The future of power generation projects is anything but certain, especially with the ever-shifting landscape of federal policies. But despite this cloud of uncertainty hanging over 2025, one thing remains crystal clear: the relentless demand for more power. As panelists at Infocast's Energy Independence Summit in Houston, Texas, emphasized, this demand is the unstoppable force driving development forward.
"There's always change, and this year felt like a constant scramble to decipher what policy would actually materialize," observed Nate Sweet, director of mergers and acquisitions at Primergy Solar, during a session on October 23rd. He painted a picture of an industry caught in a cycle of waiting, reacting, and striving to stay ahead of the curve. "Having policy certainty toward the end of this year has been really helpful, but obviously, uncertainty is just not helpful," Sweet said. Imagine trying to build a house when the blueprint keeps changing mid-construction – that's the kind of frustration developers have been facing.
But here's where it gets controversial... While uncertainty creates headaches, Sweet also highlighted a surprising undercurrent: "The undertones of all of this, while there has been some uncertainty on policy, is really excitement. There's a lot of energy that needs to be deployed." This excitement stems from the sheer scale of the energy demand that needs to be met, regardless of policy headwinds.
Erika Taugher, renewable energy director at Pattern Energy, echoed this sentiment and stressed the importance of diversification within the industry. "I think we need both sides to really come together, and I think partnerships are going to be really important," she stated. She envisions a future where renewable sources like solar partner strategically with traditional energy sources like natural gas, perhaps even incorporating carbon capture technologies. This collaborative approach could address the inherent intermittency issues associated with wind and solar power. Think of it as a team effort, leveraging the strengths of different energy sources to ensure a reliable and consistent power supply.
Navigating the complex world of capital is another significant hurdle. "I think the challenges over the last five years have really benefitted the larger and more experienced developers that are very prudent about moving projects forward," Sweet noted. These established players have the resources and expertise to weather the storms of regulatory changes and financial complexities.
Looking ahead to 2026, Sweet anticipates a bifurcated M&A market, essentially two distinct landscapes for mergers and acquisitions. And this is the part most people miss... He points to the substantial non-refundable deposits – sometimes tens of millions of dollars – that projects must post before fully understanding interconnection costs or resolving permitting and risk issues. This "fish or cut bait" approach, driven by queue reforms aimed at weeding out speculative projects, is creating a situation where some developers simply can't afford to proceed. "The industry is starting to see some projects that developers just can't bring forward because it's too expensive," Sweet explained.
"I think there is an opportunity for buyer-friendly market there on the project side," Sweet suggested. In other words, next year might offer favorable conditions for buyers seeking to acquire projects that are struggling to get off the ground.
However, on the flip side, there's a scarcity of fully de-risked projects ready for near-term operation. Those developers who can successfully navigate the risks and bring viable projects to fruition will command a premium, whether they're seeking power purchase agreements or sponsor-level investments. The key is demonstrating the ability to manage risks effectively and monetize projects appropriately. The demand for projects that are ready to go is immense. "I think the capital is still there, whether that's American capital or overseas capital. There's still new capital flowing in and capital staying in US clean energy, but also the energy space in general," Sweet reassured.
Shariff Barakat, a partner at Akin, reinforced this point during a separate panel on October 22nd, emphasizing that the underlying demand for power will persist even if tax incentives disappear. "These projects are going to get built, and whether it is the federal government subsidizing them or technology companies having to pay up in [power purchase agreements], there's going to be a healthy demand for growing power," Barakat asserted.
Tim Tarpley, president of Energy Workforce & Technology Council, cautioned developers against relying solely on tax credits. "The tax credits can be a benefit, can help support the goals, but given how back and forth energy policy has been during the past two administrations, I think you have to really build out a model that can be sustainable without those credits," Tarpley advised. He identified federal permitting reforms and tariffs as the most pressing challenges. The current government shutdown only exacerbates the permitting issue.
"Our companies are having a difficult time moving their supply chains quite as fast as the tariff structure is designed to push or see shortage of certain products that simply can't be forged here quick enough and that is limiting the ability to meet this challenge," he concluded.
Here's a thought-provoking question: Given the inherent uncertainties in government policy, should energy companies prioritize projects with inherently strong business models, even if it means potentially missing out on short-term gains from tax incentives? Or is a more aggressive, incentive-driven approach worth the risk? What innovative solutions can be implemented to address the supply chain bottlenecks caused by tariffs, and are there alternative sourcing strategies that can mitigate these challenges? Share your thoughts and opinions in the comments below!
