CO2 Leadership Brief

On May 1, Federal Reserve Chair Jerome Powell offered a two-part message to eager interest-rate watchers. The Fed is unlikely to increase interest rates this year, but policymakers there are also not rushing to bring them below 5.25%-5.5%. Interest rates shape markets, and that's especially true with renewable energy. Clean-energy projects are cheaper to run than their fossil-fuel counterparts because they don't require operators to continually purchase fuel. But they typically have high up-front costs. As a result, the price of clean energy is determined to a significant extent by the cost of the debt that developers take on when they first build projects. Energy experts sometimes refer to what they call the levelized cost of electricity, or LCOE, to compare the cost of generating electricity over the lifetime of different facilities or energy sources.