Energy Market Update

LevelTen Energy’s snapshot on U.S. and EU Power Purchasing Agreement (PPA) pricing is below. For more information on LevelTen please visit www.leveltenenergy.com.

A Supreme Court ruling invalidated tariffs imposed under the International Emergency Economic Powers Act, prompting the administration to shift to alternative trade authorities that may affect the cost and timing of imports used in renewable energy projects. A week before, Treasury released guidance on Foreign Entity of Concern (FEOC) compliance that outlines streamlined pathways for solar, wind, and battery projects to qualify for tax credits, while still introducing new supply‑chain due diligence requirements. Separately, the Environmental Protection Agency moved to rescind the 2009 greenhouse gas endangerment finding, eliminating the legal basis for federal greenhouse gas regulation and setting up anticipated legal challenges.

February 20,2026: Supreme Court Invalidates IEEPA Tariffs; Administration Moves to Section 122 and Section 301 Authorities

1. A Supreme Court ruling invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA), eliminating tariffs on imports from China, Mexico, and Canada, among others. The practical impact on North American trade is limited, as roughly 90% of imports from Mexico and Canada were already USMCA‑compliant and exempt.
2. In response, the administration announced a 15% universal tariff under Section 122 of the Trade Act of 1974, effective February 24, which allows tariffs for up to 150 days based on balance‑of‑payments deficits. This action temporarily replaces the broader tariff framework previously implemented under IEEPA.
3. The administration is also pursuing tariffs under Sections 301 and 232, which require formal investigations, consultations, and public processes before duties can be imposed. Section 301 tariffs, once implemented, have previously been upheld by federal courts and represent a more durable legal pathway for trade actions.
4. Shifts in tariff authorities may affect the timing, scope, and durability of tariffs on imported renewable energy equipment, including solar modules, inverters, wind components, and battery storage components. Temporary Section 122 tariffs and longer timelines for Section 301 actions could create near‑term cost uncertainty while delaying more targeted, country‑specific trade measures affecting clean energy supply chains.

February 12, 2026: Treasury Takes Moderate Approach to FEOC Guidance that is Positive for Renewables

1. The guidance introduces multiple compliance pathways, with the easiest (Identification, Cost Percentage, and Certification Safe Harbors) reserved for solar, wind, and battery developers/projects as well as manufacturers of inverters, battery modules using cells, and solar modules. These simplify supply chain tracking by limiting depth (often to manufactured product components only), aligning with existing domestic content bonus rules, allowing reliance on supplier certifications under penalty of perjury, and reducing the need for complex self-calculation of PFE exposure.
2. The guidance is positive relative to a worst-case scenario, easing compliance burdens, avoiding overly restrictive rules that could hinder innovation or buildout (especially in geothermal and nuclear), and enabling renewables developers to more confidently claim tax credits as non-FEOC content thresholds increase over time (e.g., 40–85% in 2026). However, it still imposes new due diligence and supply chain adjustment costs.
3. Treasury will accept public comments on the guidance until March 30, 2026, and plans to release a proposed rule later this year that incorporates the current guidance and adds details on ownership and effective control restrictions, allowing further industry input to refine the rules toward greater administrability.

February 12, 2026: Trump guts basis for climate regulation, setting up a courtroom clash

1. On February 12, 2026, the Environmental Protection Agency moved to rescind the 2009 Greenhouse Gas Endangerment Finding, a policy that previously gave the EPA ground to regulate greenhouse gas (GHG) emissions on the basis that GHG emissions threatened public health and welfare.
2. Without the endangerment finding, the EPA no longer has authority to regulate GHG emissions from cars, trucks, and power plants.
3. The EPA’s “primary argument is that the Clean Air Act was never intended to allow for regulation of greenhouse gases because climate change is a global phenomenon” therefore the EPA should only regulate “pollution with direct health impacts or that could create regional issues like acid rain.” The EPA has also stated that this deregulatory action will save Americans over $1.3 trillion.
4. Critics of the action have argued that the EPA’s savings estimate ignores the economic and human costs of climate impacts. The EPA’s own staff union issued a statement calling the EPA’s action a “deep betrayal of the EPA’s mission and duty to protect public health and safety, and Americans will pay the price.”
5. Several environmental groups and Democratic states have  vowed to sue the repeal on the basis that the action is unlawful and defies established climate science.

Rapid growth in large electricity loads (e.g., data centers and AI) is increasingly shaping federal, regional, and state policy discussions, with implications for system planning, infrastructure development, and market design.

• Large electricity load growth, particularly from data centers and AI, is driving federal and regional focus on grid reliability, with concerns that generation, transmission, and interconnection timelines are not keeping pace with demand.
• NERC plans to issue a Level 3 (Essential Action) Alert addressing operational and planning risks associated with large loads, requiring formal responses from affected entities and indicating elevated reliability oversight.
• PJM filed tariff changes to establish an Expedited Interconnection Process for select large generation projects (≥250 MW) that meet defined siting, readiness, and state support criteria, citing urgent capacity needs tied to load growth.
• PJM also proposed extending the capacity market price collar for the 2028/29 and 2029/30 delivery years to limit price volatility and manage customer cost exposure during a period of rapid demand growth.
• ERCOT advanced work on its Large Load Batch Study process, including revised timelines, upcoming protocol filings, and discussion of how controllable load and “bring‑your‑own‑generation” resources may be incorporated into transmission planning.
• MISO introduced a draft framework for Zero Injection Generator Interconnection Agreements, allowing generation co‑located with large loads to bypass certain interconnection upgrades while still supporting resource adequacy obligations.
• States are advancing affordability‑focused actions, including proposals to return clean‑energy program funds to customers (New York, Massachusetts), reduce energy efficiency program administrative spending (Massachusetts), and evaluate alternative utility business models (New Jersey).Permitting efficiency remains a policy priority, with initiatives such as Delaware’s Permitting Accelerator aimed at coordinating agency reviews and shortening timelines for energy infrastructure projects.
• ISO‑New England released draft forecast data showing slower long‑term electrification growth, driven by reduced assumptions for electric vehicles and heat pumps, and incorporated new large‑load and behind‑the‑meter resource considerations into future planning.

Large Buildings & Big Cities: How Urban Mandates Are Reducing Carbon Footprints

Across the United States, cities are now the primary drivers of building decarbonization, particularly for large commercial, institutional, and multifamily buildings. Rather than focusing only on new construction, cities are increasingly regulating existing buildings, which represent the largest share of urban greenhouse gas emissions. Buildings typically account for 30–70% of citywide emissions, depending on the city, making them a high‑impact policy target. As federal climate policy becomes less consistent, city‑level mandates have accelerated, shifting sustainability from voluntary commitments to enforceable requirements

What Cities Are Doing Differently

Cities are moving toward performance‑based regulation, where outcomes matter more than technology choices. These policies generally include:

• Building Performance Standards (BPS) that cap energy use or carbon emissions
• Annual energy and emissions reporting, often made public
• Electrification requirements, especially for new buildings
• Financial penalties that increase over time for non‑compliance
• By 2026, 40+ U.S. cities are expected to have enforceable building performance standards in place.

City‑Specific Mandates

New York City – Local Law 97

• Applies to buildings over 25,000 sq. ft.
• Sets carbon emissions caps for existing buildings
• First compliance period began 2024
• Much stricter limits begin 2030
• Penalties: $268 per metric ton of CO₂ above allowed limits
• Why it matters: Carbon now has a direct, predictable cost for building owners, influencing capital planning and energy procurement decisions

Boston – BERDO 2.0 

• Applies to buildings 35,000+ sq. ft.
• Requires actual emissions reductions, not just disclosure
• Penalties up to $1,000 per day
• Net‑zero emissions target by 2050
• Why it matters: Boston is explicitly linking climate policy to operational performance and long‑term building investments.

Washington, D.C. – Building Energy Performance Standards (BEPS)

• Focuses on minimum energy performance targets
• Buildings must improve performance over time
• First major compliance cycle ends 2026
• Penalties can reach hundreds of thousands to over $1M for large properties
• Why it matters: D.C. emphasizes continuous improvement rather than one‑time compliance

California Cities (Los Angeles, San Francisco, San Jose) 

• Mandatory energy benchmarking and disclosure
• Increasing restrictions on fossil fuel systems
• Strong push toward all‑electric new construction
• Incentives for heat pumps, efficiency, and on‑site renewables
• Why it matters: California cities are aligning building policy with grid decarbonization and long‑term electricity planning.

Electrification

• Electrification is becoming central to city climate strategies: Many cities require or strongly favor all‑electric new buildings
• For building owners, operators, and large energy users, Carbon reduction is now a compliance obligation

Key Takeaway

Even as federal climate policy shifts, cities are accelerating action—using enforceable mandates, emissions caps, and electrification requirements to drive measurable carbon reductions from large buildings first.