A quick review of ten shifts, reversals, accelerations, and other changes.
I first started teaching my Clean Energy Finance course way back in 2015 so clearly I’ve had to make plenty of changes along the way, but this most recent break of four years was the longest hiatus in that period. This time around, the process of updating the course was challenging and even a bit disorienting. Here are the changes I’ve noticed and my thinking about how to incorporate them.
1. Renewables are cheap – so build already! (And integrate.)
The previous chapter of the energy transition, roughly 2010-2020, was primarily about falling costs for solar, wind, and batteries. The current chapter, as I understand it, is about the rapid build-out, and about integrating these no-longer-small shares of intermittent resources with storage, coordinated DERs, demand response, and other sources of flexibility.
Was this already true in 2021? Well, kind of – and the conversation only kind of reflected it. A lot of speaking and writing in 2021 still hadn’t fully absorbed the fact that renewables had become the lowest-cost new resources on most of the U.S. grid. And why would it be otherwise? At the end of 2018, wind and solar represented just 6.5% and 1.5% of electric power generation. In 2024, they made up 10.5% and 7.5% (including small-scale solar) – and their deployment had accelerated, with renewables and batteries making up more than 90% of new capacity deployed in the U.S. (and globally too). New realities sink in slowly; this reality has now, for the most part, sunk in.
The graph below from Lazard’s 2024 LCOE+ publication summarizes the situation: we’ve largely come to the end of the dramatic period of cost declines for solar and wind (in the U.S., at least), and we’re into a period of some stability of relative costs.
Source: Lazard LCOE+ 2024
2. All together now, “Electrification!”
When I taught this course in 2021, I was already talking plenty about energy efficiency, DERs, and EVs. But energy guru Saul Griffith had only just founded Rewiring America, and I certainly wasn’t yet saying “electrify everything” or even the word “electrification” much outside of transportation.
Those days are long gone. There has been a clear verbiage shift, representing (I believe) a clarity that, amidst a steadily decarbonizing grid, we simply need to…well, electrify everything. Yes yes, I know, people like David Roberts were using the term, but it wasn’t yet part of the zeitgeist as it is now. And in my defense, Griffith’s book Electrify didn’t come out until October 2021.
In class, we listened to an excerpt of Roberts’ interview of Ari Matusiak – highly recommended as an introduction to electrification. We also took full advantage of the resources at Rewiring America, including the Personal Electrification Planner, and I found it helpful to use Griffith’s ‘one billion machines’ framing for describing the challenge and the economic opportunity.
3. Corporate goals are coming due.
Corporate goals for renewable energy and climate action have been commonplace for a while now, but we’re into the next phase of achievement, scrutiny, and deliberation. On renewable energy in particular, Amazon’s announcement in 2024 that it had met its renewable energy goal years early provided a convenient way in to discussing these goals generally. Microsoft’s ‘pivot’ amidst its struggles with its admirable climate ambition provided another touchpoint.
Notably, the discussion following Amazon’s announcement elicited excellent reporting by the New York Times with a critical assessment of how exactly Amazon claimed to have achieved its goal. Those details – involving accounting for renewable energy that doesn’t directly serve Amazon assets, and the use of unbundled RECs – gave the class fodder for thinking critically about what it means to pursue a goal that is way beyond what the grid is delivering at the moment.
4. DERs and VPPs reach the utility playbook.
It was exciting this year to see how many new developments are nibbling away at the ways that utilities can make money. For many years, I have made the basic structure of the traditional regulatory compact – that is, the way we regulate and guarantee a profit for ‘natural monopolies’ that provide electricity – foundational material in the course. It defines electricity supply in most parts of the country (and even for electricity distribution in restructured markets), and since these entities and their infrastructure aren’t going anywhere, we badly need technical and financial innovation to help them to be levers of change.
A few highlights:
- DERs and VPPs as teammates: Virtual Power Plants (VPPs) have been around for a while, but there’s been a major leap forward in seeing them as opportunities for utilities. DOE’s Liftoff report on VPPs sums it up: “VPPs are aggregations of distributed energy resources (DERs) such as rooftop solar with behind-the-meter (BTM) batteries, electric vehicles (EVs) and chargers, electric water heaters, smart buildings and their controls, and flexible commercial and industrial (C&I) loads that can balance electricity demand and supply and provide utility-scale and utility-grade grid services like a traditional power plant.” (That’s my italicizing – didn’t want you to miss the part about utilities.)
- Examples abound: This was more theoretical in 2021 and examples were scarce, but now it’s clearly part of the utility playbook. The map below from RMI’s VPP flipbook shows the breadth, from residential solar+storage in Hawaii and smart thermostats in Arizona to residential battery coordination with Green Mountain Power in Vermont and Rocky Mountain Power in Utah. And some examples are scaling up with deep interoperability in mind, such as Portland General Electric’s PGE+ program – only EV chargers for now, but clear ambitions to coordinate a wide range of DERs with embedded tech aimed at maximally replicating what a traditional power plant can deliver.
- Big swaths of little bits? One new path is for utilities to procure batches of DERs at scale through what Sparkfund calls ‘distributed capacity procurements’ (DCPs). Sparkfund’s Pier LaFarge’s conversation with David Roberts provides a sweeping vision of how utilities can – and in his view should – sit in the driver’s seat as we roll out DERs.
See Rocky Mountain Institute‘s Virtual Power Plant Flipbook for on overview of VPPs and details on each of these utility programs.
These ideas will surely look different from one utility to the next, but harnessing utility expertise and aligning utility incentives in these ways could remove a long-standing barrier to the energy transition.
5. Storage is going bonkers, as we hoped it would.
Check out the shape of the curve below. I’m not sure there’s much else to say.
The drivers are pretty straightforward: intermittent renewables are cheap, but not temporally aligned with loads, so we need dispatchable power to address rising peaks; battery costs have fallen precipitously; and we’ve gotten good at grid-scale storage.
Yet the scale can be hard to grasp. I find it helpful to see battery storage the way EIA has started reporting it at times, i.e., as just another form of capacity. It’s clarifying to see it that way – below, as EIA’s projection for 2025.
Storage has taken off so strikingly that some in the energy industry feel threatened, which brings me to…
6. Everything is bigger in Texas. (This time, solar and storage.)
When I taught the course in 2021, Texas had just had its biggest solar year ever, with nearly 2 GW of new capacity pushing the state to just under 5 GW. As of last month, Texas passed 32 GW of utility-scale solar capacity. We’ve seen this coming for a few years. Indeed, in 2023, it was clear that Texas would blow past California as the number one solar state, and it’s about to do the same with utility-scale storage as well. (California still leads, but Texas is gaining amidst an accelerating national build-out.)
Remember that I said someone felt threatened by all of this storage? With the boom in solar and storage (to go with Texas’ long-standing leadership in wind), traditional fossil fuel interests in Texas have pushed a bill in the legislature to mandate more fossil fuels. Yes, you read that right, and the details are fascinating and wacky: SB 388, which passed 31-20 in the Texas Senate, would set a target for 50% of new power plant capacity to be “sourced from dispatchable generation other than battery energy storage.” Why? Batteries are serving Texas well – indeed, a recent analysis suggests that energy storage has lowered costs, improved reliability, and saved Texans $750 million since 2023.
Of course there’s no logic here, and this is a fossil-powered money grab to keep gas and coal as relevant as possible. But it tells us a lot about how important storage has become in Texas in a short time.
7. So many EVs!
I’ve been moderately obsessed with electric vehicles for years, but the only specific work I could have people do on transportation electrification before early 2021 was about buses. The selection of EVs was too small, and they were mostly luxury cars, and mostly Teslas. In 2022, I wrote a piece about consumer decision-making (Do we just need an easy ‘EV Chooser’ tool to improve adoption?), and my former student Rachel Cohen and I wrote a piece about EVs and the grid in 2021 (No, the grid isn’t ready for plug-in cars. But by the time the cars plug in, it will be.), but it was still hard to ask students to define a use case, select competing EV and ICE options, and look at the numbers. Now it’s possible – and rewarding!
While I was teaching that 2021 course, the New York Times published a simplified and visually appealing version of MIT’s Carbon Counter, a site showing the carbon-vs.-cost trade-offs for a range of vehicles. Though now outdated, it serves the basic purpose of showing the combined impacts of cost and GHG impact, but there’s enough information now in the public domain to do credible analysis of the EV vs. ICE decision. In general, the students hit it out of the park.
8. IRA is here…for now.
The second Trump term began in the middle of the course, so it was necessary to cast the main clean energy subsidies in the 2022 Inflation Reduction Act in uncertain terms. That said, it was a helpful teachable moment: Lazard’s LCOE publication and NREL’s solar installed system costs analysis both provide energy costs with and without subsidies, and despite all of the complaining out there, it’s still pretty easy to figure out if a vehicle qualifies for the current tax credits.
The uncertainty here is a big deal: IRA subsidies (or their disappearance) will make a difference in energy decisions as diverse and consequential as residential heat pumps, EVs, hydrogen, multifamily housing weatherization, and clean energy manufacturing.
I have no crystal ball, and fiscal, economic, and political uncertainty is at an all-time high, yet I see some reason to be optimistic that the IRA, or at least many of its provisions, will persist. Quickly, three reasons:
- Too many Republicans support too much of the spending. There appears to be a ‘mini-caucus’ of roughly twenty House Republicans who support the IRA generally and are willing to say so publicly. Considering the Republicans’ slim majority in the chamber, we should expect this group to make IRA repeal difficult.
- Oil and gas generally gets its way. The carbon capture and sequestration (CCS) provisions, specifically the 45Q tax credit, in the IRA are extremely lucrative, and some of the firms best positioned to take advantage of 45Q are in the oil and gas sector. They’re already lobbying to keep these subsidies in place.
- We need more energy. Analysts everywhere are telling us that, with the push for electrification and especially the rapid build-out of datacenters, we will simply need to generate more electricity. This need will become a full-blown emergency if Big Tech threatens to raise costs for regular people, and Republicans may sense that danger – and in fact the legislatures in Georgia, Virginia, New Jersey, and Oregon are considering or have passed laws to shield consumers from datacenter energy demand. Such laws are political winds in the sails of energy developers, and anything that slows down energy growth will, I think, run into resistance on the grounds of affordability, a watchword from the 2024 election cycle.
9. “Houston, we have (Pathways to Commercial) Liftoff.”
The Liftoff reports produced by the U.S. Department of Energy during the Biden Administration are an embarrassment of riches: detailed assessments of where we could go with advanced nuclear, hydrogen, carbon management, virtual power plants, geothermal, long-duration energy storage, and more. I recommend them to anyone who would like a glimpse of the technology opportunities and barriers. Although I didn’t incorporate much of the material in the course explicitly (ten-week quarters are too short), the reports provided some excellent background on VPPs and allowed me to give interested students some excellent reading tips. (A few students inevitably ask about nuclear, and the forward-looking Advanced Nuclear report pairs well with Lazard’s evidence-based reality check focused on current nuclear.)
10. Carbon removals have come of age.
In 2021, the carbon removal space was just getting going, and frankly, I wasn’t yet using the term carbon removal back then. I merely nudged the students back then with A Start-Up’s Unusual Plan to Suck Carbon Out of the Sky, The Atlantic’s provocative 2024 article about Stripe’s early funding of speculative removal technologies. It told an exciting story, but it still seemed pretty niche.
The article was prescient, as Big Tech has gone all in on carbon dioxide removals (CDRs). Microsoft, Alphabet, Meta, and partners in other industries now fund big procurements, and sometimes they publish the nitty-gritty details. I can immerse students in a serious discussion of what a good carbon removal credit consists of with the publicly available criteria guidance document produced by Microsoft and Carbon Direct. We can look at the portfolio approach big buyers are taking, including the granular details of the portfolio of Frontier Carbon, a collaborative effort launched in 2022 by Alphabet, Stripe, JPMorganChase, McKinsey, and others. And in CDR.fyi, there’s a transparent public tracker of the carbon removal market. It’s a different world. (Technically I’ve moved this content to a different course, but it was in my clean energy course back in 2021, and it would still work there too. I just wanted to mention the changes.)
Bonus item: The heat is on! (industrial heat and thermal energy networks)
I didn’t have space for it (curse the quarter system), but the next item on my agenda, and a possible future addition, is heat. Heat for various purposes – residential and commercial space heating, and industrial heat at a wide range of temperatures – represents roughly about half of global energy use and 40% of greenhouse gas emissions.
There have been potentially game-changing and truly mind-blowing technological advances in addressing our need for low- and high-temperature heat in a variety of settings, and I see the following projects and companies as truly inspiring.
- Rondo (https://www.rondo.com/) uses electricity to heat special brick to very high temperatures (i.e., above 1000º C) for industrial processes. The magic of Rondo’s thermal batteries is that they can ‘charge’ quite flexibly and hold their heat for many days, so it’s possible to rely entirely on intermittent renewables.
- Antora (https://www.antora.com/) is similar to Rondo, but with the trick that it can turn the heat back into electricity. The technology is more complicated and costly than Rondo’s, and the thermal batteries, consisting mainly of graphite-like solid carbon with some proprietary magic, will require the large and expensive factory Antora is now building. But the flexibility to deliver electricity or heat dispatchably gives it a huge advantage in the marketplace.
These companies are just the ones I’ve learned the most about. Last year, Forbes’ profile of Antora mentioned a long list of companies working on industrial heat. Worth checking out if you’d like to be optimistic.
Industry isn’t having all of the fun: the rise of thermal energy networks (TENs) – underground loops of networked bore holes and geothermal heat pumps – suggests that decarbonizing residential heat (and cooling) is far more feasible and lucrative than it seemed just a few years ago. The Volts podcast on the topic piqued my interest, but you should just watch the two-minute video from Eversource. And don’t forget to revel in the fact that this is the gas utility that is redeploying its core competences of digging trenches and laying pipe.
Shout-out for Lazard
Amidst all of this change, I must acknowledge the steady hand of Lazard: I remain annually grateful for Lazard’s updates of its LCOE publication, and I recommend it to anyone who wants to understand the evolution of energy finance in the U.S. I also appreciate that Lazard has consolidated its energy, storage, and hydrogen analyses into a single document.
And in case I forgot…
Did I forget anything? Please feel free to be in touch (jskov@uoregon.edu) if you think I missed something big. And if you’d like to browse the syllabus and leave a comment, you’ll find it here.
Quick thank-yous: to my MBA students in winter quarter 2025, who provided a thoughtful and patient sounding board as I processed all of these changes in real time; to my University of Oregon colleague and Oregon Center for Electrochemistry director Paul Kempler, with whom I taught a related course (Technoeconomic Analysis for Decarbonization) in 2023; and to Ryan and Jillian for proofreading and refining.
