Gas Boom Grows, Solar Boom Slows Amid A Failing Energy Transition

Forbes

4 days ago

WASHINGTON, DC - APRIL 25: U.S. Energy Secretary Chris Wright speaks during the Semafor World ... More Economy Summit 2025 at Conrad Washington on April 25 2025 in Washington, DC. The Summit, held from April 23-25, gathers CEOs, government officials, financial leaders, and more for conversations on the state of the global economy. (Photo by)
A pair of stories in recent days illustrate the rapidly shifting equation for the prospects of a real energy transition in the United States during Donald Trump's second presidency. Thanks in large part to the administration's radical rebalancing of federal energy policies, the momentum is shifting heavily in favor of traditional energy sources like oil, natural gas, and nuclear power as tax breaks and subsidies for renewables are being systematically eliminated. The end result is an altered outlook on which form of generation will boom into the future.
A Gas Generation Boom Driven By AI
In the July 24 issue of the Wall Street Journal's Climate and Energy newsletter, Ed Ballard writes that 'There's Never Been a Better Time to Be Selling Natural-Gas Turbines.' On the same day, Reuters published a piece by Nichola Groom headlined, 'Boom fades for US clean energy as Trump guts subsidies.' Taken together, the stories detail a reversal of Biden-era fortunes for the respective industries which has come about more rapidly and comprehensively than anyone could have realistically imagined just six months ago.
This time last year, speculation ran rampant that a long backlog for sourcing natural gas turbines would limit the prospects for natural gas to provide a major share of new power generation needed to meet rapidly rising electricity demand. But, as the big tech companies in the AI industry, whose enormous data centers springing up across the country are the major driver of incremental demand, developed plans to secure their power needs, a consensus began to form that natural gas generation is the ideal solution for the coming decade for a variety of reasons.
Outside view of the newly completed Meta's Facebook data center in Eagle Mountain, Utah on July 18, ... More 2024. The data center is a complex of five large buildings each over four football fields long and totaling 2.4 million square feet. (Photo by GEORGE FREY / AFP) (Photo by GEORGE FREY/AFP via Getty Images)
Those reasons include:
As that consensus began forming last summer, Ballard writes, prices for the turbines 'went through the roof.' But, at the same time, the handful of big turbine manufacturers, including GE Vernova, Siemens Energy, and Mitsubishi Heavy Industries, developed and announced plans to expand existing facilities, build new ones, and increase their output of new turbines.
Ballard notes that all three companies are in the process of expanding their U.S. operations, adding that 'GE Vernova looks the most convinced,' pointing to plans to expand the output from its Greenville, SC plant from 55 turbines per year to as many as 80, a 40% increase. More expansion may ultimately be needed given the current backlog with lead times as long as four years, but GE Vernova CEO Scott Strazik says his company will need more certainty around the AI industry's ultimate true generation needs before committing his company to more capital outlays.
Solar Boom Slows Amid D.C. Policy Shift
While gas generation is in a renaissance, Groom says the U.S. solar boom of recent years has suddenly stalled. Indeed, the boom may already be fading amid decisions by an array of solar manufacturers to cancel planned new capital investments.
'Singapore-based solar panel manufacturer Bila Solar is suspending plans to double capacity at its new factory in Indianapolis,' writes Groom. She also points to decisions by both Canada-based Heliene and Norwegian solar wafer maker NorSun to re-evaluate or suspend planned new investments as federal policy shifts.
Groom also notes that even a pair of fully permitted solar facilities in Oklahoma now face cancellation in the wake of the enactment of the One Big Beautiful Bill Act (OBBBA), which gradually repeals Biden-era tax breaks and subsidies for both the wind and solar industries in the coming few years. The President levied another hit at solar's future with a July 7 executive order directing strict enforcement of OBBBA provisions by Treasury Secretary Scott Bessent. All told, according to energy researcher Rhodium Group, a total of $373 billion in clean energy investments are now at risk.
The pair of Oklahoma projects are likely to be joined by a rash of cancellations of planned solar and wind projects in the coming months, as developers determine they won't be able to meet the OBBBA's deadline of being placed in service by the end of 2027 to continue to benefit from the investment tax credit. Capital flight is also likely to become a rising problem as private equity and institutional investors reallocate capital to more profitable ventures with higher degrees of certainty. Some of that capital seems likely to end up being invested in gas generation capacity instead.
Where Do The Competing Booms Go From Here?
In a July 22 interview on Fox News Special Report with Bret Baier, Energy Secretary Chris Wright said he and the administration are for 'everything that works. Anything that can deliver affordable, reliable, secure energy.' Prodded by Baier, Wright gave a dim assessment for the wind industry's future in the United States, saying 'value of the energy [it generates] is very low - who knows when the wind's gonna blow - and there's been huge public opposition to onshore and offshore wind.'
But Wright's view of the future for the solar industry was more positive, saying, 'Solar is a different story. Solar is growing rapidly in the United States right now and I think it's got a future.' But, he added, 'The idea there was just it should have a commercial future not paid for by the taxpayers' future.'
Thus, the key for the solar industry to revive its boom times in the remaining 42 months of this second Trump presidency will be to develop sustainable business models which create solid, investable rates of return without major federal tax breaks or subsidies. That seems a major challenge given that, if such a model exists, it would likely have already been deployed.
Meanwhile, the natural gas industry will face challenges of its own. A slowing of the solar boom places added pressure on natural gas generation companies to mount a major, rapid expansion of new capacity in the parts of the country where it will be most needed. Some key states, like Texas, in which the AI industry is rapidly expanding have been and are likely to remain welcoming to gas generation. Policymakers in some other big AI states seem likely to need more convincing.
For an industry experiencing a current equipment procurement backlog and whose infrastructure has experienced significant ill-timed failures in recent years - like the freeze-ups in Texas during 2021's Winter Storm Uri - the ability to sustain its current boom and grow it into the future is not necessarily a foregone conclusion. Much work remains to be done.