WALTHAM, Mass. — The uncertainty around federal funding, permitting approvals and tariffs on trade is creating major challenges for clean energy development in the Northeast, industry representatives said at the Northeast Commerce and Energy Association’s annual Renewable Energy Conference on March 5.

Turmoil in the federal government is creating “an atmosphere that is not good for business,” said Jeremy McDiarmid, managing director and general counsel at Advanced Energy United. “It’s been 44 days, and it seems like forever.”

Tariffs on Canadian imports threaten to add “hundreds of millions of dollars in potential costs for New England electric customers,” McDiarmid said, noting that this could be “extraordinarily damaging for the ratepayer at the end of the day.”

Patricia Tamez, senior adviser at Shell Energy, said the tariffs could be particularly damaging for clean energy technologies with nascent supply chains.

“Everybody needs investment certainty. … Supply chains for a new industry are difficult to set up,” Tamez said. “The starts and stops make it very hard to predict what’s going to happen.”

Tamez also highlighted the significant uncertainty surrounding potential tariffs on electricity imports. Both ISO-NE and NYISO are preparing to collect tariffs on imports if they are directed to do so while simultaneously arguing that electricity should be excluded from the tariffs. (See ISO-NE Braces for Tariffs on Canadian Electricity and NYISO Preparing to Collect Duties on Canadian Electricity Imports.)

“There is conflicting information from the government agencies on whether a tariff can be collected on the provision of electricity,” Tamez said. “This conflict has been noted by many, but the government hasn’t yet announced a clear position.”

Meanwhile, Hydro-Quebec has considered cutting off exports to the U.S., according to reporting by The Globe and Mail. The company already faces extremely low reservoir levels because of an extended drought, putting it in “an excellent negotiating position” to potentially pause exports as it recharges its reservoirs, Robert McCullough of McCullough Research noted in an email.

Imports from Quebec have met about 11% of demand in ISO-NE over the past five years, and the RTO has said cutting them off could create “precipitous, adverse consequences” for grid reliability.

Regarding federal funding, Tamez said it appears unlikely that Republicans will fully repeal the Inflation Reduction Act, noting the large amounts of funding that have gone to Republican congressional districts and the “very large coalition that’s developed across energy sources to protect the IRA.”

McDiarmid said there is “a lot that states can do” to fill the gaps left by the federal government, but he acknowledged that the states lack the “the financial prowess to replace the finances that these federal tax credits can provide.”

Speakers said the challenges to clean energy development come at a difficult time for the region, which is preparing for an exponential increase in demand growth over the next couple decades. ISO-NE projects its peak demand to grow from about 25 GW in 2024 to about 57 GW in 2050.

The New England states will need to keep pace with load growth while simultaneously reducing fossil generation, which accounted for the majority of generation in the region in 2024. (See New England Gas Generation Hit a Record High in 2024.)

“We’re definitely moving to a world where both the supply and demand both are going to be highly variable and dependent on the weather,” said Marianne Perben, director of planning services at ISO-NE.

Michael Judge, undersecretary of energy at the Massachusetts Executive Office of Energy and Environmental Affairs, noted that the state will need to deploy about 24 times more wind and six times more solar than current levels to meet its climate mandates.

“We need to build a lot, and we need to do it really quickly,” Judge said. He highlighted the changes to permitting and siting processes enacted by the state in 2024, which are intended to streamline and expedite clean energy infrastructure approvals. (See Mass. Clean Energy Permitting, Gas Reform Bill Back on Track.)

For the storage industry, “federal policy uncertainty right now is obviously a huge challenge,” said Sean Burke, director of policy at BlueWave Energy. He said the tariffs have created complications for state procurements and power purchase agreements.

New England states are aiming to massively scale up the region’s storage capacity in the coming years. The Connecticut legislature has established a storage development goal of 1,000 MW by 2030; Rhode Island has a goal of installing 600 MW by the end of 2033; and Massachusetts plans to procure 5,000 MW over the next five years.

Hans Detweiler, senior director of development at Jupiter Power, emphasized the importance of soliciting “apples to apples bids” to enable state agencies to see how the bids are priced and potentially adjust the pricing to account for major changes in federal policy.

Detweiler said he remains optimistic about the “long-term opportunity” of storage in the Boston area, adding that “within the Boston load pocket, our view is the volatility is going to come,” which will create the demand for storage resources.