A Wave of Clean Energy Project Cancellations May Be Coming
The risks are highest in states that have been slowest to permit projects
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Last week House Republicans introduced a budget bill that includes a repeal of key parts of the Inflation Reduction Act — a move that could threaten the financial viability of clean energy projects across the U.S.
The bill’s exact details are still being debated, but the current draft proposes phasing out clean electricity tax credits starting in 2028. That would put many long-lead-time projects at risk, especially those slated to come online in 2029 or later.
The proposed bill would have disastrous consequences for planned projects across the country. But projects in some states are far more vulnerable than others. In California, where permitting delays routinely stretch out for a decade or more, hundreds of solar, wind, and battery projects suddenly find themselves at risk.
To understand which kinds of projects might be most exposed, I used Cleanview’s project tracker to analyze data from California and Texas — the two states with the largest clean energy markets. The analysis reveals a sharp contrast in project development timelines between the two states — and shows how those timelines could shape which projects survive and which may get canceled.
Most projects in California are at risk
In California, hundreds of projects are expected to come online after 2028, the year the tax credits are set to phase down. These projects have a combined capacity of 85 GW — enough to power tens of millions of homes.
In fact, two-thirds of all projects in California’s CAISO interconnection queue are at risk. If the bill passes in its current form, they would see reduced tax credit value — potentially jeopardizing their financial viability and leading to cancellations.
That’s not the case everywhere. While California faces a wave of projects that may not reach completion before the tax credit deadline, most currently planned projects in Texas appear largely insulated from that threat.
Most Texas projects avoid IRA-repeal risk
Texas clean energy developers have a lot to worry about close to home. The state’s legislature has proposed a slew of anti-clean energy bills this session. But most projects that have been proposed aren’t at risk of losing federal tax credits.
Just 9% of projects in ERCOT’s interconnection queue are expected to come online after 2028. That means the vast majority of projects that have already been planned and permitted could get built and receive their full tax credits.
At first, this might seem surprising: why are so many more projects at risk in California than Texas? The answer becomes clear when you compare how long it takes to build clean energy in each state though.
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Why permitting delays matter more now
California is famously slow at building infrastructure. Whether its solar farms, housing, or high-speed rail, the Golden State is struggling to create the stuff of modern life in the 21st century. Much of this is due to a permitting regime and set of regulations that have crippled infrastructure projects across the state. Environmental reviews have been used to block everything from bike lanes to solar farms to public transit projects.
Projects in Texas don’t face the same delays. The state has one of the most hands-off approaches to permitting and regulation. (As I’ve written, there are a lot of downsides to this approach).
In the chart below, I’ve plotted every planned clean energy project in the CAISO (California) and ERCOT (Texas) interconnection queues using Cleanview’s project tracker. For each project I calculated how long developers expect the project to take from beginning to end. The pattern is unmistakable.
In California, the average clean energy project in CAISO’s queue is expected to take 10 years from initial interconnection request to final completion. In Texas, projects in ERCOT’s queue are expected to take half the time at 4.5 years.
But that’s, of course, just the average. Some projects that are in the CAISO queue were proposed more than 20 years ago, when George Bush was president and Donald Trump was still just a reality TV star.
The story of the Tule Wind project in San Diego County is illustrative of the types of challenges that clean energy projects face in California.
In 2004, Iberdola, Tule Wind’s developer, submitted an interconnection request and began the process of development. Because the project was set to be located on both state and federal land, it required both a NEPA and CEQA environmental impact report. Those took two years. After the state and federal government issued their reports, the county of San Diego had to issue its own report. Then, after that, the state’s public utility commission had to approve the power purchase agreement between the developer and the state’s utility. And then, finally, the State Lands Commission, which controlled a small strip needed for phase two of the project had to weigh in. By this point, it was 2016—12 years after the project was first proposed. But the real saga was only just getting started.
Each state review and decision opened up a new opportunity for litigation from any member of the public. In 2014, a local group began launching a series of lawsuits targeting the project. At first they claimed that the electromagnetic frequency (EMF) from the wind turbines would cause cancer. When that didn’t work, they argued that the turbines would kill eagles. Their lawsuits were ultimately unsuccessful at stopping the project, but they added years to the development timeline.
20 years later, the second phase of the project is still not complete. It’s expected to come online in December 2027.
California’s slow permitting process is a big reason so many of its projects are at risk going forward: by the time many of them reach the finish line, the policy landscape may have already changed beneath their feet.
In clean energy time is risk
A few years ago, I wrote a story about a small group of anti-clean energy activists who successfully blocked an offshore wind farm substation from being built on the East Coast to support the Skipjack Wind Project. It was tempting at the time to see it as a small setback. Hundreds of similarly small and mundane delays plague clean energy projects across the country every year. They barely make the local news.
But in clean energy development — and in the larger project of decarbonization — time is risk. When Skipjack Wind couldn’t build its substation, it had to scramble to find an alternative site. That created a two year delay. Normally, a two year delay isn’t a big deal, but for Skipjack Wind it was. Instead of completing the project in 2022 as initially planned, the project got hit with huge cost increases as a result of the pandemic. In 2024, the project was forced to withdraw from its offtake contract with the state of Maryland. Today, it’s unclear whether the project will ever reach final completion.
Skipjack Wind isn’t an outlier. It’s a case study in how small delays can snowball into cancellations, especially in times of chaos and uncertainty. In clean energy, delay can do more than defer progress; in some cases it can stop it entirely. And if federal support like the IRA begins to unravel, projects already walking a tightrope may never make it to the finish line.
