Two Crises at Once
In the summer of 2022, while Congress negotiated the Inflation Reduction Act, people in several entire neighborhoods in Athens, Georgia received notice that their monthly rent was increasing several hundred dollars, their Section 8 vouchers would no longer be honored, and they had one month to decide whether to stay or go. Many tenants in these mostly Black neighborhoods had lived for years in their homes, some for decades. Long enough to fix up the kitchen, see the neighbors’ children grow up, and build community. And, long enough to see apartments fall into disrepair and the septic system become overwhelmed. Housing investors from out of state bought several whole neighborhoods, raised rents, rejected vouchers, and displaced over a hundred households. Some of the tenants organized, attempting to pressure the developers or seek help from elected officials. The community’s pleas to the property developers were largely ignored, and the local government had limited options for an emergency response. A few people were able to pay the higher rent. Most people just had to try to find another place to live in a town where rents are rising due to many pressures and the supply of affordable housing does not meet the needs. Many people had to move out of the county or become homeless.
The Summer of 2022 was also the hottest summer on record, until the record was broken the following year. A few months later, in December, the South experienced an extreme and unusual winter storm with record low temperatures across the country, including in Athens. It is hard to know where the displaced residents went or how many people were still unsheltered by then. By January, 2023, the city’s homeless population had increased by 20% over the previous year’s count, following an upward trend that began during the COVID-19 pandemic.
Athens is not unique. All over the south and across the country, communities are grappling with a lack of affordable housing to meet the needs of the people who work and live in cities, small towns, and even rural communities.
According to a recent report from the National Low Income Housing Institution, no state in the United States has an adequate supply of affordable housing. And all over the south and across the country, climate disasters are increasing. These two major problems are linked. Their solutions are too.
Affordable Housing and Climate Change
Lack of affordable housing makes people and communities more vulnerable to the effects of climate change and climate disasters. As weather becomes more extreme in a changing climate, the unaffordability or inability to properly heat and cool inefficient homes can contribute to weather-related health problems; and extreme heat poses even greater threats to unhoused people, who are often displaced by unaffordable housing prices. People with few resources may be forced to live in places where they are more exposed to climate risks, such as flooding or urban heat islands, in order to be able to afford housing. This displacement can also contribute to urban sprawl, which can lead people to travel further by car and contribute to rising emissions. Meanwhile high utility costs, which disproportionately burden low-income residents, are often indicative of inefficient housing that lacks enough insulation and leaks air during cold and hot weather. Inefficient housing drives up residents’ bills while wasting energy and unnecessarily burning polluting fuels.
Improving housing can shore up our communities and protect vulnerable populations while lowering climate emissions. Layering climate-smart practices with efforts to preserve affordable housing can stabilize communities and make them more resilient to the threats of climate disasters while also driving down harmful pollution that causes climate change.
Building new housing with climate in mind can provide safe, healthy, and affordable housing for the workforce necessary to build the new electric vehicles, solar panels, batteries, and associated goods that will allow us to accomplish the energy transition.
Inefficient housing makes it harder for residents to stay cool in the summer and warm in the winter.
At the same time while the Athens residents were receiving their rent notices, during that hottest-summer-ever-until-the-next-summer, Congress passed the IRA on party line votes, directing historic funding to low-income communities like the ones affected by the housing crisis in Athens. Several programs in the IRA are aimed at building community resilience, improving existing affordable housing with climate-smart retrofits, and encouraging energy efficiency in new construction. Local governments, affordable housing owners, and nonprofit organizations can take advantage of historic funding targeted to disadvantaged communities through the Justice40 initiative.
These programs will not be enough alone to solve the climate crisis or the affordable housing crisis, but they can begin to shift the trends. Below are some of the opportunities available now. If you know of a property owner, local government, or community based organization who might be eligible for any of these programs, please send this blog post to them and encourage them to look into it!
Funding and Assistance Available Now
Below are several IRA programs that are available now. Some programs are for communities meeting specific criteria, and some are more broadly available.
These programs are subject to the Biden Administration’s Justice40 Initiative, an executive order that sets the goal of delivering at least 40% of the benefits of funding for climate and clean energy to communities defined as “disadvantaged” by the Environmental Protection Agency’s Climate and Economic Justice Screening Tool.
HUD Thriving Communities Technical Assistance
What does it do?
The HUD Thriving Communities Technical Assistance program (TCTA) will support coordination and integration of transportation and housing in infrastructure planning and implementation. The TCTA is part of an interagency initiative among the Department of Transportation, HUD, Energy, Commerce, and Agriculture, as well as the General Services Administration and the Environmental Protection Agency.
Who is it for?
TCTA is for local governments that have received federal funding for transportation projects and want to explore options for addressing local housing needs while completing infrastructure projects. For example, a community that has a project to construct multimodal improvements and connect a disadvantaged community could include TCTA to preserve affordable housing in the community.
When is it due?
Applications are accepted on a rolling basis.
Analysis:
The TCTA program can help local governments make the most of opportunities to address multiple community needs and get guidance on how to meet community priorities that cross federal agency boundaries. Often, infrastructure projects have consequences for affordable housing in communities. Receiving technical assistance across agencies could help mitigate the potential negative impacts and ensure that communities see better outcomes from current transportation projects.
HUD Green and Resilient Retrofits Program
What does it do?
The Green and Resilient Retrofits Program (GRRP) provides three different grants to help property owners add energy efficiency and resilience measures to existing affordable multi-family housing. The three programs are called Elements, Leading Edge, and Comprehensive. Which cohort fits a project best depends on where the project is in relation to the recapitalization process and how ambitious the property owner wants to be.
The Elements program provides up to $750,000 per property for gap funding for energy efficiency, renewable energy, carbon emissions reduction, and / or climate resilience measures. Gap funding allows the owner to finance the additional cost of the measures. For example, if a property owner is planning to replace windows in housing units, this grant could provide the additional funding needed to purchase high-efficiency windows instead of lower efficiency windows. To be eligible for this grant, properties must be in the process of recapitalization (a process whereby the owner uses third-party financing to make improvements on the property).
The Leading Edge program provides up to $10 million per property for projects where the owner is interested in pursuing an advanced green certification (examples of green building certifications at this link). Measures could include: energy efficiency, renewable energy, materials with lower embodied carbon, and other resiliency measures.
The Comprehensive program provides up to $20 million per property to properties with extensive needs for energy efficiency and climate resilience. Under this program, HUD provides owners with substantial assistance through recapitalization and the green building process.
Who is it for?
This program has grants for owners of existing HUD-subsidized multifamily housing that are in need of eligible updates. Most eligible properties fall under Section 8, including project-based rental assistance housing with housing assistance payment contracts (PBRA with HAP), Section 202 housing (for the elderly), Section 811 housing (for people with disabilities), and Section 236 (housing preservation). The GRRP is not for non-Section 8 public housing (for example, housing projects owned by public housing authorities), properties that accept housing vouchers but do not have HUD subsidies, or homes owned by low-income homeowners. You can use this map to identify HUD assisted multifamily housing projects in your community, but not all of the identified properties fall under Section 8.
When are they due?
Elements Deadline: March 28, 2024 (Elements NOFO)
Leading Edge: April 30, 2024 (Leading Edge NOFO)
Comprehensive: May 30, 2024 (Comprehensive NOFO)
Analysis:
The HUD GRRP grants could help preserve and maintain existing affordable housing units, and improve the health and wellbeing of residents. These grants are limited to certain properties in specific conditions, so they may not be widely useful across communities, but will make a big impact where eligible properties take advantage of the grants.
Environmental Justice Community Change Grants
What do they do?
Safe and affordable housing is a crucial condition for delivering environmental justice, particularly to communities that have faced disproportionate harm from housing policies that have segregated people by race and restricted access to housing and homeownership for Black and brown people in the United States. The EPA’s new Environmental Justice Community Change Grants program is one of many efforts by the Biden administration to deliver investments and opportunities to disadvantaged communities and begin to redress the harms of past policies. While these grants are not targeted specifically at housing, the goal of these place-based grants to “reduce pollution, increase community climate resilience, and build community capacity to address environment and climate justice challenges” could align well with community goals to improve affordable housing in communities through clean energy, energy efficiency, and other climate resilience measures. Read our Environmental Justice Community Change Grants blog to find out more about these grants.
Who are they for?
Community-based organizations (CBOs) that are governmentally recognized as nonprofits can apply for the Environmental Justice Community Change Grants in partnership with at least one other CBO, or in partnership with tribal governments, institutes of higher education, or local governments.
When are they due?
Applications will be accepted on a rolling basis until November 2024.
Analysis:
The EPA’s Community Change Grants represent huge opportunities for communities to address complex environmental justice problems through community-driven solutions. Safe, affordable housing is just one aspect of environmental justice that could be realized for communities through this grant program. These grants could make a big impact on communities that have often been left out of the benefits of federal investments.
Climate Pollution Reduction Grants
What do they do?
Agencies in most states and the largest metropolitan centers in the Southeast are currently engaged in developing priority action plans to reduce climate pollution through the Climate Pollution Reduction Grants program (CPRG). Plans will be submitted to EPA by March 1, 2024. Once plans are submitted, local governments will have until April 1, 2024 to apply for short-term, “shovel-ready” implementation grants (due May 1 for tribes).
State or local governments for whom affordable housing is a high priority could apply for CPRG implementation grants that provide for energy efficiency, renewable energy, electric vehicle charging, and other climate pollution reducing actions in affordable housing. See SACE’s letter to Tennessee’s Department of Environment and Conservation for example for how CPRG can be used for investing in multifamily affordable housing. For these projects to be included, planning agencies must include them as priorities in their planning grants, so it is important for communities to notify planning agencies that this is a priority for their community. For more information on how to provide feedback to CPRG planning agencies, check out our blog at this link.
Who are they for?
Local or tribal governments, states, and state agencies must lead in implementation grant applications. Local governments are encouraged to form coalitions with other local governments, and can also include community-based organizations, institutions, or private companies as coalition partners.
When are they due?
State, local, and tribal governments must apply for CPRG implementation grants by April 1, 2024.
Analysis:
Residential and commercial buildings are a key sector for climate emissions. While the CPRG program allows for broad measures, communities that are focused on rehabilitating housing could benefit from applying CPRG funds to energy efficiency and clean energy measures for affordable housing.
Tax Credits
What do they do?
The IRA included many tax credits for homeowners, developers, and builders to make home improvements such as energy efficiency, solar, batteries, and electric vehicle chargers.. Some base tax credits can be increased if developers deliver the benefits of clean energy and energy efficiency to low-income residents. The tax credits also encourage local workforce development by providing credit adders if developers pay prevailing wages, establish apprenticeship programs, and locate projects in low-income communities.
The New Energy Efficient Homes tax credit (Section 45 L) provides up to $2,500 per single family home (site built or manufactured), and up to $500 per multifamily unit for builders of new housing that meets ENERGY STAR specifications. This tax credit does not require the housing to meet affordability standards, but the builders could access additional credits if they pay prevailing wages. This tax credit is stackable with Low Income Housing Tax Credits. Only builders can access this tax credit–it is not available to local governments through direct pay.
The Investment Tax Credit for Energy Property (ITC) has been newly increased and extended under the IRA. The tax credit could go to a building owner or other entity that installs solar or battery energy storage systems on a property. The ITC includes additional credits for locating the project on low income-housing, benefitting low-income residents, and meeting prevailing wage and apprenticeship requirements. If all conditions are met, the developer can get up to 70% credit on the investment.
The Alternative Fuel Infrastructure Tax Credit (AFITC) provides up to 30% tax credit for electric vehicle chargers that are installed in rural or lower-income areas. To receive the full tax credit, developers must meet prevailing wage and apprenticeship requirements.
Who are they for?
The New Energy Efficient Homes tax credit (Section 45 L) is for builders of new single family or multifamily housing. This tax credit is stackable with Low Income Housing Tax Credits. Only builders can access this tax credit–it is not available to local governments through direct pay.
The Investment Tax Credit for Energy Property (ITC) (Section 48) is for property owners or other entities that install solar or batteries on a property. The ITC is eligible for direct pay, so local governments and nonprofits that do not have a tax liability can receive a payment in lieu of the tax credit. There is also a residential version of this tax credit for residents’ homes.
The Alternative Fuel Infrastructure Tax Credit (AFITC) (Section 30C), also known as the alternative fuel vehicle refueling property credit, is for property owners or other entities that install electric vehicle chargers or other alternative fuel equipment. The ITC is eligible for direct pay, so local governments and nonprofits that do not have a tax liability can receive a payment in lieu of the tax credit. There is also a residential version of this tax credit for owner-occupied homes.
When are they due?
The IRA tax credits are extended at current levels through 2032. Developers and builders can apply for the credits for the year when the project was completed.
Analysis:
The IRA tax credits provide opportunities for new and existing affordable housing. Building owners and developers who apply these credits can help residents lower their bills and reduce pollution, while increasing property value and reducing tenant turnover rate. Local governments can work to make sure that developers in their communities are aware of the tax credits, and may have opportunities to encourage developers and building owners to take advantage of tax credits to improve affordable housing in their communities.
Home Energy Rebates
What do they do?
The Department of Energy Home Energy Rebate Program provides rebates for home upgrades that reduce energy use. The rebates can be used for whole home upgrades, including insulation and weatherization. Rebates can also be used to offset the cost of new energy efficient appliances, such as electric stoves, heat pump HVAC equipment, and electric heat pump dryers, as well as electrical wiring and panel upgrades. Some of the rebate programs are designed for low-income households, with upfront rebates up to 100% allowed under the legislation for people earning below 80% of the area median income.
Who are they for?
The DOE Home Energy Rebates programs will be administered by state energy offices, which may develop their own eligibility criteria within the elements of the legal framework of the IRA. Homeowners and renters may be eligible for the funds, and building owners or other entities performing the work can access the funds on behalf of residents. Many of the rebate programs will be designed to be used by low-income households.
When are they due?
Most states are currently developing their rebate plans, and most programs are expected to be open by fall 2024. The rebate program is enabled to run through September 30, 2031.
Analysis:
The Home Energy Rebate programs will make available hundreds of millions of dollars to states in the Southeast to upgrade low income homes. Unlike tax credits, the rebate programs have a limited pool of funding. It could make sense for states to target funds to benefit the most vulnerable populations who may not otherwise be able to access funding for home energy upgrades.
Stay Up to Date With SACE
Affordable housing and climate change can be addressed together with investments for local governments, nonprofit organizations, and housing developers. Above, we have outlined some of the opportunities available now, but there are more coming. At SACE, we are always looking for ways for our members to advocate for their communities to thrive with investments in climate and clean energy. To stay up to date as new grants and programs open up, join us on our next Clean Energy Generation monthly call.
Click Here to Join the Clean Energy Generation
The post Meeting the Climate Crisis with Investments in Affordable Housing appeared first on SACE | Southern Alliance for Clean Energy.
Meeting the Climate Crisis with Investments in Affordable Housing
Renewable Energy
Know Your “Isms”
I present the chart at left, though I do so without any belief that it will change anyone’s thinking.
As dozens of the world’s great thinkers have said over the centuries, Don’t expect that reason will have any effect on people who beliefs were formed without reason in the first place.
Renewable Energy
U.S. Sanctions on Iran
Is what we see at left actually true?
Possibly, but no one with the IQ of a turnip believes a word that comes out of these people’s mouths.
Renewable Energy
WindQuest Advisors on Repowering and Rising O&M Costs
Weather Guard Lightning Tech

WindQuest Advisors on Repowering and Rising O&M Costs
Dan Fesenmeyer, Managing Partner at WindQuest Advisors, joins to discuss the repowering rush and the FAA permitting stall, rising O&M costs on larger turbines, tariff pass-throughs, and AI data center demand.
Sign up now for Uptime Tech News, our weekly newsletter on all things wind technology. This episode is sponsored by Weather Guard Lightning Tech. Learn more about Weather Guard’s StrikeTape Wind Turbine LPS retrofit. Follow the show on YouTube, Linkedin and visit Weather Guard on the web. And subscribe to Rosemary’s “Engineering with Rosie” YouTube channel here. Have a question we can answer on the show? Email us!
Welcome to Uptime Spotlight, shining light on wind energy’s brightest innovators. This is the progress powering tomorrow
Allen Hall: Dan, welcome back to the podcast.
Dan Fesenmeyer: It’s great to be here. Great to see you again.
Allen Hall: There is so much happening in your particular area. Your name pops up quite a bit within Weather Guard because, uh, we’re dealing with a lot of operators and- A number of times we’ll ask them, “Have you read your turbine supply agreement?”
“No.” “Have you read your full service agreement?” “No.” “Well, maybe you should do that.” And then we say, “Have you talked to Dan? You should call Dan, ’cause he can help you understand what you have signed.” Mm-hmm. “Oh, that’s probably a good idea.” So now that you’re here, WindQuest Advisors, of course, obviously is your company.
Mm-hmm. And you’re talking to a number of operators. The, the big hurdle at the minute, the nearest short-term hurdle, is repowering. There’s just a lot of [00:01:00] repowering efforts going on- Mm-hmm … trying to get turbines in, start a project. There’s a July 4th deadline and an end of the year deadline. There’s a couple deadlines after that.
What are you seeing right now from operators i- in terms of repowering? What’s the effort happening?
Dan Fesenmeyer: Well, there was a ton of effort to start physical work. That window’s obviously closing-
Allen Hall: Yes …
Dan Fesenmeyer: very quickly, but it’s still open. Uh, and then once you’re past that window, my understanding is if you get your repower completed by the end of ’27, you didn’t really need to have started physical work.
But I think most folks, start physical work is kind of the insurance piece of it-
Allen Hall: Sure …
Dan Fesenmeyer: if things take longer. Uh, another thing that’s popped up is obviously FAA and other permitting.
Allen Hall: On the permitting side, from the federal’s, uh, standpoint, is that stopped? Or, or are projects able to continue putting turbines in the ground, or what’s the status?
Dan Fesenmeyer: My- From what I’ve seen, I think on the opening session here at [00:02:00] ACP, it was said, they said that there’s, like, 130 projects that are-
Allen Hall: At least …
Dan Fesenmeyer: caught. Yes. And I’m, I’m involved with some of them, and I have a fairly small shop, and there’s just no FAA variances or permits or- They’re not issuing- … mitigation studies.
Everything seems to have stopped.
Allen Hall: So they’re not even reviewing the documentation that’s been submitted by the operators at all?
Dan Fesenmeyer: That’s what it seems, yes. Yeah.
Allen Hall: Is that legal? Uh, uh, usually those federal requirements have a timeline which they’re able to review those permits and get them approved or disapproved them.
You’re s- Right … I think what I’m hearing is, what you’re saying is they’re not even looking at them.
Dan Fesenmeyer: That’s correct. That’s what I’ve heard and seen.
Allen Hall: Okay.
Dan Fesenmeyer: Yeah. Yeah.
Allen Hall: So what is an operator to do then? How does this, how do they meet some of these deadlines if they can’t get the permit?
Dan Fesenmeyer: Well, I mean, it stalled a lot of projects ’cause of the associated risk with it.
Although I’ve seen some, uh, you know, some repower folks think, “Well, you know, I’m just repair- repowering like for like, or I’m not changing much.” [00:03:00] But if your, if your rotor’s changing or pad location’s changing, you need to update those permits.
Allen Hall: So the, the groups and the operators that are repowering the existing turbines are putting basically the same turbine in the same hole.
Dan Fesenmeyer: Well,
Allen Hall: I- Would that be okay?
Dan Fesenmeyer: I would say originally- The initial push on repower was kind of your larger rotors- Sure … new drivetrain, et cetera. Yes. The market seemed to shift more towards, “Hey, let’s do smaller upgrades, component exchanges.”
Allen Hall: Okay.
Dan Fesenmeyer: Getting more towards the minimal investment, so to speak.
Allen Hall: The 80% investment portion.
Dan Fesenmeyer: Yes.
Allen Hall: Right.
Dan Fesenmeyer: Yeah. And less about, you know, a big new machine head, for example.
Allen Hall: Well, if that gets you through and gets you the, the, uh, tax credit started back up again, which is the whole point- Right … there would be a reason to do that.
Dan Fesenmeyer: That’s right.
Allen Hall: Is there a marketplace then for those components if you’re gonna repower a GE 1.5 machine, which there’s a lot of them- Mm-hmm
in the United States? Are you seeing a big emphasis to go get a new gearbox, [00:04:00] to upgrade the blades- Yeah, and, and- … kind of
Dan Fesenmeyer: thing? Or just do maybe a drivetrain and s- Okay … and leave the rotor or, or-
Allen Hall: So do a gearbox and-
Dan Fesenmeyer: Yeah. Gear or just full drivetrain- Or generator … or yeah, s- things like that. And, um- Wow
people are comfortable doing it, and then it’s e- it’s easier, obviously.
Allen Hall: Sure. It’s faster.
Dan Fesenmeyer: And faster, and you don’t necessarily have to touch permits or, yeah.
Allen Hall: And is part of that repowering, I know one of the questions- Mm-hmm … that’s been bandied about quite a bit is, do I have to buy a, a new generator or a new gearbox, or is a refurbished gearbox enough to check the box in terms of upgrading or putting 80% of the value back into the turbine to qualify for those tax credits?
Dan Fesenmeyer: I’m not a tax expert, but I’ve seen people do both.
Allen Hall: Okay. Well, that’ll tell you.
Dan Fesenmeyer: Yeah. Yeah.
Allen Hall: They’ve obviously talked to- Right … tax advisors about that.
Dan Fesenmeyer: It’s, it’s their level of risk and whether they have outside tax money or whether- … they’re kind of balance sheet or taking it themselves. It’s, it’s- Yeah … more of a risk profile that [00:05:00] everybody’s different on.
Allen Hall: Okay. So that has changed the landscape quite a bit. So now it’s, once this window of opportunity passes by, we’re into brave new world. Mm-hmm. And operating turbines now not really 10 years, operating till end of life, which could be 20, 25 years. Have operators started thinking about that and starting to address some of the, the, especially the contracts around that?
Are they starting to rethink contracts? Are they starting to approach full service agreements differently? Is, is the marketplace changing in the US?
Dan Fesenmeyer: Yeah, I think so. I mean, it, it, depending what you have and what you’re doing, whether you have an existing agreement or you need a new one, and whether it’s a renewal or if you’re doing, let’s say, a drivetrain or new machine head, then there’s usually a service contract that’s going to come with it- Sure
’cause it’s essentially a new machine. Largely a new machine. Largely,
Allen Hall: yeah.
Dan Fesenmeyer: But in the case of a gearbox, right, you’re probably out of your longterm O&M agreement anyway, and, uh, whether you’re… And you probably [00:06:00] have, you don’t have the unplanned coverage anymore. Right. So it’s really, you’re on, you’re kind of on your own risk.
Allen Hall: Okay, so that’s the repower scenario. Mm-hmm. What’s happening new turbine-wise? It seems like the, a lot of the operators are choosing six megawatt, seven megawatt, eight megawatt machines tends to be the, the, the band of opportunity for a lot of operators. What are they working on right now in terms of, uh, TSAs, full service agreements?
What are you seeing out on the landscape US-wise?
Dan Fesenmeyer: Well, I think, um, the TSAs haven’t changed much.
Allen Hall: Okay.
Dan Fesenmeyer: But the- The, the scope and the risk has changed a bit, and the, the OEMs are, you know, holding their cards closer, and it’s hard to get to certain terms that– harder than it used to be.
Allen Hall: So let’s, let’s talk about that for a minute because, uh, there’s been some recent reports speaking to the O&M costs for larger machines.
And so the, the goal was if I went from a [00:07:00] two-megawatt machine to a six-megawatt machine, my O&M cost may be 3x because of the size of the turbine, but ideally they drop. That, uh, the same amount of effort into a larger, m- newer machine, uh, so, uh, my spend wouldn’t go up that much. In, in some places on the planet that I’ve seen feedback about that is that the O&M costs are not 3x, they’re 5x.
So the, the cost to operate the turbine, the six and eight megawatt machines, is higher than it would be proportionally to a two-megawatt machine. I think operators are just trying to start to figure that out. Are the OEMs already knowledgeable of that fact and are s- trying- I, in, in- … to phrase the conversation
I
Dan Fesenmeyer: mean, in the pricing that you get from the OEMs for the full scope agreements, that’s largely in there already.
Allen Hall: Yes.
Dan Fesenmeyer: And I always tell people look at it on a dollar per kWh or dollar per megawatt hour- Ah … basis versus a dollar per turbine, and you- Sure … you’ll see a different number.
Allen Hall: Different calculation done.
Dan Fesenmeyer: Right. But [00:08:00] these, these larger machines, they need larger cranes. They need tall– Yeah, they have taller towers, so a different crane setup, and these components become very, very large. So- Everything gets harder … everything gets d- more difficult. In a basic sense, it’s still oil and gearbox and, you know, tho- tho- Right
that kind of basic service. But when you get into major components and more major maintenance items, then it’s bigger, it can be harder.
Allen Hall: So what does a operator think about that now that they have a little bit of experience? Obviously SunZia, which is a huge project, three and a half gigawatts, uh, a l- several hun- like around 900 turbines, all of them bigger turbines.
It’s a r- for, uh, really the first real taste in America of larger turbines. What are the operators thinking about that, and how are they thinking about what sizes to go with in the future? Or, or, or do they not really have a choice? Like, GE offers six, Vestas offers six, Siemens will offer a six or a seven, [00:09:00] so those are your choices.
They’re– You’re not able to get a two megawatt machine anymore.
Dan Fesenmeyer: I mean, I think, uh, it really comes down to your, your site. Okay. And the larger machines are generally better when you have land constraints or, uh, y- your, your wind resource varies very differently. Think of a ridgeline, and you only have a certain number of pads.
But generally, it’s kind of a pad constraint to push you to the larger, and then your smaller, “smaller,” four and four to four and a half- … megawatt machines, those are still kind of the workhorses of, of the US, in my opinion. Their NCS better, they’re e- they’re lower cost, but you need more pads. So it’s always that trade-off of pads versus space, spacing, uh, and in the end, you just want to get the most AEP out of that site.
Allen Hall: In terms of marketplace, are you seeing prices generally rise dollars per megawatt on [00:10:00] new turbines? ‘Cause the, at least the market indication is that, uh, some of the OEMs have- Real strength in the marketplace today. This is an, an OEM-strong market. They can set- Mm-hmm … prices now. There’s fewer players. China has been eliminated from a lot of lo- locales.
Mm. So they don’t have the competition. That allows them to raise prices. Are you starting to see that flow down in some of the contracts, that, hey, the prices are going up? But, but i- inflation has been a big part of that, too. Well,
Dan Fesenmeyer: yeah, yeah. I mean, there’s… And tariffs, right? The, uh, that, that’s the most interesting one right now, and you have to kind of peel apart what’s my pre-tariff price versus my post, and then what’s the exposure if these tariffs change?
And-
Allen Hall: Is that in the contracts now? Are they able to write contracts that tie them to what the tariffs could be, so your final price really depends on what the tariffs are today or tomorrow?
Dan Fesenmeyer: It’s generally… Well, things have changed and, and things are always fluid, but, [00:11:00] but most recently it’s, “Well, here’s what the tariffs are today,” and when we either bring in the component or when the OEM’s actually paying that tariff, it’s kind of a pass-through
Allen Hall: in essence.
So they’re just handing you the, the bill for the tariff- Yeah … in a sense.
Dan Fesenmeyer: I mean, that- that’s it. And then you can maybe negotiate and do some things around that to share risk a little bit. Mm-hmm. But the basic premise is, you know, there’s transparency on here’s the countries and the tariff rates. If these change, that’s on the buyer.
Allen Hall: So the OEMs are trying to address that in, in some form w- by moving production into the United States. Vestas has a large blade facility in Colorado. They’ve been expanding that over the last several months. They’ve been hiring quite a bit. Uh, GE with LM up in North Dakota and TPI, and all the discussions around TPI at the minute is to really bolster their supply chain.
Uh, they’re trying to get away from the tariffs as much as they can. Are, [00:12:00] are you… You think you’re still gonna see more of that where a Siemens, a GE, a Vestas are gonna be investing more in the United States to avoid that tariff, or is it just impossible?
Dan Fesenmeyer: I, I mean, I think you… What they’ve done, I… It seems to me, I’m not obviously an expert on that, but it- they’ve moved things where they can And to capture- Mm
you know, where you already have capacity. But starting, yeah, building a new plant somewhere, I’m not sure how wise that is in the environment that we’re in.
Allen Hall: Yeah, you saw a lot of plants that were proposed two, three years ago that have, were never built. It does seem like existing plants that were on site that were closed got reopened.
Kansas, Iowa- Mm-hmm … some of those plants got- Mm-hmm … started over again, which is easier to do, which makes a lot of sense. So they’re going after the, the easiest things first still. We’re in that phase of we’re not gonna put a lot of money into the United States however. We’re gonna utilize what we have and maybe grow what we have.
Dan Fesenmeyer: Right. Or, or similarly, you can move from, if you have more of a… All these supply [00:13:00] chains are global at this point.
Allen Hall: Sure.
Dan Fesenmeyer: But if you happen to have a factory in a country with a lower tariff and versus one that’s higher, maybe you move that. You’re not bringing it over to the US, but you’re moving from, let’s say, India to the UK.
Allen Hall: Sure. So, so- Okay, so there, there’s a lot of sh- card shuffling going on- Yeah … to avoid tariffs.
Dan Fesenmeyer: Yeah, and unfortunately then the tariffs change and- … perhaps you have to change back. And, and the other one, uh, that’s out there, obviously the Supreme Court had their ruling on tariffs, so folks are waiting for a Section 232, which is
Allen Hall: still- Untouchable, in a sense?
Uh-
Dan Fesenmeyer: Well, it- people are just waiting for what, what will Section 232 be. And it’s been looming for months now.
Allen Hall: Over a year.
Dan Fesenmeyer: Yes. So, and, you know, we’re waiting, I guess.
Allen Hall: Is the feeling about that in the industry, uh… I’ll, well, I’ll use a couple of good examples, I think, which, uh, offshore wind being a real stress point United States, and a lot of [00:14:00] the administration’s work to limit offshore development got stopped in the courts.
So anything that was sort of building turbines, putting, had ships out, putting- Mm … uh, monopiles in, they never got stopped. They were delayed a couple of weeks, but they were never really stopped, and it feels like from the outside looking in, is that the courts are not gonna allow some of these, uh, movements by the administration to take effect.
Is the industry in the United States seeing the tariffs and some of the more extreme things that are happening as temporary or, or are they being a little more cautious, saying, “Yes, offshore wind has won a, a number of lawsuits”? But we may not. And th- with the Department of War and 232 and all those events that are happening, what is the outcome there, and w- how are operators thinking about that?
Dan Fesenmeyer: Well, I think we’re in a, in a market where if you have a project that can get built within this window-
Allen Hall: Yeah …
Dan Fesenmeyer: and [00:15:00] you’ve safe har- Like, those projects- And you’re, you’re just in … are desperately moving forward.
Allen Hall: Okay.
Dan Fesenmeyer: Then- ‘
Allen Hall: Cause the trend has been, if you can get it in the ground, they’re gonna let it be developed.
They haven’t been able- Right … to stop anything halfway through. Well,
Dan Fesenmeyer: other, like, the FA is a good example of it-
Allen Hall: Sure …
Dan Fesenmeyer: being stopped. But- Yeah … if you have a project that’s being built, you’re moving forward, and then projects that are outside the window, it’s more of a greenfield development view of, of life.
And seems like some folks are selling p- assets, some folks are buying- A
Allen Hall: lot of that …
Dan Fesenmeyer: development assets.
Allen Hall: Let’s go down that pathway for a minute because I did think- Yeah … that’s a very interesting piece to what’s happening in the United States at the minute. There’s a lot of transactions, big dollar transactions happening for wind- Mm-hmm
on buying, selling portfolios, not just farms. It used to be farms. Right. We’ll sell a farm. Yeah. It was. We’ll swap farms, that kind of thing. Now it’s like, uh, would you like our whole portfolio, wind, solar, battery?
Dan Fesenmeyer: Mm-hmm.
Allen Hall: Is that playing into a lot of the decisions that are [00:16:00]happening on the ground right now, that a, a developer or an operator that has assets is saying, this is a prime time to sell.
There’s a l- I have my tax credits already locked in. We’re golden here- Mm-hmm … for several years. The value is never gonna get higher. I need to get out. I- is that the marketplace today, is-
Dan Fesenmeyer: I think for some. I mean- Yeah … everybody’s got different, uh, motivations, whether they wanna get into wind, get out of wind, greenfield versus repower.
Uh, it, it’s, it’s really their view of the world and their risk profile moving forward, and whether this is a short-term play, long-term. Do we wanna get out of wind? Some people are essentially doing that. Uh, it’s, it’s across the board.
Allen Hall: How’s AI data centers playing into this? What are you hearing?
Dan Fesenmeyer: Oh, I mean, that’s what everybody talks about, AI and data centers, and the demand for power is there.
And- The [00:17:00] issue that, that a lot of us see is wind and solar and battery can all help with that.
Allen Hall: Sure.
Dan Fesenmeyer: And if you want a gas turbine, that’s great, but my former colleagues at GE are gonna tell you it’s 2030- Yes … or later to get one, so what do you do between now and then? And you’re seeing prices go up, which makes these wind farms look pretty good.
Power profile’s nice. Yes. Uh, but you still have hurdles to get, like the FAA, US Fish and Wildlife, all these other hurdles to, you know, that are slowing down wind and solar for that matter too.
Allen Hall: Solar’s been slowed down for sure.
Dan Fesenmeyer: Yeah. Yeah. Yeah.
Allen Hall: Does that change, though, with the demand for power in AI data centers?
And it does seem to be a priority in the United States to, to win this AI race. Mm-hmm. Does that loosen some of the reins on renewables to let them go, like just look the other way for a while, while they put a new solar field or wind farm in?
Dan Fesenmeyer: It stands to reason that will happen. Haven’t really seen [00:18:00] it, unfortunately.
But I wo- But I think it will, right? I mean, it, it, it, it almost has to at some point.
Allen Hall: There’s a lot of pressure on Washington DC to let data centers start being developed and, and go.
Dan Fesenmeyer: Mm-hmm.
Allen Hall: But a- as you pointed out, gas turbines are hard to get, and they can’t scale up at the rate at which the demand is.
Right. So your alternative is something really simple, quick and efficient, which would be wind and solar and a little bit of battery. Yeah. I- is that change in the thinking of operators and how they’re thinking about their assets, one, and two, what they’re thinking about in the future? Or are they trying to hook up with an- a- I mean-
a Google, a Facebook, a- Yeah, I
Dan Fesenmeyer: mean, the offtake’s- … SpaceX … there, and that’s generally, you know, it used to be utility PPAs. Then it turned- Right. … into hedge things and C&I. Yeah. And now it’s more, you have this, the data center offtake.
Allen Hall: Is the data center offtake, thinking about it from a, a financial standpoint, which they’re probably not being tied to the grid.
At [00:19:00] least a lot of these, or at least the talk is right now, is the not being connected to the grid to be sort of standalone, feeding a data center, and maybe a piece of fiber optic coming out of the data center. But that’s essentially it. Maybe some backup power on the grid just in case things go horribly wrong, but standalone power for data centers does make sense.
It would, it would seem to lessen the requirements on wind and solar in terms of interacting with the federal government or the, the power company in a sense. Does that make wind and solar a little more viable because it’s not connected to the grid?
Dan Fesenmeyer: Well, I mean, it will be connected to the grid because when the wind stops blowing, the utility will usually, you know, or, and the sun stops sh- shining- Sure
uh, the utility will kind of provide that power. That w- Or the gas turbines that they have would- Gas turbine will kick
Allen Hall: in, right.
Dan Fesenmeyer: Yes. Yeah. But, but generally speaking, you’re never truly off the grid, but it does speed things up with interconnection and, and, you know, your T&D [00:20:00] line is much shorter.
Allen Hall: Right.
Dan Fesenmeyer: Or not, you know- Much
much, much shorter. Yeah. Depending where the, the resource is and versus the plant or the, the data center.
Allen Hall: So what are the things that we don’t know in the industry that you’re in touch with that we should know? ‘Cause there, there must be a lot happening behind the scenes that we don’t hear out in public or in the common spaces of some of these conferences that are happening behind the scenes.
What is, what is the status right now? What do you think the status is of wind?
Dan Fesenmeyer: I mean, it’s, I, I, I’m a big sailor, and sometimes the wind’s blowing hard- … you’re going fast, and sometimes you sail into what we call a hole- Yeah … and it’s just dead quiet. We’re not quite there yet, but, um, it, it’s kind of we’re going through a bit of a lull right now.
And I think, I think what people don’t realize is the multiple roadblocks that the industry’s facing. In the past, we’ve had PTCs lapse, and the question is when and if it [00:21:00] will be renewed. Yeah. Now you have other roadblocks, you know, whether it’s, again, FAA, Fish and Wildlife, permitting, different localities.
Some… And this goes back to the data center. A lot of local, you know, communities don’t want a data center.
Allen Hall: Right. There’s a lot of-
Dan Fesenmeyer: Right? And they’re like, “Well, wait a minute. My power prices as a citizen are gonna go up- True … because of it.”
Allen Hall: Yeah, it’s true. We’ve already seen it.
Dan Fesenmeyer: Yeah. Yeah. So, so there’s a lot of just new barriers that have come up.
Allen Hall: Okay. That-
Dan Fesenmeyer: But wind developers are an extremely resilient bunch, and-
Allen Hall: This isn’t the first rodeo-
Dan Fesenmeyer: Right …
Allen Hall: where they’ve had these issues pop up- Yeah … and PTCs stop and other world forces affect the industry. What’s the outlook over the next three to five years, do you think? Different administration in a couple years, maybe different outlook, more demand on…
for power, AI data centers. Is- it just gonna [00:22:00] overwhelm any resistance to wind and solar and battery?
Dan Fesenmeyer: I mean, it, it, that’s kind of a crystal ball, but I think if these data centers start getting built out like people think they will, there’ll be demand for power. And, now we’re talking basic economics, Supply, demand. People need power, then power plants will get built and, whether it’s gas, wind, solar-
Allen Hall: All of the above
Dan Fesenmeyer: All of the above, right? And, and I think it will ultimately follow that. I think the, administration will let you know if there’s not enough power or power gets too expensive, something has to break and fill that gap
Allen Hall: because- So let the economics play out a little bit.
Dan Fesenmeyer: Yeah, right? Yeah. ‘Cause we’re, we’re voters, right? And- Sure … and, um, people vote often with their pocketbooks.
Allen Hall: And wind and solar are cheap sources of energy, and they’re gonna come to the top of the list almost every time.
Dan Fesenmeyer: Yeah.
Allen Hall: Yeah. Yeah. Yeah. I, I agree with you. Uh, it’s good to see you again. We saw you a few months [00:23:00] ago at WOMA in Australia, and that was wonderful.
And I tell a lot of the operators we talk to, “You better be talking to Dan and WindQuest Advisors because you really need to understand what your contracts say and the contract you’re signing, and you need to have a better sense of what’s happening, a little more broader speak in the United States and elsewhere- Mm-hmm
and they should be talking to you.” So how do they call or how do they contact WindQuest Advisors to get started?
Dan Fesenmeyer: Well, www.windquestadvisors.com or reach out to Allen and his team. You’re on LinkedIn. I’m on LinkedIn as well- … both personally and my firm. And, um, ask a friend ’cause I have a, we have- … big networks that everybody…
You know, it’s, it’s a small community here. It
Allen Hall: is.
Dan Fesenmeyer: Right?
Allen Hall: It is.
Dan Fesenmeyer: And, and people bounce around different firms and, but people stay connected, so, um, that’s a great way to find each other as well.
Allen Hall: Yeah. Great to see you, Dan. Likewise. Thank you. Thanks for being on the podcast. And yeah, we’ll hopefully see you in Australia in a couple months.
Dan Fesenmeyer: Looking forward to
[00:24:00] it.
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