Market View: IRA guidance, Solar share, Infra funds
Long-awaited final rules on Section 48 tax credits under the IRA were issued by the US Treasury on Wednesday, clearing the way for billions of dollars in announced clean energy investment to proceed to project financing close.
While the newly nominated IRS Commissioner Billy Long could work to adjust and reshape guidance even absent a change in the underlying law, completion of final guidance anchors investment plans and creates room for legal challenges by beneficiaries to administrative changes.
For clean fuels, where incentives are even more crucial for financial viability than for renewable power, the tax credit guidance could boost the outlook for additional production. Investment in equipment used to upgrade biogas into renewable natural gas will now qualify for credits, a crucial factor for many announced projects.
In the meantime, financing activity for renewable power has shown few signs of slowing even as some uncertainty persisted ahead of the finalized guidance.
A new report from an industry group claims solar accounted for 64% of all new US generation additions in the first three quarters of 2024, up from 55% in 2023 and 44% in 2022.
Deployment continues: A trio of banks underwrote a new debt and equity package for Longroad Energy’s 111MW solar facility and associated 85MW battery installation in Arizona this week, with a tax equity structure and a green loan underpinning the deal. US Bancorp, Commerzbank and CIBC were the leading institutions. Longroad is backed by a group of international pension funds and asset managers, including Munich Re and the New Zealand's Infratil.
Expectations that retail investors will be permitted to expand investment in private capital infrastructure plays have risen as the Trump administration names new agency chiefs. Renewable energy and transmission investor Stonepeak is raising a new infrastructure fund for individual investors, who will deploy capital alongside its $70 billion in institutional money.
Market View: Failure to build
The collapse of New York State’s Clean Path transmission project due to reported cost overruns places the country’s third largest economy on the knife’s edge of an outright electricity shortage in the coming decade.
The blast zone from the cancellation runs to billions of dollars in related clean energy investment planned to meet future load growth and compensate for generation retirements elsewhere in the system.
Project owners Blackstone-backed Invenergy and energyRe, a consortium underwritten by a slew of major European investors and energy firms, are the first firms to be hit by the cancellation. Other clean energy plays like HVDC company Prysmian, with its $900 million contract to wire Clean Path, are just beginning to count up the loss of business.
The New York state failure to build at scale against its ambitious plans to upgrade an aging and undercapitalized energy system is an extreme example of the ongoing inability of US power sector regulators and their political counterparties to coordinate the revival of the vital industry just as meaningful load growth revives.
Recent analysis from NYISO indicates that even with all the projects in the pipeline, New York may simply run out of power at peak times as soon as the early 2030s, creating the potential for a massive uncoordinated rush for available capacity as that date nears.
Distributed electricity generation, community power projects and active energy management platforms tied to batteries may benefit in many of the markets facing shortfalls, echoing profitable trends in other markets like South Africa that have accommodated to rolling brownouts after decades of reliable power supply.
Prompt-season NYISO capacity prices quoted by Karbone have weakened in the last six months, despite the prospect for tightening supply in more forward periods. New York City zonal prices, which would have been impacted by the Clean Path project’s clearing congestion from the other NYISO zones upstate, have maintained a 300-500% premium to prices in the ROS zones north of the Hudson Valley.
The failure to build stretches beyond the clean energy economy. A new decision from FERC to hold a Venture Global LNG terminal to yet another round of environmental review was overshadowed by the Clean Path cancellation among energy market watchers, but for those expecting “gas by wire” to displace clean energy in forecasts, the inability to coordinate infrastructure buildout is as pressing for fossil fuel inputs with high capacity factors as it is for cheap but intermittent renewables.
Market View: Private capital scales for solar and biofuels
A few years ago, the Karbone research team highlighted the intersection of a capital markets revolution with a technology revolution – a pair of revolutions that would shape energy market evolution.
Private capital continues to scale mid-decade as it maintains a leading role in everything from electrification and renewable power to clean fuels.
Private equity firm TPG secured $376 million in new debt financing from a quartet of global banks today for a 210MW Texas solar project as part of a broader package that included a sale of environmental attribute certificates to Microsoft. The Matrix Renewables-led project is the latest in billions of dollars in US renewable project financing closes in the weeks since the US presidential election.
In clean fuels, emerging demand certainty has driven a wave of contract commitments in markets around the world - and for a variety of end uses. The world’s largest chemical parcel tankers firm, Stolt Tankers, confirmed it would use at least a share of renewable diesel in all of its inland tanker fleet this month, while European airline easyjet signed up for long-term supply of up to 150,000 tons of SAF from 2030.
While corporates continue to play a determinative role in biofuels and other clean fuels as they integrate new molecules into their carefully calibrated legacy systems, larger private capital groups like KKR and specialist investors like Nexus Development Capital continue to back clean fuels production with growth capital investment and buyout plays.
Energy transition financing needs are significant enough to require ever-larger and more sophisticated capital markets intermediaries.
That logic for concentrating capital activity across debt, equity and market types is behind asset management giant BlackRock’s newly announced $12 billion agreed purchase of private debt firm HPS, a major energy markets player. BlackRock closed its acquisition of infrastructure specialist GIP for a similar sum just weeks ago, part of a “full-service” offering as energy investment needs grow globally.
Market View: Duke IRP, Atlas DG solar, Brazil fund
Updated planning models for the US power sector demonstrate an evolving strategy for handling increasingly apparent pressures from load growth as it meets project development challenges.
Efficiency efforts outpace offshore wind in handling the gap between load growth and expanded generating capacity in Duke Energy’s latest resource planning revisions. The fate of troubled offshore wind projects has an outsized effect in modeling outlooks for gas, emissions and capacity markets along the US Atlantic coast, making any additional margin for error granted by “efficiency” increasingly valuable.
Karbone merchant curves models for PJM RECs demonstrate the impact of even a slowdown, rather than a net curtailing, in deployment of wind. The cost of environmental attributes falls through the 2030s only as long as offshore wind continues to come online as scheduled, but delays quickly place a new floor under pricing and drive it above current-year levels into the 2040s.
Duke’s revised IRP is a snapshot of the current mid-transition moment for the rapidly evolving US power sector. Covering the modeled generation and load profile for the mid to late 2030s, the firm expects over the intervening period to add 9 GW of additional fossil gas and 2.8 GW of efficiency to balance the intermittency costs of 17.5 GW of new solar and 2.4 GW of new offshore wind.
As large generators wrestle with the ongoing transformation of the US power sector across fuels, geographies and regulatory confusion, investors are increasingly turning to distributed power that can be launched swiftly and relied on as grid shortfalls emerge.
A group of four mid-tier US commercial banks backed a new $450 million warehouse financing facility for distributed solar projects last week. Private capital firm Atlas SP teamed up with First Citizens, BankUnited, Comerica and Cadence Bank to underpin Pivot Energy’s pipeline of new solar.
The US picture for new load increasingly looks like the international picture as well: Brazilian private equity firm Piemonte Capital is raising $172.5 million for renewable-energy powered data centers in that country, following its success deploying renewables at its Elea Data Centers portfolio company.
Market view: Deals shrug off headlines
Energy transition financiers shrugged off a very high volume of background political and regulatory noise in markets to keep closing deals in the final hours before a US holiday.
From the inescapable global headlines about new tariff proposals from President-elect Trump to the niche but worsening standoff between PJM and its independent market monitor over the fallout from record-high prices in the 2025-26 base residual auction, uncertainty in market governance has rarely been higher.
At the same time, fundamentals continue to demonstrate an outright net shortage in energy supply that has kept investors and their bankers working towards close on billions of dollars in deals for new supply.
US Bank signed a tax equity commitment with the owners of the Caballero energy storage project on Monday, allowing the project to reach financial close on the 400MW asset with construction and term debt commitments from MUFG.
Recent bids for CAISO resource adequacy BESS delivering the second half of 2025 have hit $7/kw-mo, indicating robust demand for clean, firm power that can filter through to support project financing for California facilities. Sustained bankability for tax equity agreements as the change in US presidential administration is especially notable, another sign that counterparties are tuning out political and regulatory volatility.
A pulled Adani Green $600 million dollar-denominated bond from the troubled company did not overshadow issuance of other green notes. Renewable energy and digital infrastructure firm Equinix pulled through $1.2 billion for its pair of European green bond offerings this week, following a separate $750 million green bond issue just two months ago.
Market View: In gas rush, upside for National CRS
Fossil gas is now likely to play a much more significant role in the US energy system than seemed apparent several years ago. The arithmetic of emissions accounting may in turn drive much higher demand for voluntary RECs, including those certified in the National CRS program, often called “green-e” contracts.
Whether by pipe or wire, gas is being prioritized for data center firm power needs and to match capacity accreditation needs for reliability in tight overall power and capacity markets.
The scale of new fossil gas infrastructure for a planned $5 billion facility planned for northern Louisiana catalyzed the drumbeat of fossil fuel PPAs and offtake agreements between hyperscalers and load servers in recent months. The new Entergy deal will use nearly a third of Entergy’s Louisiana load, highlighting the scale of data center demand in individual, already-strained power markets.
With firm corporate commitments to drive down company-level emissions and offset uptake of fossil fuels, the increased large-scale use of gas for data centers, embedded for decades to come by high-priced long-term offtake, forms a large potential call on both compliance and voluntary RECs markets.
While the buildout of wind and solar supply in US states without formal RPS programs has outpaced voluntary demand for RECs in recent years and kept a cap on prices for products like the National CRS-listed contracts, the emergence of new emissions “demand” from data center operators buying unabated fossil fuels could reset prices higher.
During a previous period of elevated National CRS pricing, the cash flow from voluntary RECs became high enough to be material in project financing discussions for renewables. A new influx of demand for green-e certified power’s environmental attributes could bring that dynamic back into play.
Karbone merchant curves for National CRS Listed RECs anticipate retirements of credited renewable supply supporting prices through the back half of the 2030s even absent significantly increased demand. In the high case updated in Q3 2024, 2043 National CRS RECs are forecasted at a premium to 2024 pricing, a forecast that could have further upside in conditions of robust data center-associated corporate voluntary REC demand.
We see this as particularly true given recent headwinds for colocation of nuclear and a potential shift in Dept of Interior views on offshore wind. For lack of 24/7 decarbonized generation options, the combination of voluntary RECs coupled with grid energy powered in large part by gas, remains the default choice for carbon conscious load growth.
Market View: LCFS limbo, RINs data, Fund boost
Transport electrification in California is emerging as the early winner relative to biofuels and other “clean molecules” from the recent vote by state regulators to boost decarbonization goals, recent transactions and investor comments suggest.
Prices for book and claim RECs in California – linked via CARB’s LCFS program to electrified transport demand – have jumped on the Karbone data hub by $1.00 for Cal 24 in recent sessions, and both Cal 25 and Cal 26 contracts have also moved higher.
Revised program language approved in the CARB vote provided further tailwinds for electrification of transport, including new incentives to build out associated infrastructure.
Biofuels projects, methane-related incentives and hydrogen support all had new restrictions placed on their access to LCFS incentives, but higher overall demand stemming from the increased targets could lift demand and improve prices even where supply growth is constrained.
The revised rules stemming from the approved policy changes will hit the market in 2025, but ahead of those changes the LCFS program will have to navigate the pending waiver authorization of eight programs. The federal government has traditionally approved these waivers that underpin the LCFS program, but the incoming Trump administration has indicated it could withhold the waiver, threatening programs that include the 2035 phase-out of new sales of ICE cars.
On the national level in biofuels, battered RINs markets eyed the impending release of EPA data on October RINs generation. D3 RIN generation fell from the previous month to 83.3 million from 95 million in September, though traders look for retroactive readjustments. The D3 market crashed last week on expectations that a sped-up waiver program announcement would unwind fundamentals.
One final thing: Renewable energy investment funds continue to close above target raises despite perceived political headwinds and a meltdown in the sector’s public equity prices. Neos, founded by a team from legendary credit fund Oaktree, closed on more than $1.6 billion of funding for renewable energy plays this week, only 18 months after closing their first fund at $830 million raised.
Market View: Reconsidering US gas
The role of fossil gas as a counterweight to ongoing dominance of intermittent renewable power in utility and corporate investment plans has become a pressing issue as forecasters balance between current planning cases and the constraints imposed by legacy infrastructure.
Energy transition dealmaking continued to inch forward two weeks after a banner rout in the sector's public equity prices, with sustained power demand growth underpinning new capital deployment.
Private capital groups with energy transition funds continue to back renewables, but private equity has migrated toward services, manufacturing and ancillary business lines and use cases in recent weeks. Apollo, headed by potential Trump US Treasury Secretary nominee Marc Rowan, picked up the majority interest in industrial power developer State Group from Blue Wolf Capital in a deal arranged by investment bank Moelis out of Apollo’s clean energy fund, constituting a bet on further distribution, efficiency and digitization efforts at manufacturers.
Karbone price insight: With capacity prices in contango at elevated outright levels across the US, industrial buyers are motivated to seek the lowest-cost electrons wherever possible. SPP deliverable capacity in the 2029 planning year is at a more than $50/MW-day premium to prompt year capacity on the Karbone hub.
While lower fossil gas prices linked to expanded drilling access under the Trump administration could have a pass-through effect on capacity and power pricing, a long history of tariffs approved by utility commissioners and FERC and implemented by RTOs have shown little correlation between cheaper gas and cheaper power. The long-term role of gas will be in focus at a FERC hearing scheduled for Thursday on the agency’s Order 1920 dictating changes to US power planning.
Meanwhile, Arizona will get a 200 MW/800 megawatt-hour battery energy storage system manufactured in the US by Tesla in 2025. EDP Renewables signed a long-term offtake agreement with Salt River Project this week, and has been greenlit in part because it was able to demonstrate significant water usage savings compared to fossil gas that would require water-intensive fracking extraction techniques.
In a more gas-reliant vision of the future US energy system, interest in renewable natural gas and other decarbonized gas generation pathways could reignite. Early indications that permitting for carbon capture systems could ease under a new administration, and the potential to monetize RNG and similar technologies through state and federal incentive programs could play a bigger rather than a smaller role under new Federal guidance.
Market View: Trump transition risks
The Karbone research team has held calls and meetings with energy transition stakeholders and Trump transition team members since Tuesday November 5, seeking to better understand the context for trading, financing and price discovery for power, capacity and environmental attributes under the incoming administration.
In the early days of the transition to the second Trump presidency, the signals are clear that energy market participants may need to take the incoming administration’s campaign promises “literally,” as well as seriously.
A full report detailing insights from those conversations is available on the Karbone data hub. The top six takeaways are:
- Risk to IRA guidance is higher than consensus.
- Offshore wind in the US is on life support.
- EPA enforcement and funding are in the GOP's crosshairs.
- Fossil gas prices may be volatile to the downside.
- Tariff management will become a big(ger) business.
- Construction costs will rise.
Market View: RINs crash, Renewables dealmaking rebound
D3 RINs have gone on a wild ride in trading sessions this week, crashing lower on November 13 as traders reversed course on what had otherwise been a surprise post-election pop in RINs pricing.
Fundamentals blended with politics in the tightly balanced pricing environment for late 2024 D3 RINs trade to create a 10+ standard deviation volatility event. Specifically, an unexpectedly early regulatory filing to reduce 2024 demand created a rush for exits; D3 prices plunged, with the bid removed by uncertainty about an accelerated EPA ruling merging with general bearishness on the Trump administration's expected granting of small refinery exemptions.
Most energy transition markets still operate at more of a remove from direct federal government management, but natural volatility can be significantly exacerbated by sudden political shifts and regulatory opacity.
Karbone price insight: None of the D-codes were spared in the clean fuels sell-off, but D3 2023 and D3 2024 RINs marked the most dramatic declines, falling roughly 17% and 16% respectively. D3 2025 RINs fell nearly 10%, closing the session at a $2.65 mid.
A post-election lull in IRA tax credit financing for renewable energy appears to have last just a week, as a second nine-figure deal closed in as many days. Private capital-backed Pine Gate Renewables closed a $290 million back leverage debt financing and tax credit transfer deal on a trio of solar projects in ERCOT and in Alabama. Three European banks clubbed together to underwrite the deal, which included transfer of IRA tax credits to a corporate buyer.
Karbone price insight: Load growth in US power remains the most bankable trend in energy markets today. Fuel choice and environmental attributes still matter, but proven ability to deploy generation and interconnection access is driving deal close even as environmental and permitting regulations remain in flux. Capacity prices quoted by Karbone are elevated in historical terms across the country, with less-liquid markets at a significant premium to more volatile RTOs with deeper capacity participation.
Market View: State action, Resi swoon, Tax equity
Prices for book and claim RECs in California moved higher in the days after the state’s air resources board cleared a more aggressive pathway for transportation emissions in the state.
California book and claim product fundamentals are linked to deployment of electric vehicles that can align their demand for power with renewable electricity supply.
Karbone price insight: The Karbone merchant curve model for book and claim RECs contains wide potential for dispersion between the high, low and base cases for pricing. As the program moves into the 2030s and 2040s, the forecasted high price scenario holds at more than 300% the low price scenario.
Equity swoon: Following Trump’s victory, stocks of residential rooftop solar system and equipment providers saw significant declines. Sunnova Energy fell by more than half, and Sunrun dipped by nearly a third. Component supplier SolarEdge and competitor Enphase fell by double digits. First Solar Inc., known for thin-film panels, dropped 10.1%, while utility-scale tracker supplier Nextracker Inc. declined by 5.6%.
Karbone price insight: The correlation between equity prices and environmental attributes pricing represented in REC markets is not direct. Reduced financial capacity for residential solar could actually tighten some SREC markets, with changes to resulting supply and demand fundamentals triggering a reevaluation of the Karbone merchant curves.
The first big post-election US renewable tax credit deal closed a week after Trump’s victory, indicating investors are still expecting sustained policy durability for the core IRA credits through the incoming administration. Private equity firm Carlyle's portco Copia closed a $519 million tax equity commitment November 12 for a solar-BESS project in Arizona, with JP Morgan as the tax equity investor.
Karbone price insight: Arizona is outside the RTO structure that other states and regions use to manage capacity, and as the desert southwest undergoes the same kind of load growth forecast for other regions the expected need for solar and battery collocated energy campuses remains high. Prices for traded capacity in adjacent RTOs tracked by Karbone are in a steep contango, indicating tightening supply availability.
Market View: RECs at the gas-wind nexus
Capacity and REC markets are drifting toward renewed disruption as regulators and strategic planners continue to ignore the potential for multi-year delays in US deployment of offshore wind.
While the election of a vocal anti-wind advocate to the presidency places a spotlight on the risks to offshore wind projects, a looming late 2020s shortfall in highly rated power supply from offshore wind farms has been inching closer for several years.
A handful of large and complex projects, with a high capex intensity and persistent performance issues, have become the pivotal binary risk determinants for power and capacity in a number of regional markets.
PJM, NYISO and NEPOOL are the markets most at risk from a shortfall or extended delay in offshore wind project deployment. The combination of strict state-level renewable portfolio standards and a limited number of alternative sources of large-scale renewable power in those regions make them subject to a mechanistic floor for REC prices if offshore wind fails to deploy on schedule.
Karbone’s most recent merchant curves for PJM REC markets show a significant detour from current fundamentals-implied pathways if offshore wind projects are slowed. REC prices stay much higher for much longer, hugging the ACP through the life of compliance programs, as long as offshore wind projects are absent.
Karbone price insight: While the current Karbone PJM tri-qualified REC merchant curve forecasts all include some level of offshore wind deployment in the RTO, the high case does incorporate a delay in offshore wind into the early 2030s. That gives the merchant curve for that contract a very different shape, with RECs peaking near $50/MWh in 2030 and remaining above the mid-2024 reference price of $40/MWh through to 2043. In both the base and low cases, REC prices fall swiftly in the 2030s as offshore wind REC supply drives markets below $25/MWh.
At the same time, capacity markets could be whipsawed as the primary competitor for wind in provision of highly accredited capacity is fossil gas. Updates to capacity market methodologies as power supply shortages bite amid growing load demand have created a gas versus wind tradeoff for project developers.
That tradeoff is relatively clear in markets where new gas can come online, and while onshore wind power continues to deploy in those scenarios, so does new gas power.
In markets like the US Northeast where gas pipeline expansions face more serious obstacles, gas-by-wire through RTO-level power imports could meet the capacity shortage where transmission is available, but the resulting grid fuel mix keeps a robust bid for RECs to keep RPS accounting balanced.
The rebound for gas has been clear in the flood of new integrated resource plans from major US utilities, and unabated gas has a longer and more financeable future alongside renewables if current Trump administration proposals go ahead. The implications for environmental attributes, however, are a one-way trade absent offshore wind or revisions to state RPS programs.
Market View: D4 and D5 RINs, Hydrogen, MISO
Late breaking: The CARB vote on increased LCFS targets passed 12-2 late Friday night. Karbone’s trading teams are watching for price impacts and reviewing shifting fundamentals in light of the decision.
Clean fuels markets in the US charged higher in the wake of the presidential election last week, with D4 and D5 RINs gapping higher. The Karbone hub price for 2024 D4, D5 and D6 RINs all moved more than 5% higher amid high trading volume on November 7, and 2025 prices for the same D-codes surged as well.
The price increases are a tariff story, with market participants betting that a mix of federal tariffs and limitations on foreign feedstocks and used cooking oil will contract supply more than any moves to unwind federal environmental programs will limit demand. A shift to a production tax credit structure from a blending tax credit structure already expected in 2025 would further undercut exports, juicing the post-election bump for the complex.
Still-nascent clean hydrogen markets, which have targeted fuels displacement as one path to wider adoption, were hit at the end of last week by Air Products’ decision to pull out of a large green hydrogen project in Texas. Air Products is one of the rare hydrogen developers with deep expertise in fossil fuel-based hydrogen and access to offtakers, so its decision is particularly challenging for US clean hydrogen development, which was still dependent on billions of dollars in early-stage funding from US government programs.
At the same time, power investment continues to move ahead, with regulated utility Ameren confirming it would update its $55 billion capex plan in the next few months to reflect additional new data center demand. The company’s resource plan is long on both natural gas and renewables, with Ameren recently acquiring existing solar assets and getting approval to build a new gas plant in Missouri.
Karbone price insight: Power generation availability in Missouri is looking especially tight ahead of the pending MISO fixed resource adequacy plan season. MISO zone 5 covers Ameren’s Missouri service area, and prompt season indications for capacity on the Karbone hub have the zone priced at the higher end of the RTO’s ten zones through the forward strip. Over the last 12 months, Zone 5 capacity prices have broadly held at narrow premiums to year-ago levels.
The global gathering of the climate community in Azerbaijan, kicking off this week at COP29, was always likely to be overshadowed by the US presidential election and the global lack of progress on agreed emissions reductions ambitions. With the US set to again exit the governing UN climate agreements and bodies, the focus among other country representatives attending the COP has been on China’s delegation.
Chinese production of cleantech for export markets has become a major economic pillar of the country’s economy, and sustained engagement with importing countries at COP could be vital to surviving anticipated cleantech and other tariffs from the incoming Trump administration. New announcements from China signaling a recommitment to the energy global transition would create a diplomatic and trade flashpoint with the US as tariff-setting processes kick off.
Market View: Repricing US Renewables
Private capital fundraising continued uninterrupted in a volatile week for public equities and debt for energy transition plays, as investors with longer-term horizons relied on shifting industry fundamentals dominated by a still-intensifying shortage in US power supply.
Longbow Capital closed on its second energy transition fund against the background of the US election, while Pelican Energy Partners closed what may be the first pure-play nuclear energy services fund at $450 million, above both its target and its original upper limit.
Nuclear power enjoys a bipartisan tailwind, and the industry has lobbied the Trump transition team to redeploy remaining DOE loan program money from the IRA into exclusively underwriting new nuclear projects.
Renewable energy fundraising outside the private markets could be subject to a late 2024 stress test if Brookfield Renewables proceeds with a multi-billion dollar share offering. The fund filed paperwork in the days before the election targeting a more than $6 billion share of LP units. Bankers questioned whether the offering would proceed, given the post-election swoon in renewable energy pure-play firms.
Karbone price insight: Early analysis indicates that while up to a third of announced US renewable projects might be threatened by a full revocation of the IRA, that would cut an extremely ambitious pipeline to a merely historically robust one.
Equity markets are almost certainly mispricing the Trump trade in energy. Even in the event of a full-scale revocation of both federal incentives and federal emissions regulations new fossil fuel infrastructure would struggle to compete in many cases with renewables plus storage. Retirements of fossil fuel, already slowing, would likely be further delayed, but new load growth will be renewables-dominated.
The more vital question for individual renewable projects is likely to be the much more niche, but impactful issue of treatment under capacity accreditation methodologies in individual power markets. Proposed changes to accreditation have already compressed the realized value of solar, and to a lesser degree wind and batteries, in a number of US energy markets, with implications for project financing.
Recent trade in power markets indicate that any perception of slowing fossil retirements creates a drag on capacity price quotes. New price indications in PJM have slipped on the expectation that an auction delay in that market will ultimately loosen capacity market conditions there.
Market View: Wild Card Wednesday
Publicly traded equity and debt markets were first to register an impact from former President Trump’s victory in the US election, with commodity impacts muted as market participants evaluated the potential for shifts in supply and demand within currently active delivery windows.
The Trump campaign’s messaging on clean energy support has been mixed in recent months, but there is little doubt that the new administration will back away from the concept of an energy transition organized via emissions targets aligned with global goals.
The extent to which a promised “unleashing” of the US oil and gas sector can overwhelm the competitive generating economics of renewables and firmly established state and regional environmental regulation is still unclear. Promises to ease permitting and boost infrastructure largely did not turn into action under the first Trump term, but progress on either could accelerate rather than delay renewable energy deployment.
For project developers, the impact of higher import tariffs and an immigration crackdown that cuts the construction workforce are both the first order concerns: Tariffs are largely within the presidential remit, and changes could happen quickly once the new administration takes power.
Higher prices for foreign components before replacement domestic manufacturing is ready means compressed returns for many energy firms, though the heavy reliance on Chinese components for solar in particular has been reflected in hits to equity valuations in that sector since markets opened today.
Environmental markets eyeing a Trump presidential election victory are taking solace in the sustained commitment of states to pricing and managing environmental attributes.
Action in environmental commodities is already largely based on state and regional programs, with federal programs in recent years more often based on a blend of tax credits and long-range targets rather than compliance pricing programs.
The history of the last Trump administration was characterized by a contradictory revival in state-level compliance market ambitions, even as federal programs were either slowed or challenged.
On the compliance side, participation and outright price levels continued to surge in the US through the first Trump presidency. Pennsylvania, which as with this year voted for Trump in 2016, boosted its compliance program ambitions significantly in 2017, and prices for related RECs contracts have climbed since.
The voluntary environmental attributes market also picked up during the Trump years, as corporates concerned about the lack of US policy in an emissions-constrained global economy built positions and expertise through voluntary mechanisms.
The forward price curve for a number of environmental commodities tracked by Karbone remained in contango on the eve of the US election, and outright prices for many markets barely budged through the closing days of the tight campaign.
National CRS-listed voluntary RECs dipped slightly at the front and back ends of the curve since mid-October, but the 2029-2033 strip held steady.
