What Co-ops Should Know About Changing Power Supply Dynamics
Welcome to Solutions Cast. I’m Chris Whittle, CFC’s Energy and Data Analyst. We’ve talked a lot about how AI investment is driving data center demand. Today, I’d like to talk about an equally important topic: power supply, and what some recent changes in federal policy may mean for our industry.
It’s important to recognize that power supply dynamics are rapidly changing in the U.S. New reliability-focused policies and expiring federal tax incentives are seeing renewable energy developers race to begin construction before growth becomes significantly more constrained over the long term.
Context is important here. The Inflation Reduction Act of 2022—or IRA, for short—used federal tax incentives to boost the development of renewable energy. In the years that followed, record volumes of renewable projects entered the grid interconnection queue. But the One Big Beautiful Bill Act, which passed in July 2025, triggered the phase-out of the IRA tax credits.
Under the new rules, wind and solar projects must be placed in service by December 31, 2027, to remain eligible for the production tax credit (PTC) and investment tax credit (ITC). Projects that can’t prove they began construction by July 4, 2026, or miss the 2027 in-service deadline—will lose access to these federal incentives. Energy storage, however, has a longer runway as new policies put a stronger emphasis on grid reliability. The ITC remains available for grid-scale batteries through 2036.
Overall, these One Big Beautiful Bill provisions are expected to accelerate solar deployment in the short term, making it the fastest-growing resource in 2026. According to the U.S. Energy Information Administration, the electric power sector is expected to add more than 31 gigawatts of new solar capacity in the next year, about 76% more than the year prior. Similarly, battery storage and wind are also projected to see significant growth in 2026. EIA forecasts more than 23 gigawatts of new battery storage and nearly 12 gigawatts of new wind capacity, up 38% and 65% from last year, respectively.
The policy shift from renewables toward dispatchable generation was further underscored in September 2025 when Congress passed legislation called the Guaranteeing Reliability through the Interconnection of Dispatchable Power—or GRID—Act. The law directs FERC to improve interconnection timelines with an emphasis on dispatchable resources when a clear reliability need is demonstrated.
However, these processes must also contend with supply chain constraints. According to the Penn State Institute of Energy and the Environment, more advanced gas turbines are sold out years in advance, with manufacturing slots booked solid for the next couple of years. A major reason: there’s only a limited number of foundries that can produce the critical high‑temperature components of a gas turbine. As a result, even with a federal push for more dispatchable generation, natural gas additions over the next year are expected to remain relatively modest compared to renewables. Most new firm capacity added in 2026 is expected to come mostly from battery storage.
So what does this mean for electric cooperatives? First, it’s important to recognize that we will likely see a near-term renewable rush as developers push to start construction by July 4, 2026 and achieve in-service by December 31, 2027 to keep PTC and ITC eligibility, which could drastically increase the competition for grid interconnection in 2026.
Second, co-ops considering PPAs or self-build renewables may need faster decision cycles and tighter commercial terms as developers prioritize “financeable, on-time projects.”
Third, co-ops may want to consider leveraging storage as a core reliability tool if they aren’t already doing so. With the storage ITC available through 2036, co-ops have a stronger economic case for batteries to firm renewables, manage peaks and support distribution resilience.
Fourth, and finally, the GRID Act emphasis on dispatchable resources when a reliability need is shown could potentially create new opportunities for co-op sponsored firm resources, even amidst a period of supply chain uncertainty.
That’s all for today. As always, thank you for joining us. Be on the lookout for more industry and technology content on CFC’s Member Website at nrucfc.coop/Solutions. We’ll talk with you soon!
