This year has been marked by rapid changes in the competitive power space – new demand, actions by key regulators impacting wholesale power markets, and a heightened recognition of the essential role that a reliable energy system plays in our future. Competitive power markets remain well-suited to meet changing needs while unlocking savings for customers, enhancing reliability, and reducing emissions.
Amidst all the headlines, 2024 reinforced the need to maintain dispatchable generation and continue the energy expansion to support U.S. economic leadership.
Throughout 2024, EPSA has stuck to our core principles – promoting competition, giving customers the right to choose their energy mix, and advocating for smart policies that advance our electric grid. As 2024 wraps up, we want to take a look back at some of the key energy issues and the progress that EPSA and its members have made to promote reliable and cost-effective energy solutions this year.
2024 by the Numbers
- Despite electricity consumption in the U.S. falling by 1.6% in 2023 because of mild weather and slowdown in manufacturing, the International Energy Agency predicted that 2024 would see a 2.5% increase in demand.
Emissions Continued to Decline for competitive power producers.
- 96%: Sulfur dioxide emissions were 96% lower in 2023 than in 1990 and 24% lower than in 2022.
- 90%: Nitrogen oxide emissions were 90% lower in 2023 than in 1990 and 17% lower than in 2022.
- 22%: Carbon dioxide emissions were 22% lower in 2023 than in 1990 and 40% lower than the peak in 2007.
- -13.5 GW: In 2023, 13.5 GW of electricity generation was retired.
- -5.2 GW: In 2024, 5.2 GW of generation was slated for retirement.
- PJM expects to process 7.2 GW in projects that are in its interconnection queue by mid-2025 and 230 GW over the next three years.
Supply Gap Remains
- PJM forecasts 25GW of peak summer demand growth by 2034 and an estimated 51.8 GW at risk of retiring by the end of the decade.
- Of the 203 GW of renewable projects in PJM’s queue, only 30 GW (14.8%) are expected to go into service, based on historical completion rates.
Net Summer Generating Capacity Rose
Here are just a few of our highlights and key energy policy discussions from the past year:
Addressed Barriers to Infrastructure Development
Lengthy permitting processes and long interconnection queues continue to be a barrier to the energy expansion. More generation of all types is increasingly needed to power electric vehicles, greater home electrification, data centers, artificial intelligence (AI), and onshore manufacturing. These forces are slowing down all different types of resources including solar, wind, nuclear, gas, and storage. According to the Permitting Institute’s testimony to Congress, it takes 7-10 years on average for new power plants to come online—an obstacle that remains even after projects move through the interconnection queue.
In 2024, EPSA has advocated for more streamlined and efficient permitting to reform the interconnection process for all types of energy resources. Grid operators have made significant progress in approving projects, but hurdles beyond the interconnection queue stymie development.
This year, Senators Joe Manchin and John Barrasso introduced a bill to reform permitting at the federal level. In a letter to Chairman Manchin and Ranking Member Barrasso, EPSA voiced support for specific provisions of the bill – including guardrails on the legal review process for key federal permits which would improve certainty around timing. The letter also highlighted the importance of giving reliability experts the ability to weigh in on how federal rules would impact overall grid reliability.
PJM’s independent market monitor has estimated that 60 GW of dispatchable generation is at risk of retirement by 2030, up 50% from their estimate two years ago. Even with grid operators like PJM working to clear interconnection queues and decrease the wait time for dispatchable generation, other hurdles block development of energy resources that are desperately needed to replace retiring megawatts. Regulatory actions such as the EPA’s proposed power plant rules create additional barriers to the energy expansion and force more resources into retirement at a time when more capacity is needed, not less.
Co-location Principles: Meeting Data Center Demand
As data centers and other large energy users require increasingly large amounts of power, customers have turned to co-location agreements to supply reliable electricity directly from generators. This practice is not new. Some of the earliest energy-intensive industries were built alongside hydropower dams.
Just this year, Amazon and Microsoft have pursued co-location agreements to supply data centers.
Demand for co-located power comes as the Federal Energy Regulatory Commission (FERC) is being asked to provide clarity on the rules for co-location agreements. If done right, co-location agreements can allow faster deployment of energy-intensive facilities and incentivize new generation, while shifting costs and risks away from consumers.
In November, EPSA released its own Co-Location Principles to help guide new regulations and policies that will promote competitive power generation. Co-location agreements should promote competition, innovation, and reliability. By creating barriers to co-location, utilities create market inefficiencies that can raise costs and place undue risks on local customers. We shared our recommendations to FERC this month, asking for swift guidance to support these arrangements in the short term while allowing for flexibility and avoiding discrimination in the years to come.
Enhanced Reliability of Existing Infrastructure
Throughout 2024, EPSA and its members have worked to bolster reliability by investing millions of dollars in operations and increasing gas-electric coordination. As a founding member of the Reliability Alliance, EPSA has worked with the Interstate Natural Gas Association of America and the Natural Gas Supply Association to develop specific policy recommendations to improve gas-electric coordination. Ensuring that natural gas supplies are available for electricity generation—even in extreme weather conditions—is critical for maintaining reliability.
EPSA has been committed to bolstering winter preparedness by regularly engaging with federal regulators and industry leaders to provide workable solutions.
EPSA members actively participate in the North American Electric Reliability Corporation’s stakeholder processes to address current and future reliability challenges. They also take operational steps to mitigate the effects of winter weather including preparedness plans, training personal, and performing critical maintenance.
EPSA will also participate in the newly formed Natural Gas Readiness Forum, which will address natural gas system performance during high demand periods.
Dispatchable Resources Remain Essential
Dispatchable resources remain essential to providing grid reliability and EPSA has continued its work to ensure policy makers understand the true impacts of their policies when it comes to premature retirement of critical generation capacity. In response to FERC’s Technical Conference on the issue, EPSA highlighted that as more generation comes from intermittent sources like solar and wind, dispatchable resources play an increasingly important role when other sources are unavailable.
FERC Commissioner Mark Christie noted that the grid is facing “a rapid, unsustainable, dangerous loss of dispatchable generating resources” and that “we have an inability to build and construct and bring online equivalent capacity resources.”
There continues to be a need for policies and market designs to support dispatchable resources by reducing the time it takes to build new generation and not prematurely retiring generation that is essential for maintaining reliability. EPSA has released its own key reliability principles that policy makers can follow to preserve system reliability while maintaining a competitive and cost effective approach.
Managing Electricity Costs
Competitive markets remain the most efficient and affordable way to build out new generation while shielding customers from investment risks.
Prices in PJM’s most recent capacity auction prices were high relative to the last two years of record low prices. But adjusted for inflation, they remained well below the 19-year average.
High power demand and ambitious environmental policies that pushed many dispatchable assets into retirement have helped lead to the surge in capacity prices. However, a competitive markets structure means that high prices encourage high investment in new generation.
As long as regulators and policymakers resist the temptation to interfere with price signals, higher prices should help attract the investment we need—especially if concrete steps are taken to streamline permitting and make it easier to build needed infrastructure.
Notes: Capacity prices are adjusted for inflation into $2025/26 and adjusted to make them ELCC equivalent. The quantity of new builds comes from the BRA Reports.
The recent auction prices are clear market signals that additional generation needs to be built to ensure system reliability. Past years with similar price signals have led to more generation capacity being added to the grid, lowering costs and increasing reliability.
Competitive Power Suppliers Are Developing Energy Resources of all Kinds
In 2024, EPSA members have been at the forefront of building out much needed generation capacity.
Seeing the price signals from PJM’s most recent capacity auction, Calpine announced that it plans to accelerate development in the region. “When more electricity generation capacity is needed and reserves begin to tighten, a well-designed competitive market sends the appropriate signals to generators to spend capital on both new and existing sources,” Caleb Stephenson, executive vice president of commercial operations at Calpine said.
Energy Capital Partners (ECP) announced a $50 billion strategic partnership with the investment firm KKR to supply data centers with the power needed for AI. “In order for the U.S. to maintain its advantage in AI, we will need massive new investments in power infrastructure on an accelerated basis that are capable of addressing concerns related to electricity prices and carbon emissions,” Doug Kimmelman, Founder and Senior Partner of ECP said.
LS Power is combating the effects of rising electricity consumption and power demand by investing $2.7 billion in U.S. energy infrastructure after exceeding its recent fundraising target.
In total, EPSA members provide over 175,000 MW of generation capacity to the grid, with significant new investments in solar, wind, battery storage, nuclear, carbon capture and storage, and more announced in 2024.
Find out more about what EPSA members have been doing here.
Looking Ahead to 2025
EPSA sees 2025 as a year of both risk and opportunity. The U.S. energy system is in the midst of an unprecedented energy expansion that will require a “more of everything” approach to meet growing demand reliably and cost effectively. Policymakers have an opportunity in 2025 to pass commonsense policies that embrace competitive solutions and innovative approaches that put consumers first.
EPSA will continue its role as the foremost advocate for competitive power markets as the best pathway to provide reliable and affordable power to every American while still meeting our environmental goals.
We’ll discuss these and more issues at EPSA’s annual Competitive Power Summit on April 2, 2025…
Find out more here.
