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Dive Brief:
- Changes to the federal policy landscape and rapid load growth projections have led utilities and developers to recalibrate toward deploying traditional dispatchable resources like natural gas, resulting in clean power growth slowing from its 2024 peak, while fossil capacity — if dispatched as projected — “could reach a market share not seen since the early 2010s,” the Environmental Defense Fund said in a report released Tuesday.
- However, the deployment of gas-fired generation faces headwinds, including turbine shortages and the potential for natural gas price volatility, which could drive up the Levelized Cost of Energy for gas plants, the report noted.
- “Rising gas turbine costs and supply shortages are already making new gas plants more expensive and slower to build, prompting some developers to consider clean power alternatives that can often come online faster and at a lower cost,” David Villagrana, EDF’s lead counsel for clean energy tax solutions, said in an email to Utility Dive.
Dive Insight:
While clean energy “continues to account for the largest share of planned U.S. power sector development,” EDF said planned development has slowed while fossil fuel deployments have caught up. “Based on capacity factors, planned natural gas project capacity is now comparable to that for solar and wind,” the report said.
An Oct. 8 Wood Mackenzie analysis found that investment in gas generation capacity is entering “a supply deficit cycle through the late 2030s, driven by data centre load growth, a dynamic that keeps thermal capital costs elevated and reinforces the long-term economic case for renewables and storage.”
Federal policy changes like coal industry subsidies, repealed greenhouse gas regulations, the rollback of clean energy tax credits and barriers for permitting new clean energy are increasingly incentivizing utilities and developers to pursue fossil fuel generation, the report said.
For that reason, Villagrana said, it’s “difficult to predict how much the market will shift,” even as developers encounter barriers to deploying new gas.
The Bipartisan American Affordability and Jobs Act, which was introduced in the Senate Sept. 30, would prevent the revocation or suspension of previously issued federal permits for energy projects, and create a right for projects to sue over a pattern of “disparate” federal treatment based on project type.
Villagrana said EDF “is still reviewing the bill and working with modelers, partners and colleagues to understand its impact.”
BAAJA would also speed the federal permitting process by altering the National Environmental Policy Act. Groups like the Sierra Club have criticized aspects of BAAJA, saying it “weakens environmental laws,” while the legislation received strong support from other groups like the Citizens’ Climate Lobby.
Fossil generation’s exposure to global risk
Fossil fuel project cancellations have also declined at the same time that clean energy cancellations have increased, said EDF’s report. Fossil fuel project cancellations dropped in 2024 and have remained low through the first half of 2026, the report said. Clean energy project cancellations have increased since 2022, and nearly 5% of a planned 281.7 GW of deployment was canceled in 2025.
One contributing factor is the Trump administration’s policy of issuing emergency orders for coal plants to continue operating past previously set retirement dates, and funding new coal plants and retrofits, EDF said.
EDF’s report noted that the cost of fossil fuel generation is more exposed to geopolitical risk, citing an Energy Innovation analysis from June which found that a spike in coal and gas prices like the one the U.S. saw in 2022 would “push up electricity costs $40.5 billion per year under a fossil fuel-heavy scenario.”
“If utilities and developers respond to power demand primarily with new fossil generation, consumers could face higher costs from turbine supply constraints, rising capital costs, and fuel price volatility,” EDF said.
In terms of the impacts of the Iran war and associated ongoing fuel crisis, Villagrana noted that these factors have so far “put more pressure on gasoline and diesel prices than on U.S. natural gas prices, so we anticipate limited immediate impacts on power development decisions.”
“But a prolonged crisis highlights the risks of investing in fossil fuel power plants that depend on volatile fuel prices for decades,” Villagrana said. “Wind and solar don't require fuel purchases, helping protect consumers from price swings and providing greater long-term cost certainty.”