Transition Finance Weekly - 12/12/2025
Cleaner Air in NYC; Gas Prices Surge; Duke Expands VPPs in NC
Exploring the policy, politics, and economics of the clean energy transition
Each week here in Transition Finance Weekly, researchers and analysts from Pleiades Strategy summarize the top stories and trends related to the policy, politics, and economics of the clean energy transition in the states.
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1. Congestion Pricing Is Cleaning the Air
New data from New York City shows that in addition to the congestion reduction, pollution has dropped across the region as advocates predicted.
Cornell researchers released one of the first comprehensive looks at Manhattan’s congestion pricing program, which launched almost a year ago. According to the study, air quality improved by 22% in the Congestion Relief Zone and reductions across all five boroughs and nearby suburbs. Fewer cars and less logjammed idling on the most heavily trafficked roads meant lower particulate pollution, cleaner air in neighborhoods historically burdened by highway emissions, and measurable public health gains.
The program’s rapid, if not overnight, success reflects what’s been happening elsewhere in the world for years. The study validates what advocates have said for years: doesn’t just cut congestion, it delivers tangible climate and health benefits, fast.
“Our overall conclusion is that congestion pricing in New York City, like many other cities in the world that have implemented it, helped not only improve traffic, but also helped reduce air pollutant concentration, improve air quality and should be good for public health,” said Oliver Gao, director of Cornell’s Center for Transportation, Environment and Community Health.
2. Gas Prices Surge as U.S. Exports Climb
As we forecasted in August and October 2025, natural gas prices are spiking heading into winter.
Wholesale prices have jumped more than 70% over the past year, with the Henry Hub benchmark recently reaching $5.29 per million BTUs, the highest level since December 2022, when the energy crisis triggered by Russia’s invasion of Ukraine roiled European markets.
The surge is a direct result of Trump administration policy. Federal regulators with a pro-export tilt are accelerating LNG terminal approvals to send more U.S. gas abroad. More gas exports put American families in direct competition with global buyers because fuel costs are directly passed through to households from utilities on their monthly bills.
Clean electrification, shifting both end-use energy consumption (heating, cooking) and electricity generation off of natural gas, is key to solving this dependency. In Europe, clean electrification has been a key economic and security imperative since the Russian invasion of Ukraine drove gas prices through the roof in 2022. As natural gas prices continue to grow in the coming years, the imperative exists for Americans too.
“This is great news for the gas industry, which has seen a bump in revenues. But it’s not so great if you’re a US consumer who relies on gas for heating or power,” said Clark Williams-Derry, analyst at the Institute for Energy Economics and Financial Analysis.
3. Duke Expands Virtual Power Plants in North Carolina
The takeaway: battery storage and electrification continue to unlock new grid capabilities.
Duke Energy is expanding its virtual power plant (VPP) footprint in North Carolina, launching a new battery incentive program for commercial customers that will offer incentives for installing batteries and allow Duke to access that stored energy during peak events. A business with a 100-kW battery could see roughly $250 in monthly credits if Duke calls on it 36 times a year, with additional payments when the battery actually delivers energy.
The utility’s residential VPP pilot, PowerPair, arose out of a compromise between solar installers and the North Carolina Utilities Commission. PowerPair incentivizes customers to pair rooftop solar with home battery systems, and it quickly reached its maximum enrollment cap of 30 MW shortly after launching, proving the market for storage and demand flexibility programs.
As utilities face rising peak demand and increasing pressure to avoid costly new fossil generation, VPPs are emerging as a flexible, customer-friendly alternative. Duke’s expansion signals that North Carolina’s grid will be leaning on distributed energy resources as a core reliability tool.
“In an era of massive load growth, something that should lower costs to customers while helping meet peak demand — to me, it’s an absolute no-brainer,” said Ethan Blumenthal, regulatory counsel for the North Carolina Sustainable Energy Association.
4. Arizona Cuts Energy Efficiency
The ACC once again undermines the grid.
Last week, the Arizona Corporation Commission (ACC) voted unanimously to slash Arizona Public Service’s (APS) budget for demand-side management programs, cutting it from $91 million to just $40 million. The move guts funding for energy efficiency in the state, programs that traditionally lower customer bills, reduce peak demand and forestall costly infrastructure spending.
Vice Chair Nick Myers led the charge against efficiency investments, asking why tools that save money for ratepayers should receive public support. He argued that if efficiency upgrades truly deliver value, customers should adopt them on their own dime rather than through utility-backed programs.
In Arizona, the Commission has targeted energy efficiency, cutting statewide rules around energy efficiency and demand-side management (DSM) beginning in 2024, despite energy efficiency continuing to be a leading cost-effective energy resource.
5. Colorado’s Comanche Coal Plant Keeps Burning
Shutting down Comanche, one of Colorado’s largest carbon emitters, is critical to achieving the state’s goal of cutting greenhouse gas emissions by 50% below 2005 levels by 2030.
One turbine at Colorado’s massive Comanche Generating Station will continue operating into 2026, complicating the state’s climate plans. State regulators had envisioned a gradual phaseout of the plant’s three units. The first turbine closed in 2022, and the second, a 1970s-era unit, was originally scheduled to shut down later this year. That schedule changed after the plant’s newest and largest turbine went offline in August due to mechanical issues, including elevated vibrations.
Now, the second turbine will remain online at least another year while the third unit is under repair. Regulators questioned the wisdom of rebuilding the troubled third turbine, noting that the utility, Xcel, the unit’s largest owner, had not provided a clear estimate of repair costs. Xcel expects the turbine, which originally began operating in 2010, to be back online by summer, despite its history of repeated mechanical failures.
The situation leaves Colorado balancing reliability concerns with its climate commitments: keeping aging coal units running may help prevent power shortages in the near term, but it delays the state’s transition away from high-emission generation.
“It sends a pretty strong message to investors that it’s going to be risky for the investors if they continue to rely on plants that have big reliability issues like Comanche 3,” said Michelle Solomon, an analyst who tracks the electricity industry at the clean energy think tank Energy Innovation.
SPOTLIGHT: Renewable Buildout Keeps Upward Momentum
U.S. renewable energy continues to expand at a steady clip. According to the Federal Energy Regulatory Commission’s September 2025 infrastructure report, the country added 2 GW of utility-scale solar in a single month, bringing the year-to-date total to 21 GW, slightly ahead of last year’s 20 GW.
Solar dominates the new buildout, accounting for roughly three-quarters of the 28 GW of new capacity installed in 2025 so far. Wind contributed 13%, while natural gas made up 11% of new additions.
Despite this growth, natural gas remains the largest source of electricity in the U.S., representing 42% of total installed capacity. Combined, wind, solar, and hydro make up 31% of the grid’s total generating resources, signaling that while renewables are scaling up quickly, fossil fuels still dominate the overall system.
