States Modify Policies to Attract New Power Plants

State lawmakers are looking at ways to attract new power plants to ward off power outages, provide sufficient electricity supply needed to meet new demands from artificial intelligence (AI) data centers, and mitigate rising electricity prices due to Biden’s climate policies. According to the Department of Energy, data centers could triple their energy use in the next three years. States also want jobs and manufacturing investment from increased electrification and new power plants. Strategies range from providing financial incentives to removing regulations. States are aided by the federal government’s efforts under President Trump to cut regulations affecting fossil fuels, undo Biden’s climate mandates, increase drilling opportunities through new leases and easier permitting, encourage the construction of pipelines, and remove Biden’s moratorium on permits for liquefied natural gas export terminals. While the federal government has a role in increasing electricity supply, so do state regulators and grid operators. An electric grid system already under stress and facing new demands will require “all hands on deck.”

In Pennsylvania, Governor Josh Shapiro wants to establish an agency to fast-track the construction of power plants and provide hundreds of millions of dollars in tax breaks for projects providing electricity to the grid. Shapiro also suggested Pennsylvania may leave the regional grid operated by PJM Interconnection in favor of “going it alone,” as he noted that it has been hard to get enough new generation projects off the ground and through PJM‘s queue. Pennsylvania State Senator Gene Yaw wants to set up a power plant-financing fund like Texas, which established a $10 billion low-interest loan program after the state was hit by a deadly winter blackout in 2021.

Indiana, Michigan and Louisiana are looking into nuclear power, and Maryland lawmakers are thinking about commissioning the construction of a new power plant, as well as more offshore wind power and storage batteries.

Ohio’s electricity demand is increasing due to a new advanced microchip plant, an increase in data centers, and defense contractor Anduril. State lawmakers have introduced legislation to encourage electricity generation using Ohio’s shale oil and natural gas reserves and to cut government-funded subsidies and solar energy projects. An Ohio lawmaker wants to give independent power producers more incentive to build power plants to supply power to the state’s technology sector. The pending bill is supported by the Ohio Consumers’ Counsel ( the state’s residential ratepayer watchdog) and business groups whose members care about electricity prices.

In Missouri, utilities, the Missouri Chamber of Commerce and Industry, labor unions, and the state’s top utility regulator support legislation to repeal a law preventing utilities from charging customers to build a power plant.... The law was approved in a 1976 voter referendum when states sought to hedge against utilities burdening ratepayers with financing upfront inefficient and/or aborted power projects. Last year, similar legislation was passed in Kansas, and companion legislation extended tax breaks to new power plants. One utility, Evergy, announced it would build two 705-megawatt natural gas plants shortly after the bill passed.

Natural Gas Is Gaining Support

The industry is turning to natural gas because it is a cheap, abundant, and reliable power source, raising the prospect that gas-fired power will play a bigger role and last longer than initially anticipated under Biden’s climate policies. Data analytics firm Enverus projects that roughly 46 gigawatts of gas-fired power will be online over the next 5 years, compared with 39 gigawatts in the past five years.

Besides Evergy’s two plants mentioned above, planned plants include Entergy’s 2,300-megawatt plant to serve Meta’s $10 billion AI data center in northern Louisiana and a pair of new plants in Texas and one in Mississippi. Furthermore, the Tennessee Valley Authority announced a 1,450-megawatt plant, Duke Energy announced a 1,400-megawatt project in North Carolina, and Georgia Power has plans for three oil or gas units with a capacity of up to 1,300 megawatts. Additionally, Calpine is exploring new gas-fired capacity in the mid-Atlantic region, especially Pennsylvania and Ohio, where the grid operator is trying to fast-track new gas-fired power plants into service. The former Homer City coal-fired power plant in Pennsylvania is being converted to a gas-fired plant expected to supply a data center, obtaining a $5 million state grant.

Conclusion

Due to increasing demand for electricity, states are realizing that they need to attract new power plants and are providing incentives and cutting regulations, as past energy rules have stymied transmission, taken power plants offline, and relied too heavily on unreliable alternative energies such as solar and wind power. This is in concert with President Trump’s policies as he has declared an energy emergency due to potential power outages from forcing intermittent renewables on the electric grid. Companies are also realizing that dependable and affordable baseload power is needed and they are turning to natural gas as the United States faces a power crunch to support AI and electrification from increased manufacturing. According to Chris Wright, the energy secretary, “Beyond the obvious scale and cost problems, there is simply no physical way wind, solar and batteries could replace the myriad uses of natural gas.”