Former FERC Chair Neil Chatterjee says implementation of the Inflation Reduction Act went too far in limiting fossil fuels and implementation of the One Big Beautiful Bill Act may limit renewables too strictly. 

Both sides of the aisle need to recognize that a true all-of-the-above approach is needed in this time of growing power demand and potential inadequacy of generation, he said. 

Chatterjee and former Texas Land Commissioner George P. Bush offered their thoughts on the impact of OBBBA on the energy sector during an HData webinar Aug. 21. 

Bush, now a strategist in Texas, said the impacts of the bill are many and significant: “This is definitely going to be the consequential bill for Trump 2.0. It’s people like Neil and I that make a living helping people interpret it.” 

Chatterjee said the present situation — rising power prices amid rising demand — is not a result of OBBBA’s cuts to renewable energy subsidies, it is due to the Biden administration accelerating generation retirement prematurely. 

“I think the risk going forward for the [Trump] administration and for congressional Republicans, I don’t want to see them make the same mistake, quite frankly, that the Biden administration did,” Chatterjee said. But it is starting to happen, he added: “The Trump administration, since passage of the OBBBA, has taken a number of steps via executive orders and agency actions to really hinder the deployment of clean energy resources.” 

Bush said the energy industry and its regulators need to rethink their operating model. 

“My hope is that jurisdictions are going to cut red tape and allow for more behind-the-meter generation, allow the private sector — of course, in a very thoughtful way — to generate this power that can be used by large load users, namely in industries that we’ve talked about,” he said. 

“I think a lot of utilities and districts are going to become entrepreneurial and help underwrite these projects or just administer the underwriting of the project.” 

America cannot win the AI race, meet rising demand and keep prices affordable without a mix of natural gas, wind, solar, geothermal and nuclear, Chatterjee said. And those new gigawatts of power need to be optimized with transmission expansion, grid-enhancing technologies, energy efficiency, demand response, virtual power plants and distributed energy resources. 

“It all needs to be on the table, and I’m optimistic that we can have conversations at both the federal level and the state level, and kind of come together to figure out what the path forward is.” 

Bush observed: “I do not envy people that are now in this business, the regulator, and making sure you’re keeping power prices low enough for your constituents and helping underwrite the process for these massive asset projects.” 

States and regions have long wrestled with market regulation, Chatterjee said, whether they have traditional vertically integrated utilities or competitive wholesale power markets. Neither model is perfect, he said, and both have challenges. 

These new challenges will lead to the design of more innovative mechanisms, he predicted. 

“Whenever you have big pieces of legislation, whether it be the IRA or the OBBBA at the federal level, that tends to prompt reactions at the state level,” Chatterjee said. “And so I fully anticipate in the coming years to see states who benefited from OBBBA or those who had their concerns with it, potentially modify policies within their own parameters to account for the shifting policy, legislative and market energy landscape.” 

Texas has the second-largest energy storage capacity of any state and, not coincidentally, the second-largest solar capacity and the largest wind capacity. 

Bush predicted storage capacity will grow: “I really do think commercial battery storage — a lot of folks in renewables will pivot to that to store the renewable capacity that they’ve already built.” 

Bush said OBBBA’s impact on the industry will be wide-ranging, particularly in a state like Texas, where a massive amount of capital has been expended on renewables. 

“We got a lot of calls in our practice with respect to, ‘How do we preserve these tax credits? We made these assumptions, we raised capital from outside investors, and what does that mean?’ And so there will be kind of an expedited time frame to work with, but the private sector, I think, is going to stand up to this challenge.” 

Chatterjee had a similar take, saying the picture still is evolving a week after the IRS guidance on wind and solar tax credits was issued, and some businesses will be able to evolve with it. 

“I think maybe there were some bad actors that were created out of the policy that came from the Inflation Reduction Act,” he said. “Folks chased the subsidies and got into the field without necessarily having a coherent business model, a lot of those bad actors are probably going to fail in light of the policy changes. But I think the companies, particularly on the clean tech side, that come through this, will come through stronger than ever, and will diversify their business model away from subsidies to provide that power and reliability.”