prices

MR. GHAZNAVI: We heard during the session before this panel that a group of 14 utilities is projecting 64,000 megawatts of combined load growth. The combination of significant load growth and the attacks on renewable energy projects are reminiscent of the 1973 OPEC oil embargo. The embargo left severe fuel shortages, and oil prices quadrupled in less than a year. Do you see the One Big Beautiful Bill having a similar effect on power supply and power prices?

MR. ALLEN: I will be controversial here. No, I don’t think so because a lot of people in the market are acting like we are. Regardless of what Congress does, we are safe harbored through 2028, and the world is going to change in the next four years. We are in head-down execution mode.

MR. FENZ: We expect power prices will eventually go up because of inflation, tariffs and changes in tax policy, but in the near term, not as much. Near term, we are still trying to get deals done at roughly our current revenue requirements with adjusters for future inflation.

MR. VAVRIK: What will be fun is the difference in PPA price for a project that qualifies for tax credits and for a project that does not. There will be new deadlines to complete projects to lock in tax credits. We are about to see the value of time to these data centers because we can try to accelerate construction for a price.

MS. DELINE: I’ll share an anecdote. The morning that the House passed the One Big Beautiful Bill, we received a call from an energy buyer whose trading desk happens to be in Canada. If anyone was following the markets, there was a pretty steep tick up in the prices for post-2028 electricity forwards. It was not correlated to gas times heat rate. It was correlated to something different, and that is what the Canadian trader wanted to understand. He wanted to know what was going on down here.

The demand growth that we are seeing is not price elastic. It is price inelastic. Customers will pay whatever it takes to get the electricity they need, as we saw in the nuclear deal announced yesterday. It is our collective job to make sure that the price stays as low as possible.

Re-Regulation Risk

MR. VAVRIK: The person not in the room is the state regulator. We are moving our attention back from Washington to the states. Look at Pennsylvania and the PJM capacity auction. I think that’s where we are moving. This is what the combined-cycle guys live through. Their business is working with state legislators and regulators because this is a regulated business, and we are not at those price levels. We have been below the radar for so long. Now we will be setting the price curve, and it will be higher.

The trickiest thing to manage is the political part. We need to work with the hyper-scalers to create a workable policy on cost allocation. Ultimately, the worst case for us is re-regulation.

First Energy promoted re-regulation legislation in Ohio, and it was defeated. Ohio is key given all the load growth. The combined-cycle industry led the effort defeat re-regulation. We all need to start working on the same thing. The state legislatures will not care who is driving cost up. They will focus solely on the fact that electricity prices are increasing.

MR. GHAZNAVI: We heard that 15% of US counties are now off-limits to renewable energy projects, and a Johns Hopkins study said the percentage is likely to double to 30% in the next two years. Is this consistent with your experience?

MR. FENZ: I came up through the development side of the industry, and I can say that it is more difficult today than it was in 2007 to develop new power projects. You will probably not find anyone in this room who disagrees with that. Has it become twice as hard to develop projects? Hard to say. What has not changed is the need for us to continue to engage thoughtfully with local communities. Be good stewards of the land and of the trust that communities place in us. It is a more challenging environment without a doubt.

We did not have grandmothers on Facebook in 2007. We have that now. It is easier for objectors to get organized and communicate with one another. These hurdles can be overcome by doing the on-the-ground execution work.

MS. DELINE: I agree with that. It is still not as hard as building a coal-fired power plant. There is a cultural issue, especially in rural areas where people feel like they are losing the agricultural feel. There are ways of managing that by where you put projects on farms. It is hard to pass a family farm to the next generation without some form of steady income, and solar gives the family that. The projects are not without benefits.

MR. VAVRIK: This is the perfect opportunity with the hyper-scalers. One thing they are really good at is local messaging. Let’s ask them to help. They understand that a data center will not work without power.

Final Thoughts

MR. GHAZNAVI: What is one positive note that you can leave us with?

MR. ALLEN: The positive is the projected load growth. Everyone will agree that things are hard right now. I would much rather have the opportunity, even though it means navigating the complexities, than be back when there was no load growth. Then we were all competing against each other. That is a huge positive for me.

MS. DELINE: I agree. I would just add that there will be some cleaning out of the interconnection queue and that needs to happen. Hopefully it will allow us and the utilities to move faster.

MS. SLUSSER: Hurricane and fire season is coming. Yesterday the east coast was shrouded in a haze from the Manitoba fires. Our product really matters. We are making a difference.

MR. VAVRIK: I have done PPAs at $150 a megawatt hour and at $15 a megawatt hour. The good news about now is that those willing to pay triple digits are viewing electricity as a strategic consumer product.

Our strength is the demand curve is strong. Let’s focus on what we do best which is focus on good sites, good local permitting and community engagement, and put it all together.

MR. FENZ: What gives me hope is that young people still want to work in this industry. It is always energizing to see the new crop of people out of college who want to join us. Hopefully that says something about the direction of travel for us.

MR. GHAZNAVI: We have time for a couple questions from the audience.

MR. DWYER: Vincent Dwyer, CEO of Energy Estate, an Australian company that is becoming active in the US. We are focused on large-scale development.

Shape is in some cases more important than price. How do you work with the load to deliver a load shape that they want rather than just saying I have solar and a battery, and I will deliver the shape I am able to deliver within that constraint?

MR. VAVRIK: Rely on the grid. The grid is there for a reason, and it does a very good job at filling the gaps for now.

As wholesale power prices go from $35 a megawatt hour to $100 a megawatt hour, folks will start focusing on efficiencies and how to combine things more than they did before.

If you look at GE Vernova and Siemens, a lot of their future growth is not the 100-MW to 500-MW kits, it is the 15-MW to 100-MW turbines. Everything is a gap filler until battery technology advances. Over time, the zero marginal cost units will be dispatched first.

Coda

MR. HUMBLE: Monty Humble, managing director of High Road Clean Energy. We are an early-stage developer in ERCOT.

I want to offer an anecdote and a statistic. The statistic is that we looked at the ERCOT generator interconnection status reports from 2012 through 2020, and solar projects that had signed interconnection agreements and had posted security were actually built at about a 20% rate. A lot of what we see in the queue is never going to be built. I suspect from conversations with people who say they are developing data centers that we will see a similar success rate on the data center side.

The anecdote is that in 2013, Panda Energy turned on two 1,000-MW combined-cycle units in Temple, Texas. Within a year, they were in the bankruptcy court and sued ERCOT because they claimed that ERCOT’s reserve margin projections were egregiously wrong. Before we get too giddy about demand growth, we ought to focus on what actually happens.