“What’s so crazy about renewables is [that] both political arguments are true,” says Pier LaFarge, a cofounder at Sparkfund, a utility services company. “They are the cheapest power at the source of generation—but they are also raising rates because of downstream upgrades to the distribution grid.”
Just reintroducing tax credits for wind and solar wouldn’t be enough to stave off the worst impacts of climate change. The UCS study also modeled the costs of policies that would more seriously decarbonize the US grid as demand rises from AI. This includes more stringent power plant regulations and more investment in the transmission upgrades that renewable energy needs. This scenario, the analysis finds, would slightly raise wholesale electricity costs through 2050, by about $412 billion—a 7 percent increase. However, the analysis finds, it would avoid up to $13 trillion in climate costs: damages incurred by floods, wildfires, droughts, and other extreme weather worldwide, as well as the local health costs associated with dirty power plants. (Earlier this month, the EPA announced that it would no longer factor in the costs of lives saved from excess pollution when considering pollution policies around power plants.)
Much of the US grid is in serious need of upgrades, especially if the country becomes serious about moving off fossil fuels. Part of the challenge of the next few years is going to be ensuring that the upgrades the grid needs—with or without more renewables—are not unfairly pushed on to consumers.
“There definitely needs to be much stronger guardrails in place for data centers themselves, as well as for making sure that we have enough electricity capacity and generation in place to power those data centers, and that it doesn’t take away from other customers,” Clemmer says.
Despite the Trump administration’s aggressive attacks on renewables and eye-watering figures for energy demands from AI, there’s some reason to hope. LaFarge believes that utilities’ increasing deployment of batteries, coupled with contracts that make data centers pay for infrastructure and other associated costs, will help drive electric rates down for regular consumers. (Unlike credits for wind and solar, tax credits for batteries mostly made it through the One Big Beautiful Bill negotiations.) In this scenario, the US could look more like Texas: tons of cheap wind and solar on the grid, a few gas plants, and installing a lot of batteries.
“The good news is that, just like the Biden administration couldn’t control the fate of the universe, neither can the Trump administration,” he says, pointing out that solar, wind, and storage made up more than 90 percent of new power put on the grid last year. “We’re building more renewables more quickly in more places for purely economic reasons.”