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Artificial intelligence’s bubblitude fizzes with circular transactions, risk concealment, and exotic real-estate debt finance. In a frenzy to build AI data centers, Big Tech recently borrowed and bonded more money in 11 weeks than in the previous three years combined. More than a thousand new data centers are under construction or planned nationwide. Though they don’t yet know how many of those facilities will eventually materialize, energy suppliers are using AI data centers’ ravenous appetite for electrons to justify vast new investments in gas and nuclear power plants and the revival of uneconomic coal plants, claiming that all are needed to win the AI arms race and keep the lights on.

This trillion-dollar surge is transforming not only equity and capital markets but also the future U.S. power mix, locking in decisions that will shape energy affordability for decades. Smarter, cheaper, cleaner, less-risky options for powering data centers exist — if decision-makers choose them.

To meet all the expected new electricity demand, the U.S. has rapidly proliferated its gas-fired capacity under development in 2025. For context, at the start of 2024, only 4 gigawatts of gas-fired power in the U.S. development pipeline were explicitly earmarked for powering data centers. Today, over 100 gigawatts are.

And developers are proposing to invest over $400 billion to build more than 250 gigawatts of new U.S. gas-fired power plants — nearly tripling the gas power pipeline in a year, mostly driven by speculative AI projects subsidized by 37 heavily lobbied state governments.

Some data centers are even being mandated as ​“critical defense facilities” to be built on federal land, alongside otherwise uneconomical nuclear plants exempted from strict Nuclear Regulatory Commission scrutiny, all at taxpayer expense. This is happening, ironically, in Texas — the nation’s free-enterprise leader in solar, wind, and batteries. These renewable resources totaled 97% of its 2025 capacity additions, while fossil fuels amounted to 3%, and nuclear 0%. But in the past two years, planned gas plants in Texas nearly quadrupled, to 80 gigawatts. Only China has more gas plants under development than Texas, and nearly half the Texas plants are meant to power data centers directly.

We’ve seen this movie before. A quarter century ago, the coal industry warned that the Internet would overwhelm the grid without massive new coal capacity. Demand proved to be over tenfold lower. The dot-com bubble burst in 2000, permanently vaporizing $120 billion of electricity investments and embalming another $80 billion in infrastructure built long before it was needed. Today’s AI mania rhymes: Gas and nuclear vendors that can’t beat energy efficiency and renewables in competitive markets are leveraging hype into mandates and subsidies to rescue their losers.

Yet capital markets increasingly fear that AI looks like a bubble set to pop. That’s because each new data center effectively bets against at least 10 plausible outcomes that make the investment unwise: Scaling large language models could fail to achieve superintelligence; customer revenue could disappoint; inaccuracy may persist; smaller and leaner models might keep outperforming giants; copyright infringements may have to be paid for; data centers may go on quadrupling their energy efficiency every year; and flexible interconnection might stretch existing grid assets to serve all new demand.

Each new power plant also bets against the ways that data centers may access cheaper electricity, such as adding pop-up microgrids, colocating renewables and storage at idle gas plants, and buying efficiency, flexible load, storage, and clean supply from other customers. Betting against any one of these realities is risky. Betting against all of them strains credulity.

Many utilities are already trimming projections toward reality. Regulators in data-center hot spots are scrambling to shield customers from accelerating and politically sensitive rate hikes — already up 16% in Illinois, 13% in Virginia, 12% in Ohio, and 6% nationwide. Meanwhile, actual data-center demand still barely shows up in national totals. U.S. weather-adjusted electricity use fell in 2023, then rose by 2% in 2024, about one-twentieth due to new data centers. Nearly all the growth comes instead from air conditioning, electrifying buildings and vehicles, and reshoring industry. These needs can all be more cheaply met by better efficiency, and by another vast and potent competitor to fossil fuels: renewables.

Globally, data centers — roughly one-ninth of which are devoted to AI — use about 1.5% of today’s electricity. The International Energy Agency forecasts they’ll grow in this decade while renewable supplies grow 11 times more. Thus, solar and wind power, now swiftly displacing costlier fossil-fueled and nuclear power, dwarf the AI boom. Speed to market is paramount for AI developers, so many smart tech companies choose renewables to get their data centers built and running quickly and cheaply.

However, other AI firms have rushed for gas power, and that stampede has doubled gas-plant costs and backlogged gas turbine deliveries to past 2030, to the point that two-thirds of gas-plant project proposals have no named turbine manufacturer. This jam has pushed about a fifth of projects to substitute off-grid gas power, often using adapted aircraft jet engines. These turbine generators are easily available but engineered to meet peak demand, so they’re inefficient, noisy, and dirty. Running them constantly to power data centers would quickly inflate electricity costs and magnify public health damages. U.S. data centers were already projected to cause more than $20 billion per year in asthma and cardiopulmonary disease costs by 2030. Communities will not welcome additional pollution, water stress, noise, and rate hikes.

Gas markets magnify the financial risks of turning to gas to power data centers. New gas wells decline faster than old ones, while falling oil prices can make new drilling and refracking unattractive. At the same time, exuberant exports of liquefied American gas (and gas pipelined to Mexico) are pushing gas toward both global glut and domestic scarcity. The analysts at BloombergNEF predict that new gas-fired AI power could tip the 2025–30 U.S. gas surplus into a deficit, making volatile gas prices for heating, industry, and utilities spike. Indeed, BloombergNEF says wholesale gas futures for 2028–30 are unsustainably priced below production cost. And whatever the gas price, new gas-fired power plants are likely to become underutilized, subsidized assets that burden electricity customers long after today’s AI ebullience fades. While many data centers will be built, many won’t, and many won’t actually run at full tilt for decades to come — stranding gas plants and pipelines built to power them.

Even as national policy reinforces a gas lock-in, power choices that can scale at AI speed already dominate actual markets. Renewables captured over 92% of the world’s new generating capacity in 2024 and (including storage) about 90% of U.S. additions in 2025, with 93% expected in 2026. They are far cheaper than gas power, keep getting cheaper, sell on constant-price contracts for decades, and finance like low-risk annuities. They’re virtually unlimited and deploy at industrial speed.

Last May, China added 1 gigawatt of solar and wind power roughly every six hours around the clock. Pakistan displaced 30% of its utility power with solar in four years. Vietnam added solar equivalent to half of its coal generation in two years. South Australia generates 75% of its annual electricity from renewables and will reach 100% by 2027, driving 37 firms to propose relocating there to secure stable, low-cost power. Global metals giants Rio Tinto and BHP are relying on ​“renewable baseload” power to smelt aluminum and mine copper. Apple’s data centers have run on fully renewable energy for more than a decade. Google just announced that on-site solar, wind, and battery power will get its new 850-megawatt Texas data center online in 18 months, not five-plus years.

Critics have long claimed that variable renewables are too unreliable: The wind doesn’t always blow, and the sun doesn’t always shine. But evidence shows that intermittency concerns are now generally unfounded. Ten proven carbon-free balancing methods already make high-renewable grids reliable and economic in many countries. One of those methods, batteries, costs 96% less today than it did in 2010. BloombergNEF finds that battery-firmed solar and wind deliver steady power more cheaply than any new fossil or nuclear plants, and many operating ones. That’s why three-fourths of India’s new firm capacity today is solar-plus-storage.

Renewables also offer essential speed. In Sparks, Nevada, the world’s largest solar-powered microgrid continuously powers modular data centers. Solar panels laid on desert ground feed hundreds of second-life electric-vehicle batteries joined to form a superbattery. It was all built in four months and delivers electricity that’s cheaper, quieter, and more reliable than grid power; uses virtually no water; emits nothing; and is even portable. This is what clean, scalable, market-speed power looks like. Gas isn’t it.

AI does have some valuable applications. No one yet knows, though, if its revenues can repay the immense and swiftly depreciating investments required. But while markets are answering that trillion-dollar question, the AI boom must not be allowed to undermine American energy affordability and security.

Utilities and regulators can protect existing customers with a simple safeguard, giving teeth to vague qualitative pledges: Sell power to new data centers only under ​“take or pay” contracts that repay the entire electricity investment regardless. Those agreements should be backed by robust bonds or insurance, priced by capital-market risk experts (not by developers), to ensure that if an AI venture collapses, losses fall on the developer, not on households and small businesses.

If markets, and not mandates, determine the outcome, the conclusion is already clear. Gas, coal, and nuclear are too slow, too costly, and too risky to anchor the next wave of U.S. power demand. The only technologies that scale quickly enough, cheaply enough, and reliably enough for AI already dominate global additions. Policy will now decide whether Americans will enable the new energy system or protect the old — and whether they’ll pay for stranded gas plants or profit from the cheapest and most secure electricity in history.

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See more from Canary Media’s ​“Chart of the week” column.

President Donald Trump claimed in his Tuesday night State of the Union speech that Americans worry that ​“we are winning too much” under his administration. That assessment does not apply to everyone in the U.S., judging by recent public opinion polls, but it rings surprisingly true for the clean energy sector in 2026.

Each year around this time, the federal government releases its expectations for new power plant construction. The latest data drop shows clean energy is going to dominate this year, just as it has for many years running. Even as the Trump administration has employed novel and at times legally dubious means to block renewable energy growth, the power sector keeps choosing clean energy again and again — attracted by its low costs, speed to build, and climate and environmental benefits.

This year, solar will provide 51% of the new utility-scale electricity capacity slated to come online, batteries will deliver 28%, and wind will add 14%, according to the U.S. Energy Information Administration. Fossil gas, one of the polluting fuels most supported by the Trump administration, makes up only 7% of that new capacity. Coal, the other polluting fuel favored by the White House, does not appear in the ranks of power plants under construction.

This clean energy success is all the more notable because of the massive amount of total power plant capacity that developers are set to build in 2026: 86 gigawatts, more than the U.S. has ever added in a year. The U.S. constructed 33 GW less in 2025, which was the biggest yearly power plant build-out since 2002. Clean power plants are consuming nearly all of a vastly expanded pie, while gas gets a scant sliver.

Still, gas dominates the existing power plant fleet, producing about 40% of annual generation, compared with less than 10% percent from solar. But the renewable energy source’s odds of dethroning gas improve with each year that solar delivers such a lopsided share of new construction. In California, home to the world’s fourth-largest economy, ascendant solar generation is poised to imminently eclipse the gradually declining portion provided by gas.

The Trump administration’s anti-renewables machinations could slow this trend in coming years. Courts threw out an order to stop construction at five fully permitted offshore wind farms, but an effective blockade on new permits for projects touching federal lands could kill or delay installations that would otherwise get built in the late 2020s. Even so, solar developers hope they can keep the success going by serving the AI sector’s overwhelming demand for quick-turnaround power sources.

Whatever tumult comes after 2026, the U.S. will face the situation with tens of gigawatts of brand-new solar, wind, and batteries in its arsenal.

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An energy-affordability bill approved yesterday by the Massachusetts House of Representatives could speed solar permitting, strengthen protections for many electricity consumers, and boost EV charging infrastructure. It could also pull the rug out from underneath the state’s nation-leading energy-efficiency programming.

The legislation, passed in a late-night session on Thursday, takes a wide-ranging approach to combating rising power bills in the state, which faces some of the highest rates in the U.S. What has drawn the most attention, however, is its proposal to cut $1 billion from the energy-efficiency program Mass Save through 2027 in an attempt to lower the fees customers pay to fund it.

Bill sponsor Rep. Mark Cusack, a Democrat, argues that any cuts would target administration and marketing expenses and that Massachusetts would still be spending more per capita on energy efficiency than any other state. Opponents of the measure, though, say it would undermine job growth and slow progress toward the state’s emissions-reduction goals, while doing little to lower electricity costs now or in the future.

“I have to assume it’s going to mean layoffs in the energy-efficiency industry, and it’s going to mean a whole lot fewer heat pumps,” said Larry Chretien, executive director of the Green Energy Consumers Alliance.

Massachusetts has been grappling with rising energy costs for years, but the issue has taken on increasing urgency in recent months. And even in the Democratic-dominated state, the conversation around this bill reflects debates that are happening throughout the region — and the country — about whether to compromise climate and affordability goals for the possibility of savings.

Last May, Democratic Gov. Maura Healey proposed a sprawling affordability package, which received a hearing in June and proceeded no further. In November, Cusack introduced legislation that included many of the measures from Healey’s bill, but also called for slashing the Mass Save budget by $330 million, reinstating incentives for high-efficiency gas heating systems, and making the state’s 2030 emissions-reduction goals nonbinding.

The reaction from consumer and climate advocates was immediate and fierce: The bill would eviscerate the state’s decarbonization progress and do little to help residents struggling with high bills, they said.

Despite these concerns, the Telecommunications, Utilities, and Energy Committee voted in favor of the bill, sending it to the House Ways and Means Committee for further revision. There, lawmakers removed many of the contested measures from Cusack’s original proposal but tripled the proposed Mass Save funding cut, an escalation that has rankled members of the renewable energy community.

“Legislators are feeling the pressure to deliver immediate savings and are cannibalizing programs that actually function to lower electricity costs over the medium to long term,” said Ben Underwood, co-CEO of Boston-based solar company Resonant Energy.

The bill now moves to the state Senate energy committee, whose vice chair Sen. Michael Barrett, a Democrat, has a track record of assertive climate and clean energy action.

Undermining energy efficiency

Mass Save is run by the state’s major utilities according to a three-year plan approved by regulators. Its offerings include home energy assessments, low-cost insulation for income-eligible households, rebates on heat pumps and energy-efficient appliances, and no-interest loans for implementing these measures.

The proposed $1 billion cut represents about 22% of the program’s existing three-year, $4.5 billion budget, but the fallout would be more severe than those numbers suggest. The current budget period runs from 2025 through 2027; by the time a bill could be enacted, more than half of the planned programming would likely have been executed. The $1 billion would therefore come out of a much smaller pool of money, and the impact would likely go well beyond the administrative and marketing costs the bill prioritizes, opponents said.

“It would really, absolutely cripple the program,” said Kyle Murray, director of state program implementation at climate nonprofit Acadia Center.

Such a drastic reduction in funding would trade significant long-term financial benefits for short-term savings, he said. Mass Save spent almost $12.4 billion from the beginning of 2010 through the third quarter of 2025, and generated $42 billion in benefits for the state’s residents and businesses. The fees that fund the program make up roughly 7% to 8% of the per-kilowatt-hour charge on the average electricity bill, which would mean a household with a $200 monthly bill would save little if the fee were lowered.

“It seems like I am most likely going to save $12,” said Mary Wambui, a member of the council that drafts Mass Save’s three-year plan, upon analyzing the impact the legislation would likely have on her own monthly electricity costs. ​“You tell me why a bill should be called ​‘energy affordability’ if it doesn’t do anything for my energy bill?”

The funding cut could also result in lost jobs if business slows down for Mass Save’s network of thousands of home energy assessors and heat pump installers.

Some good stuff

Despite the alarm bells set off by the Mass Save portions of the legislation, other provisions are receiving more support. Solar, clean energy, and climate groups praised the bill’s passage.

The bill calls for strengthening restrictions on third-party power suppliers, which sell electricity directly to customers who don’t want to get their energy from traditional utilities. These companies routinely charge higher prices than default service, often targeting lower-income households, according to studies by the Massachusetts attorney general’s office. The legislation would allow municipalities to ban third-party suppliers from operating in their city or town, limit suppliers’ ability to offer variable rates, and increase the penalties for regulatory violations.

Solar power would also get a boost. The bill would require the state to establish an online permitting platform to speed up the process of municipal approvals for solar projects. It would also allow residents to install portable solar — do-it-yourself kits that send power into a home through standard outdoor outlets — and would double the limit for how much net-metered solar an individual municipality can own, from 10 megawatts to 20 megawatts.

Other bright spots include support for virtual power plants, geothermal networks, and EV charging infrastructure that lets battery-equipped vehicles both consume power and send it back to the grid. Still, advocates say they will now be focusing on defeating the Mass Save funding cuts as the bill moves to the state Senate for consideration.

“If the Senate can fix that, maybe 2026 won’t be so bad,” Chretien said.

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This analysis and news roundup come from the Canary Media Weekly newsletter. Sign up to get it every Friday.

No matter how you feel about data centers, we all rely on them: for reading this email, for scrolling through TikTok when you should be asleep, for streaming last night’s ​“Traitors” finale, and so on. And as AI becomes more powerful and more widespread, tech companies are building more of these power-hungry facilities — though exactly how many, and how much energy they’ll need, is unclear.

That fuzzy future is what makes data centers so complicated. Utilities that are rushing to meet data centers’ massive projected demand run the risk of building too many power plants, locking in more greenhouse gas and health-harming emissions, and passing unnecessary costs on to households.

It’s a dilemma that lawmakers on both sides of the aisle are finally waking up to. In the early years of the data center boom, governors and the federal government created tax breaks and other incentives to secure a slice, betting that the facilities would create jobs. But just last week, Illinois Gov. JB Pritzker (D) announced a two-year pause on tax incentives for data centers in his state. Similar rollbacks have been proposed in Maryland, Michigan, Oklahoma, and Virginia, Stateline reports.

Pennsylvania Gov. Josh Shapiro (D) has meanwhile called for data centers to make sure their power demand isn’t saddling residents with unfair costs. It’s a message with bipartisan support: U.S. Sens. Josh Hawley (R-Mo.) and Richard Blumenthal (D-Conn.) introduced a long-shot bill earlier this month that would ensure each new data center has its own power supply that doesn’t connect to the grid that the public relies on.

The idea that data centers should pay their own way is gaining traction with the White House, too. In his State of the Union address on Tuesday, President Donald Trump said he will push tech companies to promise that their data center build-outs won’t leave Americans with higher power costs. This ​“ratepayer protection pledge” wouldn’t be binding, however.

It’s a conversation worth following as congressional primaries begin this month, including in the data center hotbeds of Illinois, North Carolina, and Texas. A handful of Democratic candidates are already looking to differentiate themselves from crowded primary fields by going hard on data centers’ energy impacts, E&E News reports. And we can expect that Pritzker, Shapiro, and other governors and senators will do the same as they gear up their reelection campaigns for November — and as they consider running for the White House in 2028.

More big energy stories

Will these fossil-fuel plants ever shut down?

The Trump administration’s push to keep fossil-fueled power plants running past their prime is stretching into a new year.

Just this week, the Department of Energy ordered Pennsylvania’s Eddystone oil and gas plant to keep operating for another three months, stretching its life nearly a year past its planned retirement. It’s one of several fossil-fuel plants that were supposed to retire last year but are now racking up millions of dollars in costs for grid operators to contend with.

Those cost battles are coming to a head in the Midwest. Federal energy regulators already agreed to spread the cost of keeping a Michigan coal plant running across 11 states served by the Midcontinent Independent System Operator. And in Indiana, the owners of two coal-fired plants forced to stay open are currently looking for a similar arrangement.

The problem is only likely to grow this year as the Trump administration forces gigawatts’ worth of fossil-fuel generation to keep operating with no end in sight.

Supreme Court considers a major climate case — with a catch

The U.S. Supreme Court agreed this week to take up the fossil fuel industry’s attempt to shut down city and state climate lawsuits — but it could face a surprising obstacle.

The case centers on a challenge brought by the city and county of Boulder, Colorado, against two oil and gas companies. After the Colorado Supreme Court ruled in Boulder’s favor last year, the companies appealed to the U.S. Supreme Court. And now, the case could determine the fate of several dozen other local climate lawsuits.

But the EPA’s recent repeal of the endangerment finding could pose a problem for the fossil fuel companies it was intended to help. Because the rollback effectively erased federal climate and emissions regulations, legal experts tell E&E News, it could be harder for oil and gas companies to make their case against local protections.

Clean energy news to know this week

Virtual popularity: Virtual power plants — which tie batteries, solar panels, and other resources into energy management systems — are gaining popularity across the U.S. as states look to curb rising power prices without the need for grid upgrades. (Canary Media)

Shifting gears: The U.S. EPA will​“revamp” the Clean School Bus program and shift $2.3 billion in remaining funds away from electric buses and likely toward vehicles powered by natural gas, biofuel, and hydrogen. (Inside Climate News)

Solar finds a spark: A growing number of states are considering legislation to allow for ​“balcony solar” systems, which can plug in to conventional outlets and help users lower their utility bills. (Canary Media)

Escaping eternal limbo: The Interior Department is reviewing at least 20 commercial-scale projects that have been stuck in permitting since Trump took office, including the massive Esmeralda project in Nevada. (E&E News)

Resilient rebuilds: While Oregon loosened building codes for families rebuilding in the wake of devastating wildfires, state incentives have still encouraged some residents to opt for resilient, energy-efficient new homes. (Canary Media)

New federal funds: The DOE has announced a $26.5 billion loan, its largest ever, to help Southern Co.’s Georgia and Alabama subsidiaries build new gas plants and transmission lines and upgrade existing power plants. (Associated Press)

“Coal has become its curse”: A small Pennsylvania coal-mining town is on the verge of collapse under the pressure of noxious, smoldering underground fires; pollution; and economic challenges. (Morning Call)

Nuclear who? The Trump administration is considering awarding a $25 billion contract to little-known nuclear power company Entra1 Energy, which appears to have just a handful of employees, to build new energy infrastructure using money pledged by Japan to avoid tariffs. (Politico)

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One of the world’s largest steelmakers has deployed a novel heat battery at its plant in India to curb emissions from its dirty, energy-intensive operations.

Tata Steel is using the 20-megawatt-hour thermal-storage system, developed by the German startup Kraftblock, at a massive steel mill in Jamshedpur, in the eastern state of Jharkhand. The technology captures waste heat that’s generated during an early stage of the steelmaking process, then repurposes that heat to replace fossil gas used within the plant.

On Friday, the companies announced the project for the first time and shared the initial results. Kraftblock has been operating the heat battery since last May as part of a one-year test run with Tata Steel.

Based on how well the system has performed so far, the cleantech firm expects its thermal-storage technology will reduce the site’s carbon dioxide emissions by 22,000 metric tons per year — about the same as taking 5,100 gas-fueled cars off the road — and will eliminate about 110 gigawatt-hours of fossil-gas use per year.

“It’s performing better than we calculated,” Martin Schichtel, Kraftblock’s CEO and co-founder, told Canary Media.

The project is likely the first of its kind within the steel industry, experts say. But manufacturers in other industrial sectors are increasingly testing out thermal-storage technology as they look for cleaner ways to produce the scorching heat they need to make ceramics, chemicals, dairy products, and processed food and drinks.

Some of these systems draw electricity from the grid to generate and store heat in specialized bricks, rocks, or salt. They then supply that heat to industrial furnaces and boilers whenever companies need it. Kraftblock, which launched in 2014, operates a system like this at a PepsiCo factory in the Netherlands, where heat batteries are used instead of fossil gas to deliver steam and hot oil for frying potato chips. The company has developed a ​“stonelike” storage material from byproducts such as steel slag and copper-mine waste, Schichtel said.

Kraftblock’s system in India charges up using the excess heat from industrial processes, not electricity. Schichtel said that hard-to-decarbonize sectors like steelmaking have a ​“huge” potential to harness more of their waste heat, which is typically just lost to the air.

At the Tata Steel site, two Kraftblock units are connected to the ​“sinter” plant by a maze of thick silver pipes. Sintering is a highly energy-intensive process in which iron ore, limestone, and other materials are heated together to make lumps that are fed into blast furnaces — the hulking coal-fueled facilities that produce iron, the main ingredient in steel.

Tata Steel primarily uses fossil gas to generate heat to make the sinter, and later runs the finished product through large circular equipment to cool it back down. Kraftblock’s technology gathers the thermal energy that the cooled-off sinter releases and stores it in the batteries — at up to 500 degrees Celsius (932 degrees Fahrenheit). Tata Steel can then tap those batteries to warm the water needed for the sintering process.

Kraftblock’s system ​“enables us to significantly reduce our fossil energy consumption and emissions while improving process efficiency,” Subodh Pandey, Tata Steel’s vice president of technology, R&D, new materials business, and graphene, said in a statement to Canary Media. ​“This project is a significant step towards a greener, more energy and cost-efficient steel industry.”

Kraftblock declined to say how much its 20-MWh system cost to build or operate. But Schichtel said the project was developed without any subsidies, a fact that reflects the growing regulatory pressure facing Indian steelmakers. India is set to launch a carbon-credit trading scheme this year, and the European Union recently enacted a carbon-border tariff on polluting imports, which applies to metal from India.

Such policies are ​“definitely supportive” of clean technologies like Kraftblock’s, Schichtel said.

Globally, steelmaking accounts for between 7% and 9% of human-caused greenhouse gas emissions. Most of that pollution comes from heating coal in blast furnaces — a chemical process that can’t be directly replaced with thermal-storage systems. Steelmakers are pursuing other low-carbon methods instead, including producing iron using green hydrogen or with novel electrochemical processes.

Tata Steel, for its part, recently announced plans to invest $1.2 billion in advanced technologies at its Jamshedpur plant that are designed to reduce coal use in the ironmaking process and will capture carbon emissions from the steel mill.

Still, heat batteries like Kraftblock’s could provide a key way for steelmakers to start cleaning up their existing facilities today, even as they work to solve the much harder, longer-term challenge of fully decarbonizing, said Kaitlyn Ramirez, a senior associate in the Climate-Aligned Industries Program at RMI, a clean energy think tank.

Curbing steelmakers’ energy use is especially crucial, given how much renewable power cleaner steel mills are expected to need for steps like producing green hydrogen and operating electricity-driven furnaces and reactors. ​“Every amount of energy that we can reduce or make more efficient … makes the ultimate transition to near-zero [steel] production easier and much more feasible in the near term,” Ramirez said.

Kraftblock is part of the climatetech accelerator Third Derivative, run by RMI. The startup joined last year’s ​“industrial innovation cohort,” along with other industrial-heat-focused companies such as Advanced Thermovoltaic Systems, HyperHeat, and Noc Energy.

Nick Yavorsky, a senior associate at RMI who works with Third Derivative cohorts, said his team thought that Kraftblock was ​“on a very successful commercial pathway.” The startup had already raised 20 million euros ($23.6 million) in Series B financing when it joined the accelerator, and it had already deployed its thermal-storage technology at the Netherlands PepsiCo plant and at a ceramic manufacturing facility in Germany.

The Tata Steel project is ​“kind of a beacon” for thermal-storage startups looking to break into the steel sector, Yavorsky said. He added that he sees significant potential for scaling Kraftblock’s technology. Beyond the carbon-intensive blast furnace, steelmaking involves over a dozen upstream and downstream processes that require lots of energy and generate plenty of heat.

Worldwide, steelmakers operate over 480 integrated iron- and steelmaking facilities, according to Global Energy Monitor. India’s steel sector is growing particularly fast, and much of that new capacity is still expected to rely heavily on coal, underscoring the need to slash steel-related emissions wherever possible.

Schichtel said that Kraftblock and Tata Steel could consider expanding the heat-battery project after the full year of operations. He noted that the startup’s technology can store and manage heat up to 1,300 degrees Celsius (2,372 degrees Fahrenheit) — much higher than the sinter plant requires — which enables its technology to harness waste heat from a wide range of industrial processes.

“Not all steel mills will convert to hydrogen [ironmaking] within the next five or 10 years, right?” he said. ​“So each step you can do to minimize emissions, to increase energy efficiency for existing systems, is highly value-added.”

A correction was made on March 2, 2026: This story originally said that Third Derivative was run by RMI and New Energy Nexus. While New Energy Nexus co-founded Third Derivative, it is now run solely by RMI.

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Lauren Phillips’ balcony just became a power plant. A very small, carbon-free one.

A few weeks ago, the attorney set up what may be the first plug-and-play solar panel in the Bronx. The 220-watt installation, which is secured to the balcony railing with zip ties, has been a boon for the co-op apartment owner and mother of two.

“I have an enormous childcare bill every month. My electricity bills never go anything but up,” Phillips said. ​“Everywhere you turn, things are only getting more expensive.”

Plug-in solar nonprofit Bright Saver, which provided the roughly $400 panel to Phillips at no cost, estimated that it will produce about 15% to 20% of the electricity her family uses and save her about $100 per year. Every time Phillips gazes at the device, she said, she’s amazed that ​“this is just a thing that I plugged in, and I’m generating my own power.”

Phillips is one of the few intrepid Americans installing DIY solar without the permission of their utilities, taking advantage of a regulatory gray area. Only deep-red Utah has a law, passed in March 2025, that explicitly allows residents to plug in these devices. A few thousand households there have installed systems so far, Bright Saver said.

But other states, including New York, could soon follow Utah’s lead and unleash much broader adoption of solar panels that plug into a standard 120-volt wall outlet. As of Wednesday, Democratic and Republican lawmakers in 28 states and Washington, D.C., have announced their own legislation to make these systems permissible, according to Bright Saver and other sources.

As utility bills climb and contribute to broader cost-of-living challenges across the United States, legislators see the portable tech as an affordability tool. It literally empowers people, said New York Assemblymember Emily Gallagher, a Democrat who in September introduced a bill to pave the way for small-scale solar.

“People are extremely enthusiastic about it,” noted Gallagher, a renter who longs for a plug-in system of her own.

An 800-watt unit that costs $1,099 is capable of powering a fridge or a few small appliances for a sunny fraction of the day. That’s enough power to reduce bills for a New York household by $279 per year on average, Gallagher said. Assuming utility costs continue to rise, those savings could increase to $327 per year by 2035.

Plug-in solar is already booming in Europe. As many as 4 million households in Germany have installed the systems, which people can order through Ikea.

But in the U.S., outside of Utah, the tech is stuck in regulatory limbo. While the systems aren’t illegal, utilities often require users to sign an interconnection agreement before plugging in solar — just as they would for a large rooftop array. And those agreements can require fees and take weeks to months to get.

Utah did away with that interconnection requirement, so long as a nationally recognized testing laboratory certifies the solar device is safe to use. All the other legislation introduced since would do the same.

“The technology has evolved, and the law hasn’t caught up yet,” Phillips said. Putting up her own system might be ​“an act of solar civil disobedience,” she mused.

UL Solutions launched an initial testing protocol in January, which a panel of experts will refine in the coming months, according to Bernadette Del Chiaro, senior vice president for California of the nonprofit Environmental Working Group and former executive director of trade group California Solar and Storage Association.

There’s a real hunger for plug-in solar, said Cora Stryker, co-founder of Bright Saver. Momentum for these devices is growing faster than she expected.

Some zealous legislators announced bills out of the blue, Stryker noted. A few chambers even saw multiple lawmakers introduce plug-in solar bills independently of each other.

Missouri state Rep. Mark Matthiesen, a Republican, sponsored a DIY solar bill in December. Electricity rates are climbing fast in his state; families who get a system could save $30 to $40 per month and break even in as little as 25 months, he said.

“Then, everything beyond that is money back in your pocket,” said Matthiesen, who got rooftop solar panels in 2024. ​“If people can buy something to invest in themselves, to save them money down the road, then we as a government just need to let people do that.”

Matthiesen heard about plug-in systems last year from fellow legislators when they met up at the site formerly known as the National Renewable Energy Laboratory in Golden, Colorado. As for South Carolina state Rep. Mike Burns, another Republican who recently introduced a balcony solar bill, it was a passionate constituent who tipped him off.

A few proposals, including those in Missouri, Washington state, and Wyoming, have stalled. Some utilities have opposed legislation for permissionless systems, saying there are safety risks, including from energy being fed back to the grid and potentially overwhelming its capacity.

Advocates, however, say that this argument ignores the physics of electricity. Because these are modest systems, which proposals generally cap at a size of 1,200 watts (that’s up to a sixth the size of the typical rooftop array), a home’s appliances will quickly gobble up the power they produce, according to Del Chiaro. Very little, if any, energy will flow back onto the distribution grid.

Balcony solar bills in New Hampshire, Vermont, New Jersey, and Illinois look on track to pass, according to Stryker. A proposal in California — a potentially massive market as the state with the second-highest electricity prices and largest state economy in the nation — is in committee. Stryker anticipates that still more lawmakers will announce legislation for the up-and-coming tech this year.

For Phillips, balcony solar is more than a means to save money; it’s a step toward a healthier future. She’s a third-generation native of the Bronx, an area disproportionately burdened by noxious pollutants.

“I was actually hospitalized with an asthma attack last year,” Phillips said. ​“For me, anything that we can do to green our power grid, to reduce pollution, is a matter of justice — especially for people who live where I live.”

Phillips has been talking to friends and family about her mini power plant. ​“Everybody wants one,” she said. States simply need to pass their portable solar bills to open the floodgates, Phillips noted.

“I can’t wait to see solar panels peeking out of everyone’s balcony.”

A correction was made on Feb. 26, 2026: This story originally misstated that Lauren Phillips is a renter. She has a co-op apartment. An update was also made on Feb. 26 to include legislation in Georgia, increasing the number of states from 27 to 28.

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Across Illinois, dozens of communities are locked into contracts to buy power from the state’s biggest coal plant for decades to come. But two cities in search of cheaper, cleaner energy want out.

The Illinois Municipal Electric Agency, a nonprofit that procures power for 32 municipal electric utilities, has been asking its members to extend their commitments to buy energy through the group until 2055, even though existing contracts don’t lapse for another decade. Most communities signed on, but two that account for almost half of IMEA’s power demand — the Chicago suburbs of Naperville and St. Charles — have rebelled, declining to renew their contracts past 2035.

A major reason: residents’ desire to get cleaner energy and break ties with the Prairie State Energy Campus, a 1.6-gigawatt facility in rural southern Illinois that is the state’s largest coal plant. IMEA owns 15% of Prairie State, which makes up over a third of the agency’s power portfolio. IMEA also has an ownership stake in the Trimble coal plant in Kentucky, meaning coal represents almost half of its generation assets.

Since the two cities aren’t planning to re-up with IMEA, they are free to negotiate power supply deals with other companies that they hope can provide renewable energy and cheaper rates.

“We don’t want to have financial responsibility for burning coal. That’s what this is all about,” said Ted Bourland, a Naperville resident who belongs to the volunteer community group Naperville Environment and Sustainability Task Force. He said that task force members and city leaders have already talked with power suppliers, like Constellation and NextEra, that indicated interest in providing Naperville with energy, including renewables.

The cities’ refusals to renew commitments involving the coal plant may seem procedural or mundane at first glance. But the saga shows that residents can successfully demand a say in where their energy comes from. The effort is also an example of how communities are moving to ditch coal power even as the Trump administration works to prop up the declining industry.

Challenges still lie ahead for Naperville and St. Charles. It may prove complicated for them to find new deals that prioritize clean sources, as proliferating data centers in the region race to secure energy, especially renewables, to help tech giants meet their climate goals.

“You’re a municipal utility in northern Illinois, you have a decent load,” said Mark Pruitt, an energy consultant and Northwestern University adjunct professor who formerly ran the state agency that procures energy for Illinois’ two biggest utilities. ​“But you’re not as large as the data centers that are all competing for capacity in northern Illinois. What makes you think you’re going to compete favorably with the data centers?”

Bourland said Naperville could consider continuing with IMEA down the road, especially if the agency can offer a deal with more renewables.

But IMEA says that it needs promises of future investment from its members to construct or acquire new generation — including renewables.

“​Without extensions beyond 2035 with our member cities, IMEA cannot procure new, favorable 20-year renewable energy agreements,” said Staci Wilson, IMEA vice president of government affairs and member services. She added that other municipalities extending their commitments allowed IMEA to contract for 150 megawatts of solar in 2024.

Wilson said that IMEA would be ​“open to discussions” with Naperville in the future, though it would consider market conditions and other factors in deciding whether to renew with Naperville at a later date.

A bet on coal

Prairie State was developed starting in 2007 by the utility American Municipal Power and the coal company Peabody Energy, owner of a nearby mine that serves the plant. The plant cost $5 billion to build and began operating in 2012. Under a complicated structure, the complex is owned by nine electric utility agencies, including IMEA, that procure electricity for more than 200 municipalities across eight states.

The communities were promised that Prairie State would provide stable and affordable energy rates. However, the deals became problematic for some towns, which struggled to cover the plant’s construction costs and even faced bankruptcy, since they had taken on debt to finance the investment and didn’t receive as much revenue or power from the plant as expected in its early years. Peabody sold its ownership stake in Prairie State in 2016, leaving municipalities to bear a larger share of the debt.

Under IMEA contracts, residents pay rates that may be higher or lower than what other Illinois residents pay, depending on fluctuations in the power markets. Over the coal plant’s life, their bills have been slightly higher than they would have been with ComEd, the utility serving most of the Chicago area, according to an analysis by Pruitt that was commissioned by Naperville. In addition to their power bills, the municipalities will be paying through 2035 for the cost of building the coal plant. Since IMEA is a part owner of the coal plant, its members can benefit from the sale of the facility’s energy when power prices and power demand are high, making the plant’s energy competitive on the market. Conversely, when market prices are low, coal plant ownership is not as good a deal.

In recent years, scores of coal plants have closed because they can’t compete with cheaper energy sources. In 2021, clean energy think tank RMI published a report finding that customers would likely save money if Prairie State were replaced by clean energy sources

No votes

In 2024, IMEA began asking municipalities to renew their contracts through 2055. So far, 29 have done so. The village council in the wealthy Chicago suburb of Winnetka voted for renewal in June 2025, despite opposition from residents who wanted cleaner energy.

But pushback in St. Charles yielded a very different result.

“Over the course of more than a year and a half, we consistently showed up at city council meetings, we consistently met one-on-one with the city councilmen and the mayor,” said resident Debi Mader, retired from a long career in marketing for Sears Holdings. ​“We got enough people interested in the topic — it’s not a very sexy topic.”

Finally, in August, St. Charles officially declined to renew its IMEA contract.

Residents in Naperville — IMEA’s largest energy user — similarly rallied opposition to renewing the contract. Bourland said that St. Charles’ decision gave Naperville advocates hope that they too could resist the agency’s proposal.

In September, Naperville sent IMEA a proposed contract calling for mandatory net-zero emissions by 2050. The agency countered that it would ​“endeavor to achieve” carbon neutrality by 2050, but declined to set binding targets.

On Feb. 3, the city council voted 6–3 to cease contract negotiations with IMEA.

“I am over the moon,” Bourland said. ​“This is a reward for over two years of focus. It was an uphill climb.”

Charting a cleaner course

As St. Charles and Naperville seek to distance themselves from Prairie State, Illinois as a whole still faces tough questions around the plant’s future while the state works to decarbonize. The facility has long enjoyed support from labor unions and some Illinois politicians, and spiking demand from data centers as well as federal politics could make it tough to close.

Prairie State is billed as utilizing ​“clean coal” technology, and Illinois leaders have long hoped that carbon capture and sequestration will be successfully implemented at the plant. But there’s been little progress toward that goal, and the concept of carbon sequestration is highly controversial in southern Illinois.

A 2024 study by the Frontier Group ranked Prairie State as the 12^th worst climate polluter of any industrial facility nationwide. The plant also spews significant amounts of health-harming pollutants like sulfur dioxide and nitrogen oxide.

At Naperville’s Feb. 3 city council meeting, 15-year-old high school student Adi Julka lamented, ​“We are, in effect, the dirtiest city in all of Illinois,” since the community is the largest IMEA member. ​“We are complicit in both the damage to our environment and everyday Illinoisans’ financial and physical well-being.”

Illinois’ landmark 2021 Climate & Equitable Jobs Act nearly failed because of pushback to its requirement that Prairie State reduce its emissions. The law not only requires all fossil-fuel generation to cease by 2045, but also mandates Prairie State specifically to reduce carbon emissions by 45% by 2038, which would likely mean closing one of its two units.

But IMEA noted in an October memo to Naperville that the federal government could order Prairie State to keep operating regardless of emissions mandates. In the past year, the Trump administration has ordered several coal plants to keep running beyond scheduled closure dates. IMEA also noted that Illinois’ 2021 climate law contains exceptions from fossil-fuel emissions limits if needed to maintain grid reliability.

Indeed, reliability concerns loomed at the two-and-a-half-hour Naperville city council hearing this month. Residents with a group called Affordable Naperville, for example, argued that extending the IMEA contract is crucial to ensuring predictable energy supplies in an uncertain future.

“Current headlines warn of increasing stress on the grid, price spikes as demand surges from things like data centers, electric vehicles, and economic growth,” said longtime resident Patrick Hughes.

Other residents argued that the quickly changing energy landscape is all the more reason for Naperville to weigh its options and bide its time, rather than rush to sign a contract committing it to an outdated energy source — coal — for many years into the future.

“The city spoke,” resident John Doyle said. ​“We want a greener option than what IMEA has to offer.”

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With utility bills rising fast, an increasing number of states are looking to virtual power plants as a potential solution.

As of last year, 34 states have programs that call on utilities to use smart thermostats and water heaters, batteries and EV chargers, and energy management systems at businesses and factories to combat rising electricity rates.

A dozen states are considering legislation this year that could launch or expand VPPs, including Michigan, Minnesota, New Jersey, and Pennsylvania. Similar bills passed in Illinois and Virginia in 2025 and in Maryland and Colorado in 2024.

The thesis behind these policy pushes is straightforward. Utilities can’t build new power plants or expand and upgrade their grids quickly enough to meet fast-growing electricity demand. Building out that infrastructure is one of the biggest drivers of rising utility rates, though not the only one.

Paying customers to lower their power use or share electrons they’re generating or storing could be a faster and cheaper solution. That approach could reduce the need to build and run expensive peaker power plants — or help avoid or defer costly grid upgrades to serve those peaks — and curb rate increases for all customers, not just those being reimbursed to supply it.

“People think about their neighbor who put solar on their roof to save on their own electricity bills,” said Mary Rafferty, executive director of Common Charge, a coalition that promotes VPPs. ​“But if we can collectively aggregate all the sources of power from homes and businesses, everybody gets the benefits of building out a more affordable grid.”

And they’re already working. Collections of these customer-based resources currently provide hundreds of megawatts of capacity in California, Texas, New England, and Puerto Rico, matching the scale of large power plants, if not the full spectrum of roles they provide.

The limits and potential of VPPs

The trick is establishing programs that can deliver those widespread benefits in a way that makes utilities and regulators comfortable.

Right now, most of the country’s VPP capacity is concentrated in old-school ​“demand response” programs that pay big power users to reduce their electricity use during grid emergencies. This tried-and-true approach has seen success, but it also faces limits in combating the broader cost pressures driving up utility bills.

There is far more potential in tapping the distributed energy resources, or DERs, that people are buying anyway. The U.S. Department of Energy has calculated that the country could achieve 80 to 160 gigawatts of VPP capacity by 2030, roughly three to five times what’s out there today, from these ​“demand side” resources. That could save utility customers about $10 billion in annual grid costs.

Jigar Shah, the longtime clean-energy entrepreneur who led the Biden-era DOE office that produced that analysis, has since made VPPs a focus of his advocacy work at groups like Deploy Action and the VPP Convergence Project, and in his relentless podcasting and social media messaging. In Shah’s telling, the argument for more VPPs can be summed up in a basic equation: the volume of electricity sales across utility grids divided by the cost of keeping that grid going.

Simply put, utilities must recover enough money from customers to pay off the costs of delivering power. That means ​“utility rates are determined by how much investments [utilities] make, which is the numerator, and how many kilowatt-hours they sell, which is the denominator,” he told Canary Media. ​“You want the numerator to be smaller, and you want the denominator to be bigger.”

Virtual power plants can rebalance that equation in customers’ favor, by bringing new energy users online at lower cost than what utilities would otherwise spend. ​“If you can reduce the numerator some — you can’t get rid of all of it — and you can increase the denominator by bringing load online faster, you lower rates.”

Along with the high cost of building new power plants and expanding and maintaining poles, wires, transformers, and substations, utilities face additional costs and bottlenecks in getting additional sources of electricity online. Gas turbine manufacturers are backlogged through the end of this decade, and the cost of gas power plants has grown significantly over the past few years. Meanwhile, solar and wind are constrained by both a too-small transmission grid and Trump administration policies.

In short: It’s hard for utilities to get the power they want right now at any cost, and VPPs can help.

In fact, the need to connect more customers to the grid is the most immediate pressure driving utilities to revisit VPPs, Shah said.

The artificial intelligence boom has put the limitations of the existing grid into sharp focus. Prospective data centers are being told there’s not enough gigawatts to serve them, even as the cost of expanding future capacity to meet their demands is pushing up rates in data center hot spots. But the fundamental issues are not new. The same constraints have made it hard for EV charging depots and other power-hungry customers to get connected in other parts of the country, he noted.

“Utilities are responsible for economic development in their regions. And they’ve been failing to support economic development, because interconnection timelines have been a lot longer than they want them to be,” Shah said.

Utilities have long been uneasy about relying on customer devices they don’t directly control. The biggest VPPs in the country remain tied to providing emergency grid relief, rather than being included in long-term plans that would allow them to serve as an alternative to building new power plants or updating the grid. Most of the regulatory and legislative directives pushing utilities to use VPPs are taking an incremental approach — launching pilot projects, testing their capabilities, and then scaling up over time.

But as Shah pointed out, utilities have had more than a decade of experience with DERs to build on. ​“All that piloting we’ve done since 2012 is ready for prime time.”

“The first opportunity”

Residential VPP capacity tends to start with smart thermostats and controllable air conditioning and electric heating that can be modulated to reduce peak-power stresses. This may leave people feeling hotter or colder than they’d like. But energy-efficiency improvements and smart precooling or preheating strategies can minimize those impacts — and appropriate payments can make the discomfort worth it. Meanwhile, some appliances, like water heaters, can be turned off without people noticing, as long as they’re not turned off for too long.

Solar systems, batteries, and EVs bring something more to the table: the potential to generate and store power that can go back to the grid. Solar-battery VPPs from companies like Tesla and Sunrun, or ​“bring-your-own battery” programs managed by utilities, are providing big boosts to grids in Puerto Rico and states including California and Vermont. And ​“managed charging” programs for EVs are a key tool for utilities to turn a potential grid stress into a grid asset — or even to tap EV batteries in ​“vehicle-to-grid” programs.

Traditionally, utilities have managed these technologies separately and slowly scaled them up. It’s also important to remember that investor-owned utilities earn guaranteed profits for investments in power plants and grids, which disincentivizes them from pushing hard on alternatives that might erode those profits — including VPPs.

But with energy affordability now driving big political pushback in Virginia, New Jersey, and other states, VPP advocates argue that it’s time to move fast — and that state lawmakers can set the terms for making that happen.

“We’re looking at legislation as an opportunity to ensure that the virtual power plants are robust,” said Chloe Holden, a senior principal at Advanced Energy United, a clean energy trade group. ​“For us, that means they have multiple DER types, they leverage traditional demand response, they often have goals attached to them in terms of scale and timelines that we think are achievable but ambitious — and that they are set up to compensate DERs for a number of different grid services, and that those grid services expand over time.”

To be clear, utility cost pressures have been building for decades, and VPPs won’t offer immediate — or complete — relief, she said. But the traditional approach of adding more poles, wires, and power plants is what’s causing costs to rise in the first place.

“This is really the first opportunity that legislators and utility regulators have had to make us build in a more affordable way,” she said. ​“It used to be true that all utility infrastructure was seen as necessary to control peak load, and that peak load was something we didn’t have any control over. That’s no longer the case.”

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This article originally appeared on Inside Climate News, a nonprofit, nonpartisan news organization that covers climate, energy, and the environment. Sign up for their newsletter here.

In the 2021 Bipartisan Infrastructure Law, Congress voted to invest $5 billion in accelerating a phaseout of diesel school buses across the country, a move meant to protect students from harmful pollution and reduce greenhouse gas emissions.

But the Clean School Bus program has been on hold since President Donald Trump took office, with $2.3 billion still unspent.

Last Thursday, the Environmental Protection Agency announced what it called a ​“revamp” of the program, signaling it would no longer favor electric school buses, where 95 percent of the money had been spent under President Joe Biden. Instead, the Trump administration is seeking to move to ​“a broad range of options,” including buses fueled by natural gas, biofuel, or hydrogen.

Such a shift could lock grant recipients into investments in school buses that generate significant climate pollution for years, but EPA Administrator Lee Zeldin said it is designed to provide school districts with increased choice and more affordable options.

“The Clean School Bus program has been a disaster of poor management and wasteful spending of taxpayer dollars,” Zeldin said in a statement. ​“Today, EPA takes the next step to set the program straight. Americans can rest assured that moving forward, the program will be safe, effective, and use reliable forms of American energy.”

How Clean is ​“Clean”?

In announcing the changes, the EPA noted that the law has always allowed for a wider range of fuel options than electric school buses. Indeed, the law specifies that money can be used for ​“alternative fuel” vehicles, defined as ​“liquefied natural gas, compressed natural gas, hydrogen, propane, or biofuels,” as long as the EPA administrator certifies it will reduce emissions.

But the law does contain a provision requiring that at least 50 percent of the Clean School Bus funding be allocated each fiscal year for ​“zero-emission school buses.” In the U.S. market, experts say that means battery-electric buses.

“It appears that EPA may be trying to stretch the definition of ​‘clean’ school buses to include more buses that run on highly polluting fossil fuels,” said Melody Reis, federal policy director at the advocacy group Moms Clean Air Task Force, in an email. ​“But the agency is still required to award at least 50 percent of funds to electric school buses.”

The EPA announcement was critical of electric buses, asserting that under Biden, the Clean School Bus program ​“forced unsafe and unreliable electric buses onto American schools.” It cited the example of Quebec’s Lion Electric, which filed for bankruptcy in 2024 after selling a reported 3,400 buses in the United States. The company’s new investors announced last year that they would not honor warranties on those vehicles.

But other bus companies with electric school bus lines have expressed a continued commitment to the market over the past year, including Blue Bird Corp., headquartered in Macon, Georgia, and Thomas Built Buses, a subsidiary of Daimler Truck North America LLC, which manufactures its vehicles in High Point, North Carolina.

Critics of the Trump administration see the planned changes to the Clean School Bus program as in line with its other moves to halt the U.S. transition away from fossil fuels, especially the EPA’s repeal of the endangerment finding on greenhouse gas emissions one week earlier.

“Once again, EPA is clearly demonstrating that it plans to fund fossil fuels and prioritize polluting corporate interests over our children’s health and our future,” said Katherine García, director of the Sierra Club’s Clean Transportation for All program, in an email. ​“Considering we have the funding, technology, and charging infrastructure to deploy electric school buses, no child should have to inhale carcinogenic pollution each day on their way to school. Sacrificing young lungs and futures to prop up corporate polluters is indefensible.”

The majority of the nation’s 500,000 school buses are diesel-powered, and an EPA study released just prior to passage of the infrastructure law estimated that 40 percent of the fleet had been in circulation for more than 11 years. Unlike many other diesel vehicles — trucks that haul loads on highways or tractors that plow farm fields — diesel school buses traverse residential areas daily, exposing residents to high levels of particulate matter and other pollutants. Studies have shown a significant reduction in respiratory illness when school bus diesel emissions are eliminated.

But switching to electric buses has been a difficult decision to make for chronically cash-strapped public school systems. A 2024 report in Resources for the Future’s magazine put the average price of an electric school bus at $352,000, or three and a half times the price of diesel buses, which typically cost less than $100,000. Although electric buses have lower maintenance and fueling costs for school districts, those savings typically have not been enough to offset the higher up-front cost of electric school buses unless they are subsidized.

The Clean School Bus program was meant to help school districts overcome the cost hurdle. And by increasing the number of electric buses purchased, the program was designed to drive the kind of investment in manufacturing facilities and supply chains that would lower the cost of the zero-emission vehicles over time.

The revamped Clean School Bus program Zeldin outlined would be far less ambitious. It still could reduce local air pollution significantly, depending on what type of buses districts purchase. But it is likely to offer only modest reductions in greenhouse gas emissions, and would not aim for the kind of industrial transformation the Biden plan was seeking.

For example, switching to natural gas buses instead of electric would mean lower up-front cost for school districts (and less need for federal subsidy money); they sell for $25,000 to $50,000 more than diesel buses, according to federal studies. Districts would have to invest in fueling stations, as they would need to set up charging stations for electric buses. The cost of fueling with compressed natural gas is currently 20 percent less than diesel. School districts also could reduce local pollution with natural gas buses, which generate up to 90 percent less particulate matter than diesel. Smog-forming NOx pollution could be 50 to 90 percent lower if the buses are equipped with low-NOx engines. But carbon emissions would only be up to 20 percent less than the greenhouse gas pollution from diesel buses.

Electric buses generate less than half the carbon emissions of natural gas buses, according to an analysis by the Union of Concerned Scientists that took into account climate pollution from the electricity needed to charge the buses. In some parts of the United States, where the electric grid is cleaner, the climate advantages of electric buses are even greater — about 85 percent less carbon emissions than natural gas buses in upstate New York, where the grid relies heavily on hydropower, nuclear power, and wind energy.

Because buses are a large capital spending item for school districts, the carbon emissions of newly purchased natural gas bus fleets will be locked in for years, with the help of subsidies from the Clean School Bus program.

“Ultimately, this means more pollution in the air our children breathe,” Reis said.

Under the Biden administration, the Clean School Bus program funded replacement of 8,900 school buses in 1,300 school districts, 95 percent of them zero-emission battery-electric vehicles. The Biden administration made $965 million available when the most recent round of funding opened in fall 2024, doubling the offering of the previous year, when applications far surpassed the money available. Applications closed just before Trump took office in January 2025.

As part of its announcement on retooling the program, the Trump EPA said it would not be awarding any funds under that round. ​“EPA thanks applicants for their interest and encourages them to apply for the new grant program,” the EPA announcement said.

Reis said the months of limbo have been difficult for school districts and have delayed action on health harms for the 25 million students who ride school buses.

“Demand for clean school buses has been high, and hundreds, if not thousands, of school districts waited for over a year only to recently discover their applications would not be honored,” Reis said. ​“I can imagine they’re feeling disappointed and distrustful of the current EPA. It also means that thousands of kids who could have been riding electric school buses this school year are still riding the older, polluting buses that are harming our health and the environment.”

A Potential Hit to New York’s Mandate

Ground zero for the impact of Zeldin’s changes to the Clean School Bus program will be his home state of New York, where Democratic Gov. Kathy Hochul is spearheading implementation of one of the nation’s first electric school bus mandates. Hochul defeated Zeldin when she sought reelection in 2022. The Legislature approved the mandate, proposed by Hochul, as part of the state budget earlier that year.

If EPA awards fewer Clean School Bus program grants for electric buses, that will mean less support for New York school districts, which are supposed to purchase only zero-emission buses by 2027. Prior to Trump’s return to the White House, 45 school districts in New York state, including New York City, received more than $210 million in grants and rebates from EPA’s Clean School Bus program for the purchase of 653 electric school buses, said a spokesperson for the New York State Energy Research and Development Authority, which is administering the transition to electric school buses. About two-thirds of the state’s 730 school districts are participating in electrification plans, according to NYSERDA.

The aim of New York’s program is to transition the state’s entire school bus fleet to electric vehicles by 2035. New York has the nation’s largest school bus fleet, with nearly 50,000 vehicles, or 10 percent of the nationwide fleet. Six other states — California, Connecticut, Delaware, Maine, Maryland, and Washington — also passed electric school bus mandates in the wake of the 2021 infrastructure law. Other states have pilot programs, like Illinois’ effort to test use of electric school bus charging to help increase stability of the grid. All stand to get less federal support than anticipated for that transition with the planned changes to the EPA program.

Hochul has made $500 million available for the state’s electric school bus transition from New York’s $4.2 billion Clean Water, Clean Air, and Green Jobs Environmental Bond Act, enacted at the time of the mandate. ​“This program can bring the cost of an electric bus close to parity with a diesel bus and can cover up to 100 percent of the cost of charging stations,” a NYSERDA spokesperson said. In addition, the New York Legislature’s 2025–2026 budget included an additional $100 million for zero-emission transportation, including school buses and supporting infrastructure.

But some New York public school leaders have chafed at the state’s mandate and the New York State School Boards Association has called for lawmakers to repeal or significantly alter it — or have the state cover the full cost of the transition. The school boards association has said the anticipated increase in funding from the state falls short of the anticipated increase in costs.

“School board members recognize the perilous effects of a changing climate on students,” the association said in a position paper. ​“However, they must ensure that the decisions they make on behalf of their communities are financially and operationally sustainable. Unfortunately, as it is currently construed, and because of factors that have changed since its inception, the zero-emission school bus transition for too many districts is neither.”

One of the factors that have changed is the withdrawal of federal support for the transition to EVs under Trump.

As a first step toward implementing its revamped Clean School Bus program, the EPA is opening a 45-day public comment period in order ​“to seek feedback from fleet operators, manufacturers, school officials, and energy producers on a broad range of fuel options that school bus sectors could use,” the EPA said.

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Sitting below sea level along the hurricane-prone Gulf of Mexico, New Orleans is particularly vulnerable to losing power during extreme weather. But the city plans to tackle that problem by helping residents buy backup batteries, which will make the grid more resilient.

In December, the New Orleans City Council ordered local utility Entergy New Orleans to design a $28 million battery incentive program for homes, businesses, and nonprofits (plus $2 million for administration and implementation). Crucially, the scheme won’t cost New Orleanians a dime: It will be paid for by a settlement Entergy reached with the city over problems at one of the utility’s nuclear power plants.

Entergy has until March 1 to file an implementation plan for the program, which is expected to launch later this year. Once the plan is up and running, the incentives could support batteries at around 1,500 homes and 150 community institutions. Those systems would provide backup power for the properties they’re sited on, but also inject power onto the grid when it’s strained.

This would propel New Orleans to the forefront of localities adopting virtual power plants, the concept of aggregating energy devices in homes and businesses and wielding them like a traditional power plant for the good of the broader community. Vermont’s biggest utility has used home batteries to lower costs during heat waves; California tapped home batteries to meet demand in extreme moments; Texas has opened up a market-based version of the concept. But New Orleans would become a pioneer of virtual power plants in the Deep South, and would stand out for the scale of the program relative to the size of the territory.

“We hope if you were already on the fence about getting a battery, here’s a chance to participate in a utility program,” said Ross Thevenot, senior project manager at Entergy New Orleans, who oversees the customer-facing battery effort. ​“We’re the Crescent City — we’ve got water on all sides of us. Customer resilience is obviously important.”

The new investment builds on Entergy’s pilot virtual power plant, which enrolled nearly 140 customer-owned battery systems across the city last year. EnergyHub, a cleantech startup acquired by smart-home company Alarm.com in 2013, manages the distributed controls for the pilot and will run the expanded program. The initiative also builds on a grassroots effort called Community Lighthouse, which formed after 2021’s Hurricane Ida and has installed backup-battery systems at nearly 20 churches so that they can offer shelter and light to neighbors during grid failures.

“We’ve seen how useful those can be when there’s a power outage,” said Nathalie Jordi, who works with Together New Orleans, the nonprofit that spearheaded Community Lighthouse, and who advocated for the new virtual power plant. ​“But how great would it be if, when the power goes out long-term after a hurricane, we have nursing homes that don’t lose their power, we have hardware stores, we have bodegas, we have firehouses?”

If the emerging plan succeeds, New Orleans could teach other parts of the U.S. how to build a cleaner, more responsive grid in a way that brings the whole community along.

Democratize battery access

Arushi Sharma Frank, a D.C.-based distributed energy expert, got an urgent message from Jordi in September 2024. The New Orleans City Council, which, unusually, serves as the city’s utility regulator, wanted to hear how the Community Lighthouse locations had performed during outages from Hurricane Francine earlier that month. Together New Orleans knew there was settlement money available, and it wanted to bring the council a fully-fledged virtual power plant proposal that could put those funds to work. Jordi wondered if Frank could propose a turbocharged virtual power plant like she’d helped design in Texas and Puerto Rico.

For Frank, this offered a chance to harness existing grid technologies to save lives in the aftermath of a hurricane or other disaster.

“There are life-threatening conditions that can be averted if people can get to shelter with power and cooling quickly,” Frank said. Small-scale batteries could ensure that ​“we have a place that any human in New Orleans can walk to in 15 minutes that has power after a storm.”

She got to work, compiling a proposal in 72 hours and arranging for people to testify from 12 other states with operating virtual power plants. The last-minute blitz worked: The City Council green-lit an effort to explore the concept, culminating in the December order.

Often, the companies selling energy devices to regular people cast themselves as electric Davids taking on the utility Goliath — as disrupters of a failing status quo.

In New Orleans, Frank said, the community groups were able to ​“remove this tone of adversarialism” that frequently crops up in virtual power plant proceedings around the country, and instead design something ​“generative, as exposed to extractive.”

The program creates a new market opportunity for solar-battery installers, with upfront incentives that can shave up to $10,000 off the cost of batteries for homes or $100,000 for businesses. It will still be up to cleantech companies — local ones or national brands like Sunrun or Tesla — to compete for customers’ business and guide them through the sales process. Those companies will be the ones designing the systems to provide backup power in the event of outages. And the order earmarks 40% of the residential funds for households with low to moderate income, ensuring installers don’t just pitch to more-affluent customers.

Once the batteries are installed and hooked up to EnergyHub’s control software, it becomes Entergy’s job to decide how and when to use them to benefit the power system more broadly. The regulated monopoly utility has knowledge that battery vendors don’t: which parts of the grid need more capacity or struggle to manage voltage when clouds interrupt rooftop solar production, for example, and other such nuances of a complex interconnected network.

Since Entergy runs the grid and charges customers for the service, it’s also able to pass along savings in the event that the virtual power plant lowers overall grid costs.

“Nonparticipating ratepayers are definitely enjoying the benefits of just having more affordable power, because VPPs are cheaper than traditional grid infrastructure and much quicker to stand up,” said Gabriela Olmedo, EnergyHub’s manager of policy and regulatory affairs.

If Entergy can eventually harness tens of megawatts of aggregated battery capacity, Thevenot said, the utility could bid that into the Midcontinent Independent System Operator’s regional grid and use the ensuing revenue to pay down costs for the overall customer base.

Building on a small-battery success

Utilities habitually seek an extended trial phase for ​“new” technology, even if the same equipment has been operating successfully for years elsewhere in the country. Sometimes, that preference for diligent study pushes off adoption of viable grid technologies. In this case, though, New Orleans was able to move swiftly on its virtual power plant because Entergy’s initial foray had laid a careful groundwork.

Under its existing pilot project, EnergyHub manages those nearly 140 batteries — mostly in homes, but also about a dozen in Community Lighthouse installations. The program pays homes up to $600 per year for sending energy to the grid for two-hour stints when demand is especially high. Last year was the first full year this system operated, and Entergy dispatched it six times, Olmedo said, largely to test that the system works.

“We started slow and steady: Let’s learn what the positives and potential speed bumps are,” Thevenot said. ​“It was a true pilot. We were trying to learn as much as possible.”

Entergy ​“got great data,” he added, and learned to troubleshoot in situations when batteries didn’t respond because of issues like internet-connectivity lapses or system settings preventing power from being dispatched.

Having six dispatches per year falls on the leisurely end of the virtual power plant spectrum. A program in Oahu, Hawaii, for instance, pays customers to set their batteries to discharge for two hours every evening, when the island grid is bound to have high demand.

That said, in this pilot phase, Entergy wanted to be judicious about using the batteries that customers had already bought and paid for, Thevenot said. And the summer of 2025 proved to be far less stressful for the local grid than the previous summer, dampening the need for battery assistance.

The plan had been to increase dispatches to 30 per year, Olmedo noted. (The forthcoming implementation plan will decide what the target is going forward.)

Each dispatch will make a far bigger difference once the new funds get disbursed: The incentives are expected to support roughly 10 megawatts of residential batteries and 10 megawatts of nonresidential, Olmedo said. All that capacity will fall within the city boundary, making for a far more concentrated impact than programs that sprawl over, say, the state of California.

Normally, a small customer base can make it hard for a utility like Entergy to propose spending on innovative programs like a virtual power plant, Frank said. The cost of a battery subsidy would be divided among the customer base, and there simply aren’t many customers to split the tab; many New Orleans households earn a low or moderate income, making them especially sensitive to jumps in utility bills.

“If we were forced to do this and run $28 million through some kind of rider we’d have to collect from customers, that would be a different conversation,” Thevenot said.

The pot of settlement dollars circumvented this dynamic, funding innovation without adding to anyone’s monthly bill. ​“Any dollar that they do spend on creating socialized infrastructure, it also goes further because of the same math,” Frank added.

This may limit how replicable the New Orleans experience can be in other locales. ​“Wait for a bucket of utility penalty funds to materialize” is not a particularly actionable directive for would-be grid reformers. But New Orleans can show the world what good a bunch of batteries can do, and quantify eventual operational savings for the whole customer population. Then, advocates can argue for funding this sort of program on its own merits, based on evidence of how useful it has been in the Crescent City.

Jeff St. John contributed reporting.

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