A new analysis of the One Big Beautiful Bill Act from Aurora Energy Research found that the bill likelywill increase wholesale power prices in NYISO and PJM by up to $8/MWh, driven by reductions in renewable energy development and increases in fossil fuel plant operation.
“When you cut off some of the capacity that was going to come through as a result of faster buildout of things like offshore wind, you get a lot of baseload gas moving in to fill in the gap, and that has a significant longer-term impact on prices,” said John Kidenda, a researcher for Aurora.
Kidenda estimates PJM will experience a $6 to $8/MWh price increase by 2035. NYISO is estimated to increase by $5 to $7/MWh in the same time frame.
The end of tax credits coupled with deployment hurdles and tariffs likely will cause PJM and NYISO to have 10% fewer renewable resources by 2040 compared to Aurora’s base case. Roughly 10 to 15 GW of renewables are at risk of missing the new in-service deadline for tax credits across both grid operators. This will force them to rely on thermal plants more often, resulting in 5 to 7% more runtime.
A separate analysis of the clean energy and transportation sectors under the OBBBA by Rhodium Group and MIT illustrated the challenges that renewable energy development faces nationwide. New utility-scale clean energy projects declined 51% between the first and second quarters of this year. New industrial decarbonization developments declined 17% in the same period and 38% year-to-year.
The Rhodium/MIT group also examined the outstanding projects receiving Inflation Reduction Act credits. Roughly $517 billion of outstanding investment remains to be spent on construction and installation; $406 billion of that is tied to electricity and industrial investment, and 42% is tied to wind and solar generation projects.
The findings of both reports point to large nationwide pressures on renewables to get to market and qualify for tax credits, a far cry from Aurora’s stance late in 2024, when it said the projected impact of a second Donald Trump presidency on New York’s grid were “minimal.” The assumption was that, despite Trump’s promise of ending the IRA’s tax credits, congressional Republicans would be unwilling to pass legislation repealing them because they benefited their districts. (See NY Well Positioned to Push Forward on Climate Goals Under Trump.)
That assumption — like that of President Joe Biden and congressional Democrats when the IRA was enacted in 2022 — turned out to be very wrong.
Kidenda said that despite Trump’s desire to keep natural gas prices down and increase gas generation, the long waits for new turbines coupled with increased demand mean there is significant upward pressure on gas prices.
“As that tightness comes through and you get demand from heating, then you get price increases,” Kidenda said. “Not because baseline gas prices are increasing but because people are bidding up the right to access the pipeline.”
Kidenda said it was critical for New York to ensure that renewable projects like Sunrise Wind are finished. The state runs the risk of blackouts and loss of load without added capacity, particularly in New York City and Long Island, he said.
