Transition Finance Weekly - July 31, 2026
Data Centers To Get Pollution Exemption; Climate Refugees; Insurance Costs Drive Utility Rate Increase
1. Major Minnesota Solar Project Grows As Coal Plant Edges Toward Retirement
Xcel Energy is bringing Phase 3 of Sherco Solar online as it prepares to retire the facility’s coal generators.
This week, Xcel Energy finished the third phase of Sherburne County (Sherco) Solar, which is transforming the retiring coal plant into a significant solar generating station. Xcel Energy has planned to retire the whole facility for years: in 2023, it retired Unit 2 and plans to retire the last two units in 2026 and 2030.
With Phase 3 up and running, the solar facility now has 710 MW of capacity and is a key part of Xcel’s plans to meet Minnesota’s renewable portfolio standard requiring carbon-free electricity by 2040. Xcel is also expected to build a fourth phase with 200 MW of solar, along with two battery storage systems.
The new additions will use the coal power plant’s existing interconnection to connect the battery storage to the grid more quickly, and is an example of how new clean energy resources can sidestep extensive interconnection delays by using the existing interconnection for aging, dirty infrastructure.
Sherco Solar Senior Operations manager Luke Molus: “We’re farming the sun.”
2. Wildfires in the Northern Hemisphere Displace Hundreds of Thousands
Wildfires in the Pacific Northwest and Western Europe force evacuations, as families fear for their safety and health.
In Oregon, thousands of people are under evacuation orders this week as dozens of large fires cover more than 1 million acres. In Canada, Ontario faces its worst fire season in history, with an estimated 900 fires currently burning. Meanwhile, in France and Spain, the worst wildfire season in modern history has sent hundreds of thousands of people evacuating as fires threaten areas around Bordeaux and Madrid, respectively.
Rising temperatures and oncoming lightning storms in both North America and Western Europe threaten to aggravate the situation, where firefighters and emergency responders are already stretched thin.
Summers in the Pacific Northwest and Western Europe are now becoming hotter, drier, and more susceptible to catastrophic wildfires, as extreme heat and droughts become a new version of normal. For people, new extremes also mean unpredictable weather and disasters — which will continue to send people fleeing at a moment’s notice.
3. EPA To Exempt Data Centers From Pollution Regs
Trump’s EPA announced it would allow data centers’ power plants to ignore clean air rules.
On Monday, the Environmental Protection Agency announced that power plants that do not connect to the grid would not have to comply with the Clean Air Act’s Acid Rain Program, which regulates power plants’ sulfur dioxide and nitrogen oxides emissions. An EPA Assistant Administrator said that the move was made to ensure “artificial intelligence dominance.”
The Acid Rain Program is, by all accounts, one of the most successful environmental protection programs in history; it has reduced SO2 emissions by 95% since 1990 and NOx emissions by 89%. These reductions in emissions have contributed to significantly cleaner air and lower mortality.
The exemption is worrying, and likely to be contested in court, and will only sharpen public opposition to data centers and dirty generation. Still, the administration and certain hyperscalers have shown complete disregard for areas impacted by data center development and shown a willingness, potentially even desire, to increase pollution associated with data centers.
4. Oregon Utility Wants To Raise Rates To Cover Insurance
Warren Buffett’s PacifiCorp is requesting permission to charge higher rates to cover rising insurance costs.
Pacific Power, owned by PacifiCorp, which is in turn owned by Berkshire Hathaway, requested permission from the Oregon Public Utility Commission to raise customer rates by 8.6%. The company said that its rate hike request was a result of “increased costs for insurance coverage.”
Insurance costs are rising for most utilities throughout the West, as utility-sparked wildfires become more common and fires threaten utility infrastructure. For Pacific Power, these costs are rising fast due to its involvement in litigation and its role in causing the 2020 Labor Day Camp Fires in Oregon. Legislators are taking note, too: Oregon passed HB 4077 into law, a low-profile bill supported by Portland General Electric that will allow utilities to self-insure and pass those costs off to customers.
Insurance isn’t just getting more expensive for people, but for utilities too. It is important for utilities to have the insurance they need, but regulators should scrutinize any requested rate increases to ensure they serve the public interest and are paired with efforts to lower risks. The Oregon proposal reinforces again the importance of the questions: how is risk distributed, and who pays?
5. Oil & Gas Industry In ‘Panic Mode’
As accountability efforts move forward, the oil and gas industry is trying to get special legal privileges.
New reporting from Grist this week finds that the oil and gas industry is in “panic mode” over dozens of lawsuits pending against the industry for its role in causing climate change and deceiving the public.
In response to a rise in litigation seeking accountability and damages over the industry’s role in the crisis, oil and gas companies and an extended universe of aligned political groups have pushed to grant sweeping immunity from lawsuits to the oil industry. Two bills were introduced in Congress, and states including Utah, Iowa, Tennessee, Oklahoma, and Louisiana have signed laws protecting fossil fuel companies from lawsuits related to greenhouse gas emissions.
The industry is funding these legislative pushes, as well as efforts to discredit attribution science, a growing body of science enabling experts, researchers, and litigators to more precisely quantify the role of climate change in extreme weather. The moves indicate an industry in fear of reckoning with the true costs of their products.
Elections SPOTLIGHT: Arizona Corporation Commissioner Loses Primary To Further-Right Challenger
Last week, Arizona Corporation Commissioner Nick Myers placed third in a three-way Republican primary to nominate candidates for the two open Corporation Commission seats this year. Myers placed third in the primary behind incumbent Chair Kevin Thompson and challenger Ralph Heap, a state legislator who jumped into the race to boost coal. In November, voters will choose between Republicans Kevin Thompson and Ralph Heap and Democrats Jonathon Hill and Clara Pratte, who ran in their primary unopposed.
While serving on the ACC, Myers moved to eliminate critical energy-saving and clean energy policies, including Arizona’s Renewable Energy Standard and Tariff (REST) Rules and the Energy Efficiency Standards (EE)/ Demand-Side Management (DSM). The rules incentivized utilities to build more clean energy and deploy energy efficiency at scale. At the time, Arizona Public Service met 14% of its demand from the DSM program, equal to the utility’s share of coal in its portfolio.
Challenger Ralph Heap jumped into the race with criticism of Myers, who he claimed didn’t go far enough in defending coal. Myers defended a decision by Arizona Public Service to retire a coal plant, which Trump and far-right organizations the Freedom Caucus and Turning Point USA criticized. Upon Heap’s victory, far-right groups claimed victory for themselves.
