Your Essential Energy Sector Update - Week 2 of May
No fluff roundup for Energy & Utility professionals
☀️ Good afternoon Friday!
The weekend is almost here, and so is your essential energy sector update.
This Week’s Highlights
DOE Caps Indirect Costs: New limits of 10-15% for grant recipients projected to save $935M annually, following similar university caps announced in April.
White House Targets DOE Budget: 2026 proposal cuts $19.3B, primarily from IIJA ($15.2B) and renewable programs, while increasing nuclear security funding by 25%.
Energy Star Program Facing Elimination: EPA plans to end 30-year program that has saved consumers $500B despite opposition from 1,000+ companies.
Texas Power Price Warning: Study finds renewable restrictions could increase electricity costs 14% by 2035 while potentially reducing reliability during extreme weather.
Nuclear Expansion Explored: New Jersey seeks solutions for projected 10GW clean firm capacity need by 2035, issues RFI on new nuclear development amid growing data center demand.
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Regulatory & Policy Updates
DOE Caps Indirect Costs for Grant Recipients
DOE announced maximum indirect cost limits on financial assistance awards: 10% for state/local governments and 15% for non-profits and for-profit organizations, following a similar 15% cap for colleges/universities in April.
Projected savings: $935M annually
Applies to new and conditional awards only
Includes all fringe benefit costs within percentage caps
Secretary can modify thresholds when “necessary and appropriate”
White House Budget Proposal Targets DOE Funding
The 2026 budget proposal cuts $19.3B from DOE, primarily targeting renewable energy and infrastructure programs while boosting nuclear security funding.
Major cuts: $15.2B from IIJA, $2.6B from Energy Efficiency office, $1.1B from Science office
Increases NNSA funding by 25%
Overall DOE reduction: 18.2% (excluding NNSA)
Claims cuts target “Green New Scam funds” for “unreliable renewable energy”
Energy Star Program Elimination
EPA plans to terminate the Energy Star program after 30+ years of operation, part of broader agency restructuring announced Friday.
Program helped save $500B in energy costs since inception
Certified 25% of new U.S. housing starts last year
1,000+ companies lobbied to preserve program in April
EPA projects $300M in annual savings from reorganization
IRA Future Remains Uncertain
Congressional Republicans target IRA for spending cuts while facing internal divisions, as 26 House Republicans advocated preserving clean energy tax credits, particularly nuclear (45U) and tech-neutral (45Y, 48E) provisions.
Industry Innovation Spotlight
XL Batteries Targets China’s Battery Dominance
XL Batteries developing water-based organic flow batteries using petrochemical feedstocks to reduce dependence on China’s lithium supply chain.
Technology uses “global, ubiquitous” commodity chemicals
Company targeting commercial deployment “significantly before 2030”
China controls “90% of lithium battery supply chain” according to CEO
U.S. battery projects facing delays/cancellations due to tariff impacts
FERC Orders Advance Transmission Technology
ACORE report highlights how FERC Orders 1920/1920-A create framework for implementing alternative transmission technologies (ATTs).
Four key technologies: dynamic line ratings, advanced power flow control, transmission switching, high-performance conductors
Implementation barriers: insufficient value recognition, misaligned incentives, static planning practices
ATTs deliver faster deployment, lower costs than traditional wires solutions
25 case studies showed multiple reliability benefits from technology implementationdustry announced $100B investment through 2030 to build and buy U.S.-made batteries, aiming for 100% domestic supply for storage projects. The commitment adds $85B to existing $10-15B investments.
25 factories in development (11 operational/under construction)
Key projects: Tesla (TX refinery, NV expansion), Fluence (first U.S.-made LFP batteries shipping), LG Energy Solution (16.5GWh this year, +11GWh in 2026), Form Energy (iron-air batteries with 4-day discharge)
Market Movements
Texas Renewable Restrictions Could Spike Power Prices
Aurora Energy Research projects 14% wholesale power price increase by 2035 if Texas restricts renewable development, with reliability impacts during extreme events.
Economic impact: +$6.3M/year for typical 100MW industrial customer, +$225/year per household
Supply constraints: 6.5GW thermal capacity gap through 2035 due to turbine manufacturing backlog
Potential load shed: 1.8-3.1GW during extreme weather events
Economic cost of outages: up to $450M in direct impacts
Southeastern Transmission Planning Lags
Southeast Regional Transmission Planning hasn’t approved a new regional project in 10+ years despite economic benefits, according to Brattle Group study.
Potential savings: $8B from $5B transmission investment
Only U.S. region without recent regional transmission projects
Southern Company spent $52M importing power during Winter Storm Elliott
SERTP process coordinating 10 utilities across 12 states deemed “insufficient”
Battery Supply Chain Disruptions
Tariffs on Chinese goods causing price increases and project delays across battery industry, exposing deep supply chain vulnerabilities.
U.S. ranks “distant fourth” in lithium battery materials production
Equipment for U.S. factories still largely sourced from China
Sustainability Corner
Renewable Reliability Study Challenges Assumptions
Aurora research shows restricting renewables would worsen reliability in Texas due to thermal generation constraints.
Gas turbine deliveries quoted for 2029 and beyond by major OEMs
Texas could add only 17GW thermal capacity through 2035
Running backup generation described as expensive “last resort”
Report highlights correlation between renewable resources and system reliability
Energy Star Program’s Grid Benefits
Energy Star has helped reduce overall electricity demand, improving grid management for utilities.
Program guided purchases of 7 billion energy-efficient products
Typical household savings: $450 annually
Reduced peak demand helps utilities balance supply
Coalition cited grid security benefits from reduced overall energy demand
Operations & Maintenance Watch
New Report Analyzes Winter Storm Elliott Response
Telos Energy’s newly released study examines how Southern Company managed the 2022 Winter Storm Elliott through significant power imports at premium prices.
Import costs reached up to $4,000/MWh from Florida
Successfully avoided outages experienced by Duke Energy and TVA
Demonstrated clear value of regional transmission interconnections
Highlighted vulnerability of even well-prepared utilities during extreme weather events
Alternative Transmission Technologies Value
Grid-enhancing technologies offer immediate benefits while planning permanent transmission solutions.
Seven quantified benefits include congestion reduction and outage mitigation
Short payback periods compared to traditional transmission expansion
States can advocate for additional benefits consideration beyond FERC requirements
Technology can serve as bridge while more permanent solutions develop
Transmission Planning Underperformance
Southeast Regional Transmission Planning lacks independent staff and effective coordination despite covering 12 states.
No regional projects approved in over a decade
Missing $8B potential savings from improved planning
Growing investments in IRA-funded projects require transmission expansion
FERC Orders 1920/1920-A create framework for improvement
- Parker