What's driving up electricity costs?

Hello,

Hope you all had a lovely Mother’s day yesterday, especially if you’re a mom!! One quick heads up: I’ll be in Hawaii this week for a friend’s wedding, so it’s unlikely I’ll publish a roundup this time next week. I’ll get back to post a few more articles and regular roundups for the rest of May after this week.

ONE STORY IN A SENTENCE AND A CHART

• New research from S&P Global offers a retort to the prevailing theory that data center development is the biggest driver of increasing electricity prices in the U.S. (“we observe no clear correlation between the change in state-level electricity prices over the last five years and the change in state-level data center capacity over the same period"). Link.

NEWS, DATA, AND HEADLINES

• In a landmark shift that has gone almost entirely unnoticed in English-language media, the scientific body that sets official scenarios for IPCC climate research has retired its most extreme warming pathways (RCP8.5, SSP5-8.5, and SSP3-7.0) formally labeling them "implausible." The new top-end scenario projects roughly 3°C of warming by 2100, versus the 4.4°C figure that dominated headlines and policy for two decades. There hasn’t been a ton of media coverage of this story, including in outlets, like the New York Times (most prominently) that used those scenarios to inform past reporting. Link.

• Airborne microplastics are a previously underappreciated climate forcer. According to new research in Nature Climate Change, colored plastic particles lofted into the atmosphere absorb sunlight and trap heat, with a global warming impact equal to about 16.2% of black carbon's. The finding challenges prior assumptions that atmospheric plastics were climatically negligible because lighter particles reflect sunlight. Link.

• A strengthening El Niño has pushed near-term temperature forecasts higher. Updated modeling now puts 2026 at roughly 1.46°C above the pre-industrial baseline, with 2027 projected at approximately 1.61°C. Forecasts for 2027 also now carry an 85% probability of making it the warmest year ever recorded, with an 88% chance of breaching the 1.5°C threshold. Both estimates have risen from projections made at the start of the year. Link.

Energy market x Iran war updates

• Oil futures are up again at the time of this writing after they fell somewhat over the course of the week on hopes that there’d be more progress soon towards peace in the Middle East. Now, that prospect looks remote again as hostilities flair up again. Link.

• The pump price pain keeps intensifying in the U.S., where gasoline prices hit a new wartime high of $4.54 per gallon, up roughly 51% since the conflict began. Link.

• U.S. airlines also burned through just over $5 billion in jet fuel in March, a 56% increase over February, as the Iran war-driven oil shock has also rippled into aviation costs. Link.

Elsewhere in energy and electrification

• The North American Electric Reliability Corporation (NERC) escalated a Level 3 grid alert, only the third such warning in the watchdog's 58-year history, after data centers in Virginia and Texas suddenly dropped off the grid, creating conditions that experts warned could trigger widespread blackouts. The alert comes with seven mandatory actions for grid operators and transmission planners. Link.

• U.S. electricity prices in April rose 6.7% above April of last year, with the 12-month trailing average also up 6.5%. These gains are consistent with the growth trend of the past five years, per Heatmap and MIT's Electricity Price Hub. The national picture, high in and of itself, also masks some ugly local dynamics: New Jersey and Washington D.C. saw trailing 12-month averages climb 21% and 25%, respectively, as power demand outstrips supply in the PJM market. Link.

• China's solar manufacturing sector is undergoing a pullback. The country's 22 biggest panel makers collectively lost 10.5 billion yuan ($1.5 billion) in Q1 as raw material prices cratered and demand remained relatively soft. New installations tell a similar story, as capacity additions dropped 31% year-on-year to 41.4 GW in Q1. Link.

• Geothermal developer Fervo Energy has filed to go public at a $6.5 billion valuation. It aims to raise over $1.3 billion in an IPO. Recently reviewed leases owned by Fervo represent more than 40 GW of potential capacity (equal to~15% of total installed U.S solar). Link.

• As we’ve began to point to in recent weeks, local communities are pushing back on data center development more and more; Q1 2026 saw roughly 100 new local fights logged, a record for a single quarter, and cumulative project cancellations have now topped $85 billion over the past three years, per Heatmap Pro. Link.

• Microsoft appears to be quietly retreating from what was once corporate America's most ambitious clean energy commitment, namely a 2030 pledge to match every kilowatt it consumes with carbon-free power on an hour-by-hour basis. The company has already paused its carbon removal purchasing program and stopped mentioning the hourly target in press releases; Bloomberg now reports it may formally delay or drop the goal entirely. Overall, the AI buildout has already torched much of Big Tech's climate commitments; since ChatGPT launched in late 2022, Meta's reported carbon emissions have surged 64%, Google's 51%, Amazon's 33%, and Microsoft's 23%. Link. Link.

• Construction is underway in northern Switzerland on what will be the world's largest redox flow battery, a 2.1 GWh system being built by FlexBase that can push or pull 1.2 GWh of power in milliseconds. The $1 billion-plus project targets a 2029 launch and will anchor a broader technology complex that includes a co-located data center. Link.

Fission and fusion

• Brookfield Asset Management and The Nuclear Company are teaming up to restart construction of two AP1000 reactors at South Carolina's V.C. Summer Nuclear Station, a project that was abandoned nearly a decade ago following massive cost overruns. Link.

• Ontario Power Generation has set the foundation for what could become the Western world's first operating small modular reactor, completing the below-grade concrete base of its BWRX-300 unit at the Darlington station east of Toronto, roughly 35 meters underground. If the project stays on schedule, it enters service in 2029. Link.

• Chicago-based Clean Core Thorium Energy cleared a meaningful technical hurdle for its patented thorium-uranium fuel blend by finishing a high-burnup irradiation test at Idaho National Laboratory's Advanced Test Reactor. In the test, it delivered more than eight times the output of conventional uranium fuel used in pressurized heavy water reactors. The fuel is designed to work in existing reactors without modifications. Link.

Policy

• Every new onshore wind project in the U.S. is now effectively on ice as the Pentagon has stopped signing off on routine FAA airspace clearances. This immediately impacts up to 165 wind farms, including many that historically wouldn't have needed military sign-off at all. The tactic mirrors the offshore wind halt the administration attempted earlier this year, which courts blocked within weeks after developers sued. The same legal playbook is expected to follow in this case. Link.

• New York's landmark climate law got materially weakened in budget negotiations this week. A tentative deal would push enforcement of greenhouse gas regulations back to 2028 and replace aggressive near-term cuts with an interim target of 60% below 1990 levels by 2040. Governor Hochul had initially sought to delay action until 2030; now, the final compromise landed somewhere in between. Link.

• The EU also looks set to weaken a landmark methane rule before it even took effect. Draft guidelines seen by Politico would let national governments grant open-ended exemptions to fossil fuel companies on energy security grounds, with no explicit Brussels oversight. The rules kick in January 2027 and carry fines of up to 20%, but have faced intense lobbying pressure from both the US and the fossil fuel industry. Link.

• The SEC took two significant swings at corporate reporting this week by advancing advanced a proposal to kill Biden-era climate disclosure requirements for public companies and separately floating the idea of halving financial reporting frequency from quarterly to twice-yearly. Whereas the disclosure rollback has been widely expected, the quarterly reporting change is the bigger potential structural shift of the two, and has drawn some positive interest from decarbonization advocates who've long argued that short-termism discourages long-horizon climate investment. Link. Link.

• The DOJ sued Minnesota to shut down the state's climate liability case against Exxon Mobil, Koch Industries, and the American Petroleum Institute, arguing a state cannot effectively set national greenhouse gas policy through litigation. Minnesota's suit, one of dozens filed by states and municipalities seeking to hold oil companies financially accountable for climate damages, has wound its way through courts since 2020 and survived a dismissal attempt by the defendants just this January. Link.

• Germany is putting up to €5 billion on the table this year to keep more heavy industry, such as steel, cement, chemicals, domestic and on a decarbonization path, using 15-year carbon contracts to cover cost gaps between more clean and conventional production methods. The round is the first to extend eligibility to carbon capture and storage technologies alongside novel production and decarbonization pathways. Link.

Honorable financing mentions

• Panthalassa, based out of Portland, Oregon, raised $140 million in a Series B led by Peter Thiel to build wave-powered offshore platforms that generate clean electricity and use it to run AI inference computing at sea. John Doerr, TIME Ventures, SciFi Ventures, Susquehanna Sustainable Investments, Hanwha Group, Fortescue Ventures, Lowercarbon Capital, Founders Fund, Gigascale Capital, and others participated. Link.

• Nyobolt, based out of Impington, U.K., raised $60 million in a Series C round at a $1 billion valuation to make high-power-density batteries. Symbotic led. Link.

• Moment Energy, based out of Coquitlam, British Columbia, raised $40 million in a Series B led by Evok Innovations to turn used EV battery packs into grid-scale energy storage systems. W23, Amazon Climate Pledge Fund, and In-Q-Tel also participated. Link.

• Blackhorn Ventures, based out of Denver, Colorado, raised $40 million in a first close toward a targeted $150 million climate tech early-stage fund. Link.

• Terraform Industries, based out of Burbank, California, raised $37.75 million to produce synthetic natural gas from air and electricity. Link.

• Skeleton Technologies, based out of Tallinn, Estonia, raised €33 million (~$38.9 million) from Axon Partners Group, SmartCap, and Taiwania Capital to make ultracapacitors and energy storage systems for grid, automotive, and transportation markets. Link.

• Lithosquare, based out of Paris, France, raised $25 million in a seed round for its AI-driven critical metals discovery startup. It also announced a partnership with mining company Aterian to apply its platform to eight exploration projects across Morocco and Botswana. Link.

• Magrathea, based out of San Francisco, raised $24 million in a Series A co-led by Resource Technology Capital and Balerion Space Ventures to use electrochemical processes to pull magnesium metal from seawater and industrial brines. Oxcart, WovenEarth, Audacity, Avila, VoLo Earth, Capricorn Investment Group, and Ora Global also invested. Link.

• Barocal, based out of Cambridge, U.K., raised $10 million in a seed round from World Fund, Breakthrough Energy Discovery, Cambridge Enterprise Ventures, and IP Group to develop a solid-state cooling technology that replaces conventional refrigerant gases with materials that produce no direct emissions. Link.

Bye,

— Nick