0 New Gas Plants Since RGGI: How Climate Policy Caused PA Grid Strain

For climate and energy professionals, Pennsylvania’s power woes offer a critical lesson: haste in decarbonization without firm reliability guarantees can backfire, raising prices and undermining public trust. The narrative that data centers are the villain obscures a deeper policy failure—one that may repeat across the U.S. as states pursue aggressive clean energy mandates.

The rising cost of electricity in Pennsylvania has sparked a search for scapegoats, with many pointing fingers at energy-hungry data centers and the artificial intelligence boom. But a closer examination reveals a different culprit: a decade-long supply shortage exacerbated by federal and state climate policies that have prematurely retired reliable baseload generation without ensuring adequate replacements. The latest PJM capacity auction results delivered a stark warning—prices soared to the maximum allowed, signaling a grid under immense strain. While data centers are heavy consumers, they are not the root cause of this crisis. Instead, a series of regulatory actions has systematically undermined the ability to build new power plants, leaving the Mid-Atlantic region vulnerable to price spikes and reliability risks.

“

At the state level, Pennsylvania’s decision under then-Governor Tom Wolf to join the Regional Greenhouse Gas Initiative (RGGI) in 2019 created a cloud of legal and regulatory uncertainty.

PJM Interconnection, the grid operator for 65 million people, runs capacity auctions to guarantee electricity availability three years in advance. The most recent auction, likely held in mid-2025 for the 2026–2027 delivery year, revealed a substantial deficit, with clearing prices hitting the administrative cap. This is not a sudden shock but the culmination of a supply-demand imbalance that has grown for over a decade. Electricity demand has increased modestly, but supply has failed to keep pace because new generation projects, especially natural gas, have stalled. The lack of new capacity is not due to a lack of interest—developers have proposed projects—but because state and federal policies introduced uncertainty, raised costs, and tilted the playing field toward intermittent sources that cannot provide round-the-clock power.

The policy chain is clear. The Obama administration’s Clean Power Plan, finalized in 2015, sought to curb carbon emissions from power plants, accelerating the closure of coal-fired facilities. Although the plan faced legal challenges, it sent a clear signal that coal was in decline. The Biden administration built on this with stricter environmental rules for both coal and new natural gas plants, adding costly control technologies and making permitting more arduous. At the state level, Pennsylvania’s decision under then-Governor Tom Wolf to join the Regional Greenhouse Gas Initiative (RGGI) in 2019 created a cloud of legal and regulatory uncertainty. A Pennsylvania court later ruled Wolf’s executive order unconstitutional, but the damage was done: since that entry, not a single new large-scale baseload power plant—natural gas, nuclear, or coal—has been initiated in the state. Governor Josh Shapiro, meanwhile, proposed his own cap-and-tax program coupled with electricity standards that heavily favor wind and solar, further chilling investment in firm capacity.

Wind and solar, while useful tools, cannot replace the dependable output of a coal, gas, or nuclear plant. When these plants retire, the grid loses inertia, frequency stabilization, and the ability to meet peak demand without the sun or wind. A new baseload plant takes years to finance, permit, and build. The policy-induced retirement of existing plants and the de facto moratorium on replacements have left PJM in a precarious position, forcing it to rely on aging generators and hoping for mild weather. The result is not just higher capacity prices but also higher retail rates for households and businesses. Ratepayers are paying for this policy-driven supply crunch, not for data centers.