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(Reuters) – The Trump administration’s plans to cancel nearly $8 billion in Energy Department grants are illegal because contracts had already been signed and will cause consumer energy prices to skyrocket, the top Democrat on the U.S. Senate energy committee said.
Earlier this month, the Energy Department canceled $7.56 billion in funding for clean energy projects that it claimed would not provide sufficient returns to taxpayers.
“These are projects that would have added energy to the grid and added flexibility,” Senator Martin Heinrich of New Mexico said. “The administration is constraining the energy that we can put on the grid, and at the end of the day, this is going to raise energy costs for consumers.”
Heinrich said that 218 of the 233 projects ranging from battery storage to green hydrogen were located in states with Democratic governors.
Soaring home electricity bills, driven largely by skyrocketing electricity demand by data centers to power artificial intelligence, have become a top voter concern, and one that Democrats hope to seize on ahead of upcoming gubernatorial elections and next year’s congressional elections.
Heinrich said retail electricity prices were already 10% higher year over year even before the cuts were proposed.
The Energy Department has said it is prioritizing oil, gas and coal energy, which it says will meet baseload demand needed by data centers and lower prices.
“Americans were upset, and rightfully upset, of four years of extreme expenditures, spent money, and the net result of spending money to subsidize energy that was more expensive energy,” Energy Secretary Chris Wright told reporters on Thursday.
Analysts have warned that the U.S. cannot meet power demand for AI without clean energy, battery storage and grid upgrades. Earlier this week, JP Morgan Chase unveiled a $1.5 trillion initiative to invest in clean energy, critical minerals and semiconductors and warned that removing renewable energy from the mix is risky.
Reporting by Valerie Volcovici; Editing by Lisa Shumaker
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