I’m going to make a bold prediction. Regardless of the investment tax credit (ITC) sunsetting and tariffs, solar and energy storage will still be replacing the development of new gas plants. Here’s why:
First, according to a recent Wood Mackensie report, there’s 133 gigawatts of proposed data center load coming onto grids across the U.S.—And that’s up 80 GW since just July 2024.
Only 6% of these centers are slated to have on-site power
Oh, and despite the news about powering these data centers with nuclear power, I’ll believe that when I see the MWh. They’re too expensive, are always over budget, no one wants to live by them, and they take over decade to build.
So, what are the solutions?
Historically, (like if this were 10 years ago) the answer would be to build more natural gas plants, but that’s not going to be the solution. Here’s why:
Why We Can’t Just Build More Gas Plants
First, new combined-cycle gas plants now cost over $2.20/watt while tariffs and permitting challenges are delaying or canceling projects, particularly in deregulated markets like Texas.
Second, there are only 3 major turbine manufacturers in the world—GE, Siemens, and Mitsubishi—and they only make about 130 units a year. If a developer or utility ordered a turbine today, they might get it delivered by 2030. Then add 2–3 years of construction, and you’re looking at 2033 before a single MWh is generated.
Even if you get the turbine, you still need firm gas delivery contracts, pipelines, a trained labor force, and one of just a handful of EPCs that can actually build the plant. Stack all of that up and that takes lots of lawyers, time, and money.
Even If You Could Build New Gas Plants —It’s Not Cheap
Speaking of money, let’s say you somehow speed up making turbines (not possible) and secure an EPC that knows how to build one of these (rare), and get the right of ways. The economics still don’t make sense compared to building solar and storage.
According to Wood Mac, gas from a new build today is 2 to 3 times more expensive than solar+ storage—even without tax credits. Did you hear that? Even without the ITC…
Even if you get the plant built in 7 or 8 years, fuel costs are volatile, and the PPA puts that volatility on the off-taker— data centers, utilities, which is ultimately you – the ratepayer!
They’d be better off getting free fuel from the sun, and that’s where solar and batteries come in.
Why Batteries and Solar+Storage Will Win the Energy Race
Batteries alone can still qualify for the ITC. While there are domestic supply constraints right now, there’s still runway to safe harbor against the restrictive FEOC requirements. Additionally, with demand being so high, we’re already seeing manufacturers pivot to a FEOC compliant supply chain.
Even without any subsidies, Lazard just published a report that concludes that solar+storage is cost competitive with gas, but as we’ve discussed, gas plants can’t be built quickly.
On the other hand, developers like Renewable Properties can deploy a stand-alone energy storage solution for data centers or utilities in two years or less – that’s a lot faster than seven years!
Battery installations alone can provide firm backup power, meeting this immediate demand for extra capacity.
When batteries are deployed with solar, we can supply the firm new capacity that these new data centers need today, in two years, and at a fixed price PPA that can be locked in for the 35-year useful life of the project.
So where does that leave us?
If you’re in the energy industry, now’s the time to lean into stand-alone storage and solar+storage. It’s not just the future—it’s the only way we keep the lights on.
And that’s Watt’s the Deal!
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