Restrictions on renewables development could conflict with the goal of boosting electricity supply.
As President Donald Trump was hitting the headlines with the promised “shock and awe” of his initial fusillade of executive orders, his administration was making other significant changes that attracted less attention, at least at first.
One was the order from the Department of the Interior, signed by the acting secretary Walter Cruickshank, temporarily suspending the ability of its offices and bureaus to issue any authorisations for renewable energy. This includes leases, rights of way, contracts or any other agreements needed for development.
The restrictions are scheduled to last for 60 days, and while they are in place only nine specified senior officials at the department will be able to issue any of the authorisations needed for wind and solar projects on federal lands and waters. It seems likely that few, if any, approvals will be issued during that period.
The order is an near-mirror image of one issued under the Biden administration in its first week in 2021, imposing similar restrictions on fossil fuel development on federal lands. In itself, its impact on the wind and solar industries is likely to be modest. But a more obstructive regulatory environment, at both the federal and state levels, could hold back renewable energy development over the next few years.
On the campaign trail, President Trump generally aimed his rhetorical fire at wind power rather than solar, and he followed that through with his executive orders in his first week in office. He announced an indefinite ban on all awards of federal permits and leases for wind projects, both onshore and offshore. And administration officials will review existing leases for offshore wind, with a view to possibly cancelling them.
But while it is mostly wind power that has been targeted, solar has been catching some stray shots as well. “We don’t want windmills in this country. We’re putting an order on it,” President Trump told Fox News last week. He then added: “You know what else people don’t like? Those massive solar fields built over land, that cover 10 miles by 10 miles. I mean, they’re ridiculous, the whole thing.”
His comments echoed attempts in some states to introduce rules restricting solar development. In Utah, for example, proposed legislation would create a long list of new restrictions on solar facilities, including a requirement that they should be at least four miles apart, separated by “green space”.
Meanwhile, in another blow to US solar, state and local government agencies and non-profits that have signed contracts for grants under former President Joe Biden’s Solar for All programme have been told that their payments have been paused, E&E News reported.
It is still very early days for the new administration. But its initial moves have raised questions about how much tougher conditions will become for solar as well as wind power in the US.
Pressure to increase US electricity supply for AI remains, despite DeepSeek
The administration’s moves to slow renewable energy development are potentially in conflict with another of the President Trump’s goals: boosting US electricity supply to support data centres for artificial intelligence.
The release last week of the DeepSeek AI model, apparently offering much greater energy efficiency than other large language models, sent shares in some electricity companies tumbling on Monday. But by the end of the week, some of those losses had been recouped.
The claim that more efficient AI models will lead to lower electricity demand is unproven, to say the least. Indeed, the Jevons Paradox suggests the opposite may be the case, as I discussed in Energy Pulse last year.
For the administration, the need to increase electricity supply to support AI development is critical. In President Trump’s declaration of a “national energy emergency” last week, he said the ability of the US to remain at the forefront of technological innovation depended on a reliable energy supply and the integrity of the power grid.
The administration’s focus is firmly on “baseload” generation from fossil fuels and nuclear. The emergency declaration claims far-reaching powers for the administration to accelerate energy development, but its definition of “energy” conspicuously excludes wind and solar.
But by refusing to support wind and solar, and actively working to hold them back, the administration is restricting some of the most readily available sources of additional electricity supply.
Solar, wind and storage account for the vast majority of the new electricity supply capacity proposed in the US. The Lawrence Berkeley National Laboratory found that at the end of 2023, there were about 1.57 terawatts of proposed generation capacity waiting in interconnection queues to be connected to the grid, an amount that is greater than the total generation capacity currently operational in the US.
Solar (1.09 TW) and wind (0.37 TW) projects accounted for 93% of the capacity in interconnection queues. Storage projects totaled a further 1.03 TW.
The emergency powers claimed by the administration may allow it to move gas-fired power projects up the interconnection queues. But that strategy is untested and would likely face legal challenges. And even if gas-fired power projects can be expedited through the interconnection process in that way, they may still face challenges in securing the equipment they need.
Chevron and Engine No. 1, the activist investment firm, this week announced a partnership working with GE Vernova to develop gas-fired power plants to supply data centres. They aim to have their first projects, with up to 4 gigawatts of generation, operational by the end of 2027.
But new customers seeking gas turbines may have to wait longer. GE Vernova’s order book has been filling up fast. It booked orders for 41 heavy-duty gas turbines in 2023 and 68 in 2024 – a rise of 66%.
NextEra Energy suggested in its fourth quarter earnings presentation that new gas-fired power plants not already planned would not enter operation until 2030 at the earliest. Renewables and storage, by contrast, are available for deployment now.
Wood Mackenzie view
The restrictions on authorisations for renewables development on federal lands are not in themselves a significant blow to the US solar industry, says Sylvia Leyva Martinez, Wood Mackenzie’s principal analyst for US utility-scale solar. About 6 GW of solar capacity is under development on federal lands, but those projects have secured the permits and approvals they need. A further 10 GW has been announced for federal lands, but many of those projects would have fallen through anyway, and an extra delay of 60 days is unlikely to make much difference to how many go ahead.
For now, the more serious issue for solar in the US may be the fate of the production and investment tax credits (the PTC and ITC) that were expanded and extended in the Inflation Reduction Act (IRA) of 2022. Republicans in Congress are working on a budget package, with some aiming to pass a bill in April.
President Trump is seeking both to renew the tax cuts passed during his first term, which are scheduled to expire this year, and to make further reductions, including fulfilling his campaign promises of no taxes on tips, overtime or Social Security. To help pay for that, Republicans are proposing cutting all of the IRA tax credits for low-carbon energy.
If the PTC and ITC are scrapped entirely, it could have a significant impact on renewables investment. That outcome might seem unlikely at the moment, because the Republican majority in the House of Representatives is wafer-thin, and several of the party’s members of Congress have spoken out in support of the credits, but it is clearly a volatile situation and there are some difficult negotiations ahead.
If the administration is determined to crack down on renewables, it could extend the freeze on authorisations beyond the initial 60 days. But Wood Mackenzie’s Martinez says that would conflict with President Trump’s other goals.
“If electricity demand grows significantly, the industry needs to come up with ways to fill the supply gap. And renewables are available and cost-effective,” she says. “It wouldn’t make sense to create more restrictions that delay adding more renewables capacity.”
In brief
President Trump threatened Colombia with 25% tariffs on its exports to the US, which include crude oil, after the country refused to accept two US military aircraft repatriating deported migrants. A deal was quickly reached, with Colombia agreeing to carry the deported individuals on its own military aircraft, and the tariff threat was dropped.
Meanwhile, at the time of writing, President Trump was keeping up his threat to impose 25% tariffs on imports from Canada and Mexico on 1 February. Such tariffs, if imposed, would have disruptive impacts on US energy supply chains and fuel markets. However, the president suggested on Thursday that oil imports could be exempted from the tariffs.
Ed Crooks
Vice Chair Americas and host of The Energy Gang podcast
Ed examines the forces shaping the energy industry globally.
