Long federal permitting timelines are putting clean energy projects at risk due to high system costs and delays, prompting developers to restructure their developments to avoid the process altogether, according to research from clean energy financing platform Crux.
The new findings, released by Klux on Tuesday and shared exclusively with Politico, come as a bipartisan group of lawmakers pursue comprehensive permitting reform legislation and as the Trump administration enacts new bureaucratic hurdles for permitting solar and wind power.
Another factor behind this is the rapid increase in electricity demand due to the growth of data centers, the promotion of expanded electrification, and new domestic manufacturing.
In February, Crux surveyed 50 developers and permitting professionals across the country who have developed solar and wind power projects, among others, and have experience with the federal permitting process. The majority of respondents are planning projects exceeding 1 gigawatt this year.
Overwhelmingly, they found the process was “delaying clean energy projects,” said Hassan Nazar, director of policy at Klax.
“At a time when we need more electrons than ever, there is less energy available and costs are increasing,” Nazar said.
More than 80% of those surveyed said they intentionally locate projects to avoid triggering federal permitting requirements, making decisions based on regulatory avoidance rather than where energy is needed most.
This could harm states with important federal lands, jurisdictions and resources, which could ultimately result in the loss of development that would occur there, the report said.
“Generally speaking, this is a market distortion that not too many people talk about,” Nazar said. “This means that the true cost of federal permitting in this system is probably an underestimate because projects that are not built do not show up in the data.”
All survey respondents reported having a project that was “significantly” impacted by a federal permit in the past 12 months, the survey found. This equates to approximately 11 GW of capacity across survey respondents last year alone. That figure likely underestimates the impact on the industry as a whole, Cracks said.
94% of respondents cited federal permits as a factor in project delays and cancellations.
According to anecdotes detailed in the new report, these delays include solar projects delayed by up to 10 months due to late-stage biological studies and storage projects delayed by six months due to Endangered Species Act consultations.
Respondents reported delays of more than six months on average over the past year, leading to additional project costs.
Cracks said all respondents reported an increase in development costs, with the majority citing a 6 to 10 percent increase in total project costs. Some respondents reported increases of more than 25%.
Thomas Hochman, director of energy and infrastructure policy at the American Innovation Foundation, who wrote the report’s foreword, said when things become longer and less predictable, development costs rise, which are ultimately passed on to ratepayers.
“We are in an era of affordable politics, and allowing reform is one bipartisan way to address this issue,” Hochman said.
Lawmakers on the Hill are seeking a breakthrough in years of efforts to reach a compromise to update the federal government’s permitting process. As environmental reviews and other procedural bottlenecks stall projects across the country, developers in both the renewable energy and fossil fuel industries are seeking change, and White House officials are increasingly interested.
When asked what change they would most like to see in a process, 72% of Crux respondents chose more predictable outcomes over faster timelines or simpler processes.
“The finding here is that developers can absorb hardship, but they cannot build under uncertainty,” Nazar said.
President Donald Trump has targeted wind and solar power projects as unreliable, and his administration has announced measures to tighten permitting decisions for these plants. Some Senate Democrats have threatened to walk away from permit negotiations if President Trump enacts new punitive measures.
The discussion also highlighted the need for certainty, which is sought by both renewable energy and fossil fuel developers.
“Reform permitting provides certainty for all types of energy projects and helps avoid the political pendulum swings that occur in this country every two to four years,” Jay Timmons, president and CEO of the National Association of Manufacturers, said on the sidelines of the CERAWeek conference in Houston last month, where permitting was frequently discussed.
“I think we all agree that whether you’re in one industry, another in the energy industry, or a specific sector of the energy industry, that kind of certainty helps with investment decisions,” Timmons added.
While some utility-scale solar projects have recently started moving forward through the Interior Department after months of stalling, that is not being felt uniformly across wind and solar projects.
“Almost every clean energy project in America now must be designed to intentionally minimize interaction with the federal government,” Yuri Horwitz, CEO of Sol Systems, an independent clean energy power generation company, recently told POLITICO.
“It’s not an efficient way to build an industry, it doesn’t make sense for American businesses, and it’s not good for the American economy.”
