HARRISBURG, Pa. — As energy demand is expected to soar, U.S. states are actively exploring strategies to accelerate the construction of new power plants. This comes as policymakers express growing concern over rising electricity bills, potential power shortages, and the need to maintain economic stability while competing with major tech companies for energy resources.
In response to the increasing energy demand, driven largely by the expansive needs of AI and data centers, some states are offering financial incentives. Others are revising long-standing regulatory frameworks in a bid to quickly address the energy demands of their residents, avoid potential crises, and sustain their economies. Todd Snitchler, head of the Electric Power Supply Association, notes the unprecedented nature of these challenges.
The demand has surged as tech companies acquire real estate to support energy-intensive data centers, bolstered further by federal initiatives to revitalize the manufacturing sector. While some tech giants are independently pursuing energy projects, energy companies are seeking their share of the growing sector, leading to a competitive atmosphere where state leaders vie for job creation and investment opportunities through new power plants.
The push from states is occurring alongside a federal landscape that has, under past leadership, reduced regulations on fossil fuels, encouraging pipeline and refinery projects. States are acting independently, with the National Governors Association urging Congress to simplify and expedite the power plant approval process, addressing the relatively slow pace of the United States compared to other developed countries. However, as power plant approvals predominantly fall under state and regional jurisdiction, federal influence remains limited.
In Pennsylvania, Governor Josh Shapiro proposes the creation of an agency dedicated to accelerating the development of large power plants. He also suggests offering substantial tax incentives to attract electricity-generating projects. Shapiro believes this is essential to gaining a competitive edge in the AI race and ensuring reliable, economical power for residents, even contemplating a departure from the PJM Interconnection grid to operate independently.
Several states, including Indiana, Michigan, and Louisiana, are exploring nuclear energy options, while Maryland lawmakers consider commissioning a new power plant. Meanwhile, an Ohio bill aims to limit electric utilities’ influence, thereby encouraging independent power producers to support the burgeoning tech sector’s power needs. The proposal enjoys backing from consumer advocates and business groups but has divided opinions in the energy sector, especially between competitive market operators and state utility monopolies.
States are also finding themselves in competition with one another. In Missouri, legislative support is growing for repealing a 1976 law that prevents utilities from billing customers for new power plant costs until operational. This law change faces criticism from consumer and environmental advocates concerning potential cost impacts on ratepayers due to new natural gas plants. Similar legislation in Kansas has prompted commitments to build substantial new gas plants.
According to John Coffman, a consumer advocate in Missouri, utilities might leverage state competition to their advantage, using the promise of power plant construction as a means to extract more financial benefit. Across the board, energy companies see opportunities as traditional power reserves decline amid the retirement of older coal and nuclear plants.
Snitchler warns that this rush to construct new power plants could erode consumer protections, transferring the financial risk of expensive projects from corporate shareholders back to ratepayers. Meanwhile, Pennsylvania State Senator Gene Yaw proposes a vast power plant financing initiative, akin to Texas’ post-2021 winter blackout program. Yaw underscores the significant shortfall in projected power plant development needed to meet future demands and insists on the necessity of attractive incentives to ensure Pennsylvania remains competitive.
