Introduction
We’re thrilled to sit down with Christopher Hailstone, a seasoned expert in energy management and renewable energy, with a deep focus on electricity delivery and grid reliability. With years of experience navigating the complexities of the utilities sector, Christopher offers unparalleled insights into the challenges and opportunities facing renewable energy projects in the United States. In this conversation, we dive into the evolving landscape of political risk, exploring how recent legislative and administrative actions are reshaping the industry, the tools developers can use to mitigate uncertainties, and what the future might hold for clean energy initiatives.
Can you start by shedding light on what political risk means for renewable energy projects in the U.S., and how it stands apart from other challenges like financial or technical hurdles?
Political risk, in the context of renewable energy projects, refers to the uncertainty and potential losses caused by government actions or policy changes that can disrupt development or operations. This could mean anything from sudden repeals of tax incentives to executive orders halting projects mid-construction. Unlike financial risks, which often stem from market fluctuations or funding issues, or technical risks tied to engineering and equipment failures, political risk is inherently tied to the unpredictability of governmental decisions. It’s become a bigger concern recently due to stark policy shifts, especially with the current administration’s actions and new laws that have directly targeted clean energy incentives, creating a volatile environment for developers who rely on stable frameworks to plan long-term projects.
Why do you think political risk has emerged as such a pressing issue for renewable energy developers in recent years?
The recent surge in political risk for renewable energy developers largely ties back to the polarized political climate in the U.S. Over the past few years, we’ve seen dramatic swings in policy depending on which party holds power. For instance, federal incentives that were once cornerstones for renewable projects have been rolled back or outright repealed under new legislation. Additionally, executive actions pausing major projects have introduced unpredictability at a scale we haven’t seen in decades. Developers are now facing a landscape where long-term planning is incredibly difficult because the rules of the game can change overnight based on election outcomes or administrative priorities. This uncertainty is a significant barrier to scaling up clean energy at the pace needed to meet climate goals.
Let’s talk about the One Big Beautiful Bill Act, or OBBBA. How is this new legislation reshaping the landscape for renewable energy projects?
The OBBBA has sent shockwaves through the renewable energy sector by repealing or restricting many of the tax credits that were pivotal under previous laws like the Inflation Reduction Act. It’s not just about losing financial support; it’s about the signal it sends to investors and developers. The bill targets key incentives like the Clean Electricity Production Credit and Clean Electricity Investment Credit for projects starting construction after a tight deadline or placed in service beyond 2028. This creates a rush to get projects off the ground before the window closes, which isn’t always feasible for large-scale initiatives like offshore wind or solar farms. Financial planning has taken a hit because developers now face tighter budgets without those expected subsidies, forcing many to reassess project viability or seek alternative funding sources.
Shifting to specific project impacts, can you walk us through how the Trump administration’s pause on offshore wind projects affected initiatives like Empire Wind 1?
The pause on offshore wind projects, including Empire Wind 1 off the coast of New York, was a stark example of how political decisions can grind progress to a halt. When the Bureau of Ocean Energy Management issued a stop-work order earlier this year, construction on this 810 MW project—meant to power half a million homes—came to a standstill. Stakeholders faced immediate costs, like barges sitting idle in ports and supply chain disruptions, which racked up significant expenses. Even though the order was reversed within a month, the delay pushed back timelines and shook investor confidence. Now, while the project is back on track for a 2026 completion, the incident highlighted how vulnerable these initiatives are to sudden regulatory interruptions, even when they’ve already secured approvals and funding.
Another project, Atlantic Shores Offshore Wind, faced a much harsher outcome with its withdrawal. What led to this project becoming unviable, in your view?
The Atlantic Shores Offshore Wind project, a 1.5-GW initiative off New Jersey, essentially collapsed under the weight of multiple political and regulatory blows. The EPA’s decision to remand the project’s Clean Air Act certificate was a major setback, undermining its environmental clearances. On top of that, an executive order pausing offshore development, combined with broader actions from the current administration, created an environment where the project’s financial and operational foundations crumbled. The developers ultimately petitioned to terminate their obligations, citing that the project was no longer feasible under its original terms. It’s a sobering reminder that when political headwinds align against a project, even well-planned and funded initiatives can falter without robust risk mitigation strategies in place.
One tool mentioned for managing these uncertainties is Political Risk Insurance, or PRI. Can you explain what PRI is and how it can support renewable energy projects in the U.S.?
Political Risk Insurance, or PRI, is a specialized form of coverage designed to protect businesses from financial losses due to political changes or government actions. For renewable energy projects, it acts as a safety net against events like abrupt policy shifts, regulatory interventions, or even nationalization in extreme cases. In the U.S., while it’s less common than in developing countries with higher instability, PRI can cover losses from things like repealed tax credits or sudden halts in project approvals. It’s a way to derisk investments by ensuring that if a government action derails a project, there’s financial recourse to cover costs like delayed construction or lost revenue. As political volatility grows here, we’re seeing more interest in PRI even in developed markets like North America, as it provides a buffer against the unpredictability of policy changes.
How realistic is it for renewable energy companies to negotiate with government agencies to overcome regulatory roadblocks, based on your experience?
Negotiating with government agencies for regulatory relief is possible, but it’s a steep uphill battle and depends heavily on the context. For projects with significant backing from state governments or major investors, there’s often more leverage to push for reconsideration of restrictive actions. The Empire Wind 1 case showed that reversals can happen when enough pressure is applied or when the broader economic and environmental benefits are made clear. However, it’s not a guaranteed strategy—success hinges on maintaining open communication channels with federal and state authorities and having influential stakeholders advocate on the project’s behalf. For smaller developers or projects in politically contentious areas, the odds of getting relief through negotiation are much slimmer, which is why complementary strategies like insurance or contractual protections are so critical.
Looking ahead, what is your forecast for the future of political risk in the renewable energy sector over the next few years?
I think political risk will remain a dominant factor in the renewable energy sector for the foreseeable future, largely due to the ongoing polarization in U.S. politics. As long as clean energy policies are tied to partisan agendas, we’re likely to see continued swings in support depending on who controls Congress or the White House. Over the next few years, I expect more localized battles as states push their own renewable mandates in opposition to federal rollbacks, creating a patchwork of risks and opportunities. Developers will need to be agile, leveraging tools like PRI and stronger contract language, while also building coalitions with state governments and communities to insulate projects from federal-level disruptions. On the flip side, if we see a shift toward bipartisan support for energy transition goals, some of this risk could ease—but that’s a big if given the current climate.
