The United States is confronting a significant surge in electricity demand, while at the same time federal policy is shifting away from clean energy support, in both tone and substance. Nonetheless, in this evolving landscape there are still signs that market necessity will continue to push energy providers and developers toward scalable, fast-track solutions that include renewable energy sources.

The Political Climate 

The change in rhetoric toward climate change initiatives has been apparent since the beginning of the current administration. On July 4, 2025, President Trump signed H.R.1, the “One Big Beautiful Bill Act,” which made large cuts to renewable solar energy projects and put restrictions on energy tax credits. Of particular note, the following provisions will impact the renewables industry:

• The Clean Energy Investment (48E) & Production (45Y) Tax Credit had deadlines placed on solar projects — requiring that projects must commence construction on or before July 4, 2026, or be placed into service by December 31, 2027, to be eligible for the credits. 

• The Residential Clean Energy Tax Credit (25D), which allows homeowners to deduct 30 percent of a system’s cost in taxes, has been scheduled to terminate on December 31, 2025. 

• Finally, in 2026 there will be restrictions placed on Foreign Entities of Concern (FEOC), where projects will have strict limits placed on “material assistance” from Specified Foreign Entities (SFE) or Foreign Influenced Entities (FEI) if they plan to claim clean energy tax credits [1].

  
  

The shift in policy priorities also extends to the Department of Energy (DOE), which published a report on July 29, 2025, that downplays the economic effects of carbon dioxide–induced climate change and concludes that some mitigation strategies may be more harmful than beneficial [2].  

Additionally, on October 2, 2025, the DOE announced the termination of $7.56 billion of awards issued by the Offices of Clean Energy Demonstrations (OCED), Energy Efficiency and Renewable Energy (EERE), Grid Deployment (GDO), Manufacturing and Energy Supply Chains (MESC), Advanced Research Projects Agency-Energy (ARPA-E) and Fossil Energy (FE). The awards had been targeted to support 223 projects in large scale decarbonization and sustainable energy [3].

The Reality of Increasing Power Demand 

Despite a shift in the substance of American energy policy, there are clear signs that necessity will continue to push energy providers and developers toward solutions that will involve renewables.

Electricity demand in the U.S. remained relatively unchanged for two decades, with increases associated with population and economic growth being offset by efficiency improvements and a shift from more energy-intensive industries like manufacturing to less intensive ones like services. However, this dynamic is changing, as the U.S. Energy Information Administration projects that U.S. power demand will increase from 3,900 billion kWh in 2024 to 5,800 billion kWh by 2050, representing a 46% increase [4]. 

This demand is being driven by a triple wave of new growth:

• The AI and data center boom: The computational power required for generative AI and large language models is enormous. In a 2024 forecast, the Boston Consulting Group estimated that data centers, which consumed 2.5% of U.S. electricity in 2022, could see their consumption triple by 2030, demanding an additional 390 terawatt-hours annually, which is equivalent to the power used by 40 million homes [5]. 

• Industrial and manufacturing onshoring: Spurred by legislation like the CHIPS and Science Act and the Inflation Reduction Act (IRA), manufacturing for semiconductors, batteries, and electric vehicles is returning to the U.S., bringing with it significant new industrial power needs and a trend towards a US economy with more domestic manufacturing. 

• Electrification of transport: The steady, increasing adoption of electric vehicles continues to add new, decentralized demand to local grids nationwide.

This flood of new demand has utilities and grid planners scrambling. This urgency has revived an “all-of-the-above” energy strategy, where solutions are evaluated on a range of priorities, including their deployment timelines. 

The Need for Speed: Renewables at the Forefront 

When time is the most critical factor in the deployment of new power production, renewables — solar in particular — are often the quickest solution. 

Among all generation sources, utility-scale photovoltaics offer the fastest route from conception to commissioning. According to the Solar Energy Industries Association, average solar photovoltaic power plant development time is 1.44 years [6]. This quick turnaround is a key reason that solar accounted for a remarkable 61% of the 42 GW of new utility-scale capacity added in 2024 [7].

Baseload Considerations 

However, without widespread, long-duration energy storage currently available and deployed (such as battery energy storage solutions), the variable and intermittent nature of many renewable energy sources means that other power sources are still required to ensure grid stability and resiliency.

Natural gas remains the single largest source of energy for the U.S. grid, accounting for approximately 43% of total electricity generation in 2023, according to the Energy Information Administration (EIA) [8]. Building a new combined-cycle natural gas power plant, from initial site selection and complex permitting to construction and grid connection, typically takes 3 to 5 years, but sharply increased demand has extended the wait for gas-fired turbines up to 7 years [9]. This timeline would fall short of current projected needs, but natural gas will likely remain a critical component for ensuring baseload and peaker capacity in the medium term. 

Prospects for Advanced Nuclear 

Emerging technologies like small modular reactors (SMRs) and other advanced designs promise carbon-free, stable power with a smaller footprint. While a highly anticipated part of the future energy mix, their widespread deployment is not imminent. The first SMR projects are still navigating complex, first-of-a-kind licensing processes with the Nuclear Regulatory Commission (NRC), face significant supply chain hurdles, and engineering challenges before even developing the first prototype reactors. Realistically, the first commercially replicable projects are on a 7- to 10-year timeline, making them a solution for the 2030s, not the pressing needs of today. 

An Urgent Focus on Execution 

Whether the motivation is decarbonization, economic competitiveness, or national security, the imperative is clear: to build more generation and update the grid and transmission system to meet increasing power demands. Doing so requires an urgent focus on execution. While long-term solutions like advanced nuclear are vital, the immediate gap must be filled by current technologies. 

The Role of Private Credit 

The U.S. power production mix, recently characterized by a transition toward low carbon sources, now faces mounting uncertainty — from shifting tax incentives to supply chain bottlenecks and regulatory delays — making the path forward anything but straightforward. This complicated risk environment is where traditional financing models can fall short. Projects now demand more flexible, reliable, and sophisticated capital partners who can navigate this complexity. 

With the energy transition as one of our thematic sectors, Chestnut Run Capital has been addressing this more complicated risk environment alongside those developing sustainable energy solutions. As a provider of structured debt financing, we are able to partner effectively with such companies in meeting project milestones — and ultimately advance the growth of this sector. 

References

[1] J. Arrington, “Text - H.R.1 - 119th Congress (2025-2026): One Big Beautiful Bill Act,” Congress.gov, Jul. 04, 2025. https://www.congress.gov/bill/119th-congress/house-bill/1/text

[2] “A Critical Review of Impacts of Greenhouse Gas Emissions on the U.S. Climate,” 2025. Available: https://www.energy.gov/sites/default/files/2025-07/DOE_Critical_Review_of_Impacts_of_GHG_Emissions_on_the_US_Climate_July_2025.pdf

[3] “Energy Department Announces Termination of 223 Projects, Saving Over $7.5 Billion,” Energy.gov, Oct. 2025. https://www.energy.gov/articles/energy-department-announces-termination-223-projects-saving-over-75-billion

[4] M. Schipper and T. Hodge, “After more than a decade of little change, U.S. electricity consumption is rising again - U.S. Energy Information Administration (EIA),” Eia.gov, 2025. https://www.eia.gov/todayinenergy/detail.php?id=65264

[5] “Data centers projected to strain electric grid | SSTI,” Ssti.org, Oct. 09, 2025. https://ssti.org/blog/data-centers-projected-strain-electric-grid

[6] “We Need Solar and Storage to Address the Energy Emergency – SEIA,” SEIA, May 15, 2025. https://seia.org/blog/we-need-solar-and-storage-to-address-the-energy-emergency/

[7] “Solar, battery storage to lead new U.S. generating capacity additions in 2025 - U.S. Energy Information Administration (EIA),” Eia.gov, 2025. https://www.eia.gov/todayinenergy/detail.php?id=64586

[8] U.S. Energy Information Administration, “Use of natural gas-fired generation differs in the United States by technology and region - U.S. Energy Information Administration (EIA),” www.eia.gov, Feb. 22, 2024. https://www.eia.gov/todayinenergy/detail.php?id=61444

[9] “US gas-fired turbine wait times as much as seven years; costs up sharply,” S&P Global Commodity Insights, 2025. https://www.spglobal.com/commodity-insights/en/news-research/latest-news/electric-power/052025-us-gas-fired-turbine-wait-times-as-much-as-seven-years-costs-up-sharply