More Bad Ideas to Promote Gas, More Clean Energy Solutions for Load Growth
Elected officials in some states are trying to accelerate a stampede to new gas-fired generation as clean energy policy solutions multiply.
As federal energy policy descends further into madness, it’s more important than ever to implement innovative state and regional policies that can accommodate—and accelerate—the clean energy transition. But the collective panic over electricity load growth from data centers continues, and elected officials in some states are making things worse.
In Texas, for example, ERCOT forecasts rapidly growing demand; it’s climbed by 17% since 2021. In 2023, legislators created a $5 billion low-interest loan program to subsidize the construction of new gas-fired power, but renewables and batteries are outcompeting gas and lowering energy prices.
With a streamlined interconnection process that could serve as a national model, ERCOT’s solar and battery additions in the last year have averaged about 1 gigawatt per month, setting clean energy records.
But Texas legislators, unwilling to let markets rule, want to stifle clean energy growth with a bill that would require half of new power plant capacity to come from “dispatchable generation other than battery energy storage.” As this article notes, an earlier version of the bill simply mandated that these plants use natural gas. So “dispatchable” does that work in the new bill.
Not to be outdone is Pennsylvania—a state shackled to gas, which powers 57% of all electricity generation while solar is barely perceptible at 0.7%, with just four battery storage installations totaling 55MW statewide.
Anti-market legislation is being proposed here to direct state agencies to identify suitable sites for gas generation projects and to provide low-interest loans and grants to finance their “construction, maintenance, modernization, and operation.”
The governor has proposed his own plan. It includes a “reliable energy investment credit” of up to $100 million per facility for three years for the development of projects described as “baseload power” from “all-of-the-above,” i.e. any fuel source. Draft legislation isn’t available at this writing, but it’s hard to imagine—I mean, really hard—that gas-fired power won’t receive favorable treatment. Even though gas plants are not terribly reliable, and solar plus battery installations can have higher reliability values than gas plants. Plus, new gas plants will take years to come online, and solar and energy storage can be built twice as fast.
Meanwhile, the list of innovative ideas and policy tools to propel clean energy continues to grow.
The first tool can be readily implemented. The “curtailment-enabled headroom” afforded by planning for load flexibility at data centers can be obtained now by requiring data centers to participate in demand response programs—particularly if they benefit from incentives like Pennsylvania’s sales tax exemptions for data centers or its array of other economic development incentives.
More creative thinking can be found in the concepts of “energy parks,” co-locating large loads like data centers with new clean energy using a single grid connection, and “power couples,” building data centers and new clean power and batteries near existing gas–fired peaker plants. Using the latter approach, as much as 50GW of new data center loads could be accommodated at prices that could still be attractive to companies that have announced clean energy pledges.
Current grid and state-level regulations will have to be modernized to embrace these creative approaches and allow for even more innovation. And while we’re at it, as an important new paper from Harvard Law School’s Environmental & Energy Law Program argues, utility rate structures that force the public to pay for infrastructure serving data centers must also be reformed.
Enacting these improvements and reforms, focusing on building the clean energy in the queue and deploying grid enhancing technologies all make far more sense than shoveling more public money and ratepayer subsidies at new expensive, unreliable—and in Pennsylvania, unnecessary—gas-fired generation.
John Quigley
Senior Fellow, Kleinman CenterJohn Quigley is a senior fellow at the Kleinman Center and previously served on the Center’s Advisory Board. He served as Secretary of the PA Department of Environmental Protection and of the PA Department of Conservation and Natural Resources.
