On Monday’s broadcast of CNBC’s “Last Call,” host Brian Sullivan stated that higher interest rates due to Federal Reserve rate hikes are endangering new energy projects, which is a problem considering that large amounts of coal and natural gas production are expected to be shut down in 2023, so “we may end up powerless, literally. And the projects that are going forward are often now going forward only if the developers are granted higher electricity costs.”
Sullivan said, “Large-scale power projects like offshore wind, nuclear, solar farms, and more are extremely expensive. … Big energy is big-time expensive. And in order to build out these new projects, developers almost always have to borrow the money to do it. And when interest rates and borrowing costs were low, it wasn’t a real concern. But now, it’s a totally different story. Higher rates are either crushing [or] ending many new projects or threatening to.”
He added, “The federal government has said that over 15 gigawatts of coal and natural gas power production are expected to be shut down or shut off this year. What does that mean? Well, 15 gigawatts, enough power to provide light and heat to probably about seven to eight million average-sized homes, or about the entire population of Massachusetts. You don’t have to be an energy whiz to understand that if we take 15 gigawatts of power offline, and higher borrowing costs stop putting new projects online…we may end up powerless, literally. And the projects that are going forward are often now going forward only if the developers are granted higher electricity costs. Meaning these get built — and we need them by the way — your bill is going to go up, but at least you will have enough power.”
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