Last legislative session, Missouri lawmakers took a swing at addressing anxiety over data centers increasing electricity rates with the passage of Senate Bill (SB) 4. This bill requires that customers with loads over 100 megawatts (MW) pay their share of costs associated with connecting to the regulated grid (the Missouri Public Service Commissions recently expanded that rule to 75 MW). For reference, 100 MW is roughly equivalent to the electricity needs of 80,000 U.S. households.

There has been confusion about whether average Missourians’ rates would increase due to data centers. It’s understandable that people might be confused about some language in the bill. For example, what exactly does “any unjust or unreasonable costs arising from the service to such customers” or “pay their share of costs” mean?

A recent hearing at a St. Louis Board of Alderman committee meeting brought some needed clarity to the matter. When questioned, Ameren’s manager of economic development clarified that “all Ameren customers, including residential customers, pay for expanding the grid through building new power plants through rate increases, and that may be needed to accommodate large-load customers.”

In plainer English, average Missouri ratepayers would pay for new power plants constructed to meet data center demand—which could be a hefty bill if Missouri does indeed need new power plants.

Major technology companies (Amazon, Google, Meta, Microsoft, xAI, Oracle, and Open AI) are meeting with President Trump to sign a pledge that they will supply and pay for their own power for artificial intelligence data centers.

So average Missourians won’t be paying for new data centers at all?

Potentially, but it depends on the deal that is finalized with the major tech companies.

While there is some uncertainty about who will pay for what, Missouri could bring clarity by allowing consumer-regulated electricity (CRE).

CRE offers a private, parallel pathway to energy abundance, and gives data centers a private partner (CRE utility) to meet their own energy needs with less red tape, more certainty, more control, and more freedom to innovate. A CRE utility would develop and operate generation on behalf of large-load customers that prefer not to own and operate power plants themselves.

SB 4 was a good start, but Missouri can go further in protecting ratepayers and attracting investment. Allowing CRE could create a clear, structural pathway that could not only further protect ratepayers, but also provide attractive, tangible benefits to the developers paying for their own energy needs.

The post Who’s Paying for What with Data Centers? appeared first on Show-Me Institute.

As a writer, there are moments when someone else articulates an idea so well that rewriting it in my own words would be unnecessary. A recent op-ed in The Hill did exactly that, clearly laying out the energy challenges facing the United States:

The U.S. electricity sector is a slow-moving maze of regulations, shaped by decade-long transmission approvals, time-intensive interconnection studies for new generators and large new customers, and overlapping layers of state, regional and federal bureaucracy. . . . The regulatory thicket surrounding the electricity industry was tolerable when the pace of change was slow. However, with the rise of AI and renewed growth from manufacturing and electrification, we can no longer endure a sclerotic grid.

In addition to reforming our rigid, reluctant-to-adapt grid, there are questions about whether average ratepayers should be on the hook for increased electricity demand being driven by a few large customers.

In the midst of all of these concerns, there is a U.S. Senate bill that could help fix the problem: S.3585 – DATA Act of 2026. The bill was recently referred to the Senate Committee on Energy and Natural Resources.

I have written about consumer-regulated electricity (CRE) for Missouri, which would reduce the number of state-level regulations that off-grid CRE utilities (CREUs) would face. (You can click here if you’re interested in what a CRE policy might look like in practice.) However, even if it were allowed in Missouri, there would still be many federal-level regulations that would diminish the benefits of the new practice.

That is where the DATA Act becomes so vital. The act would exempt certain new CREUs from specific federal regulations that apply to the broader grid. If our state and federal governments approve CRE, there would be a pathway for large electricity users like data centers and aluminum plants to more quickly generate their own electricity without impacting the rates of average Missourians. That would be a win for all of us.

All of this suggests that the DATA Act of 2026 is something to watch in Washington, D.C. But Missouri should not wait until the federal government makes its move. We should be proactive and allow CREs in our state, creating a pathway to address modern energy challenges that would become even more viable if federal reforms under the DATA Act follow.

The post Keep an Eye on the DATA Act in Washington, D.C. appeared first on Show-Me Institute.

The investigation and review are intended to protect ratepayers, assess Missouri’s future energy needs, and manage Missouri’s natural resources effectively. These are good objectives, but the hard question is finding a policy solution to match all those goals.

One option I have written about, consumer-regulated electricity (CRE), is worth considering. (If you’re unfamiliar with CRE, you can click the link to learn more.)

Instead of placing new data centers on the existing regulated grid, we could match data centers with an independent CRE utility (CREU). Furthermore, if electricity demand for these data centers falls short of its sky-high projections, then the excess capacity will have been a poor investment. This protects ratepayers by putting private companies on the hook for that risk instead.

There are benefits to data center developers as well. A CREU can be structured around the developer’s reliability needs and preferred energy resources. Projects could also require less transmission, as new generation facilities could be built near their customer base. CRE could be a reliable, economical, and sustainable energy solution to meet current and future energy needs.

Speed to operation is vital in today’s economy, and data center projects have experienced difficulties securing permissions from the various layers of government. While many hurdles would still remain (like local zoning), CRE projects would not require permissions from the Missouri Public Service Commission since they would not be connected to the regulated grid. At the federal level, Senator Tom Cotton recently introduced the DATA Act, which would exempt CREUs from federal regulations not designed for on-site, self-contained power systems. While still early, this legislation is worth monitoring and could further increase the speed to operation.

The governor has made it clear that he wants to meet growing energy demand in a way that protects ratepayers and addresses Missouri’s current and future energy needs. CRE is a policy approach that matches those objectives.

The post Consumer-Regulated Electricity (CRE) and Data Centers appeared first on Show-Me Institute.

-A tribute to the late Joe Forshaw
-Lessons from Robert Caro’s books about LBJ
-Springfield voters declining to subsidize a convention center
-Traditional public schools signing on to MOScholars
-An update on Medicaid’s out-of-control growth in Missouri
-How Missouri could use consumer-regulated electricity to power data centers

Click here to find the newsletter.

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Festus is not alone in its debate. Nationwide, there have been significant disputes about whether communities should want data centers in their backyards. While data centers can bring investment to a community, there are concerns about electricity, water usage, and sound.

Of the hundreds of citizens participating in the recent Festus hearing, one gentleman’s comments captured my attention. The St. Louis Post-Dispatch reported:

He urged local governments to turn any revenue gain due to the new facility into lower property taxes for the general public. He also said a data center should pay for any increase in utility rates due to the extra energy usage it requires. And, he said, the city should not offer the data center any tax incentives.

I have to wonder—has this gentleman read this article I recently published?

Jokes aside, his comments convey a few key points that I think are important to keep in mind when considering a data center project in a community.

#1: Lower taxes help drive economic growth, so a reliable course of action is to return extra revenue to taxpaying citizens.

New data center revenue ought to be returned to taxpayers through lower tax rates, easing pressure on the entire tax base. Property tax abatements should not be handed out.

#2: Find innovative solutions for electricity needs.

Last year, a major energy omnibus bill, Senate Bill 4, included a provision that protects average ratepayers from “any unjust or unreasonable costs from service to such customers [such as data centers].” This should help shield average ratepayers from rate hikes to meet this new energy demand, but some burden will likely still fall on them.

While it is a state-level solution, Missouri should explore consumer-regulated electricity (CRE), which would allow new data centers and other large customers to be served by separate, independent grids. This idea could be beneficial for both ratepayers and developers. You can read more about CRE here.

#3: Remember what data center developers are prioritizing, and do not hand out subsidies.

Lastly, the actions of the biggest data center customers have made their priorities clear.

Money does not seem to be a big factor for these enormous developers. They instead seem focused on energy availability, speed to operation, and long-term stability. A clear example of this is Microsoft pouring an enormous amount of money into restarting Three Mile Island for its data centers.

Instead of handing out subsidies, a municipality could evaluate its own permitting rules. Reducing red tape could both accelerate speed to operation and signal that the community is a dependable, long-term location.

Festus will certainly not be the last community to have a heated debate about data center development. Keeping these key principles in mind, however, may help communities have productive debates on this topic.

The post The Data Center Debate Continues in Festus appeared first on Show-Me Institute.

Consumer Regulated Electricity and Today’s Economy

CRE would allow off-grid electricity providers to generate, store, transmit, distribute, and sell electricity to new, large customers. They would not be permitted to serve the general public and would still be subject to federal regulations and other rules such as permitting and workplace safety. If a CRE utility (CREU) chooses to interconnect with the regulated grid, it would then cease to be a CREU.

While this might sound like a lot of red tape, it still cuts down on the mountain of regulations and permissions for utilities on the regulated grid that serves the general public. CRE enables innovative, profit-driven entrepreneurs to serve energy-hungry clients building things like data centers.

For example, CRE could allow a new aluminum smelting facility that needs a consistent, high-power energy supply to partner with a CREU specializing in small-modular reactors (SMR). Such a partnership would give the aluminum facility a reliable power source tailored to its needs, with a payment structure negotiated privately between both parties. The aluminum facility could even use industrial heat from the SMR for its own high-intensity manufacturing processes.

Another benefit of CRE is increased flexibility. The energy sector is rapidly changing. Forecasting future demand is difficult even under stable conditions, but today’s landscape makes accurate prediction even more challenging.

Consider artificial intelligence. Many projections warn of an immense spike in electricity demand from data centers needed to power artificial intelligence, while others suggest innovation could make these systems far more efficient. Either way, relying on regulators alone to anticipate these trends and build capacity accordingly is risky for ratepayers who need electricity but also end up paying for new construction.

Free-market mechanisms like CRE would distribute that risk. If demand rises sharply, CRE utilities could more quickly deploy new generation to meet some of it, easing pressure on the regulated grid and diminishing rate hikes. If demand falls short, the CREUs and their customers would be responsible for the financial cost of overbuilding, not captive ratepayers.

Illinois’s willingness to explore CRE shows a growing recognition that the traditional utility model may not be the best way handle modern energy challenges. Allowing CRE in Missouri could attract investment, foster innovation, and relieve stress on the regulated grid and ratepayers. This is a policy Missouri should consider.

The post Illinois Explores Free-Market Energy Policy appeared first on Show-Me Institute.

The data center discussion is highly nuanced, marked by an interesting mix of not-in-my-backyardism and yes-in-my-backyardism.

This debate has touched down in Platte County in the Kansas City area, where “Project Kestrel” would grant substantial property and sales tax subsidies to support the development of a new, $100 billion data center campus. But is this the right move for Platte County, or for Missouri?

Missouri is in need of investment, and artificial intelligence and associated data centers already play a significant role in our economy.

However, economic development subsidies enrich individual developers at the expense of taxpayers, schools, and other public services. Using tax subsidies to lure data centers, filmmakers, sports teams, and others into Missouri shrinks the tax base of the region without leading to meaningful economic growth. Opportunity costs are largely ignored, with estimates for economic “boosts” not taking into account what the millions given away in subsidies could have achieved if invested in infrastructure, public safety, education, or tax rebates for Missourians.

Looking at electricity, data centers are enormous consumers that are prompting the buildout of new generation facilities. On a regulated grid, such as Evergy’s in the Kansas City area, building new generation and associated transmission is one of the most expensive processes for average ratepayers, because monopoly utilities are allowed to recoup the cost of their capital investments and typically earn a government-approved profit.

Now, it is true that average Missourians use artificial intelligence, indirectly driving the increased demand for data centers. It is also true that we currently cannot predict with certainty the amount of electricity artificial intelligence and data centers will ultimately require.

In April 2024, Goldman Sachs forecast that data centers would rise from 2.5 percent to 8 percent of all U.S. electricity usage by 2030. However, Google recently reported a 33-fold reduction in energy usage for AI queries in a single year.

Some legislation has been passed in an attempt to shield average Missourians from bearing “unjust or unreasonable” costs of powering new data centers. However, this does not mean that none of the burden of new power-plant construction will fall on average ratepayers. Furthermore, if utilities overbuild generation capacity based on overly aggressive demand projections, average ratepayers could find themselves footing the bill for underused assets.

Yet, there is risk in veering too far in the other direction as well: An underbuild of new generation would likely lead to Missouri missing out on significant investment.

To navigate this dilemma, policymakers in Missouri should think outside of the box. Instead of solely considering solutions inside the regulated, ratepayer-supported grid, Missouri should follow New Hampshire’s example and consider consumer regulated electricity (CRE). The idea is simple: huge customers like data centers are driving up electricity demand and putting strain on the grid and ratepayers. CRE would allow off-grid electricity providers to build and operate generation and transmission facilities whose output would be sold exclusively to these new customers. This approach would help shield Missouri ratepayers from both the rate hikes that would otherwise come with new plant construction and the risk of overbuild. CRE would also provide developers with speed, flexibility, and certainty—attractive qualities that are often lost to red tape and lengthy regulatory approval processes.

Adopting CRE could help ease tensions in Platte County and across the state. Of course, the pressure to offer tax subsidies would remain, but this problem is not exclusive to data center development. Corporate handouts are not the way to encourage economic growth. Instead of trying to lure businesses with subsidies, Missouri should have a free market–oriented economic and regulatory environment; for example, one that is conducive to polices like CRE.

The post Data Centers, Subsidies, and Electricity in Platte County and across Missouri appeared first on Show-Me Institute.

In my recent report, Connecting Nuclear’s Past and Present: Guiding Missouri’s Future, one of the policy solutions I offer to meet electricity demand is consumer-regulated electricity (CRE). In short, CRE would allow for the creation of private energy entities, disconnected from utility grids, in order to serve the largest customers more efficiently.

A recent article on this topic caught my eye. The article mentions that delegates at the World Nuclear Association summit in London discussed forming private energy clusters, disconnected from the grid, to meet surging demand from data centers.

Doesn’t that sound familiar?

Bringing Energy Clusters (or CRE) to Missouri

A few weeks ago, New Hampshire’s governor signed into law House Bill 672, which allows for “off grid electricity providers”—independent and disconnected from the main grid—to generate, transmit, distribute, and sell electricity.

Whether you call it CRE, off-grid providers, or private energy clusters, the concept is similar: enabling private energy systems to serve large industrial customers with less delays, less red tape, and less pressure on the main grid and ratepayers.

Poland and the Netherlands are beginning to consider the use of energy clustering to meet industrial energy needs. The previously mentioned article identifies a few potential benefits from energy clustering:

• It would allow large customers to take their electricity from a co-located generation source
• If a thermal energy source like nuclear is used, large customers could use its industrial heat (high-temperature steam used in industrial processes like manufacturing)
• The energy developer would benefit from simplified project finance
• Both consumers and developers would avoid long transmission lines
• These clusters would also help reduce the burden on grid resources, which are at a premium in most markets and in Missouri

CRE gives large customers the option to use an energy source of their choice, so long as they meet the still-applicable regulations (such as the Clean Air Act for fossil-fuel plants).

As we have seen with the drastic actions of Meta, Microsoft, and Google, there is a market for this type of arrangement as these huge customers have sought connection to nuclear reactors. States and countries are taking notice of these market conditions and are bringing the free market into the energy sector.

Missouri needs to reduce pressure on the grid and attract investment. In the upcoming legislative session, lawmakers should seriously evaluate how CRE—or private energy clustering—could benefit consumers, energy developers, and ratepayers in our state.

Want to read more? Check out these related articles:

Connecting Nuclear’s Past and Present: Guiding Missouri’s Future

New Nuclear Energy: Business-Speed and Business Friendly

Mission Impossible and Nuclear Energy

One Way Missouri Could Keep its Grid Reliable

Weighing Consumer Regulated Electricity to Meet Energy Demand Growth

Missouri Needs to Be Prepared for Growing Energy Demand

The post Is Consumer-Regulated Electricity Going Worldwide? appeared first on Show-Me Institute.

Managing this problem in the current system that is dominated by monopolies is difficult. But what if market forces could be infused into our current system to help address new demand?

An Introduction to Consumer Regulated Electricity (CRE)

One potential policy solution that could complement Missouri’s current system is consumer regulated electricity (CRE). While still a developing idea, CRE is worth considering as Missouri navigates an uncertain and potentially very costly energy future.

In theory, CRE would allow private investors to create new, independent electric power systems (both generation and transmission) using their own capital. These private grids would be scaled to specifically meet new demand growth from large consumers. In order for a CRE entity to operate appropriately, it would need to be free from restrictions placed by the Missouri Public Service Commission (MPSC). That means CREs would need to be unconnected to the regular grid and only serve new industrial and large commercial customers.

It should be noted that these CRE entities would still be subject to federal regulations, such as the Nuclear Regulatory Commission for nuclear projects. These entities would still need to meet federal safety standards.

Considering the Benefits of CRE in Missouri

Travis Fisher of the CATO Institute argues that these private grids—partly free of the massive regulatory red tape for utilities—could be developed more quickly, infusing needed competition and innovation into the energy sector. As “private energy islands” for new, large energy consumers, CREs could potentially relieve strain on the primary grid and ratepayers. Rather than relying on ratepayers to fund new power plants to accommodate rising industrial demand, the market could provide that solution.

This idea aligns with growing momentum in the private sector to pair small modular reactors with corporations (Google, Microsoft, Meta) urgently seeking energy sources tailored to their needs. CRE could allow the free market to guide this practice, and potentially, more quickly match demand with supply as companies would not be subject to current MPSC regulations that limit competition. This could be a boon for economic development in Missouri.

In theory, CRE would not tear down Missouri’s existing framework, but rather, complement it and allow private developers to target growing energy demand from the largest consumers, which are causing the most concern about reliability.

How Could We Potentially Bring this to Missouri?

Bringing CRE to the Show-Me State would likely require a modification of state statute to declare that CRE entities—if they are not connected to existing infrastructure and only serve large, industrial customers—are not subject to state regulation. New Hampshire is one state considering this concept. While further study is needed, CRE is a compelling idea that our lawmakers ought to consider.

The post Weighing Consumer Regulated Electricity to Meet Energy Demand Growth appeared first on Show-Me Institute.

• “Microsoft deal would reopen Three Mile Island nuclear plant to power AI”
• “Amazon goes nuclear, to invest more than $500 million to develop small modular reactors”
• “Amazon and Google have plans for fueling their data centers: Nuclear power”
• “Oracle will use three small nuclear reactors to power new 1-gigawatt AI data center”

Why are some of the largest corporations, who are the biggest consumers of energy, trying to get nuclear plants up and running?

In my view, energy security—access to sufficient, affordable, and reliable energy—is the key motivator. These corporations likely foresee potential shortfalls in energy supply, particularly for sources that can meet demand at any time.

As these headlines show, corporations are even willing to go “behind-the-meter” in order to have access to clean, reliable, and consistent nuclear power. Behind-the-meter refers to the practice of purchasing power directly from a plant, bypassing tradition utility infrastructure. For Missouri, these national trends again highlight the need to seriously consider nuclear power as a solution to building a reliable grid for the future.

What Big Tech is Saying about Energy

A strong and reliable electric grid is vital. Demand for electricity is growing because of data centers, artificial intelligence, electrical manufacturing, and electric vehicles. More than ever, citizens rely on energy to power their daily lives.

Michael Terrell, senior director for energy and climate at Google, said this:

We feel like nuclear can play an important role in helping to meet our demand, and helping meet our demand cleanly, in a way that’s more around the clock.

When major corporations, whose profits depend on uninterrupted power, express concern about future electricity demand, it is worth paying attention.

A Warning Sign for Missouri

Missouri is not doomed, but if you see a bear running away from something in the woods, it is wise to at least consider why it is running. Big Tech’s movement toward nuclear may be a similar warning signal.

Missouri needs to be prepared for an immense energy transition. Amending the Construction Works in Progress (CWIP) law is one way forward. This would open the door for nuclear construction by allowing utilities to gradually recover costs during construction as opposed to all at once afterwards. Investing in more nuclear power is an investment in a strong, reliable power source that we will need as energy demands continue to increase.

The post What to Make of Big Tech’s Pivot to Nuclear appeared first on Show-Me Institute.

What does a reliable electric grid even mean?

The Federal Energy Regulatory Commission defines grid reliability as:

“The provision of an adequate, secure, and stable flow of electricity as consumers may need it. In other words, when you flip the light switch, the lights turn on. The grid remains functional even during unanticipated but common system disturbances.”

Essentially, there needs to be a sufficient and secure amount of dispatchable power plants supplying electricity to consumers. Dispatchability is an energy source’s ability to be “dispatched” to the grid’s consumers whenever they need it. Intermittent energy sources, like wind and solar, are not dispatchable, as they are not continuously available for consumers when they need it.

Missouri’s retiring coal plants are consistent and dispatchable, and to maintain grid reliability, they should simply be replaced with similar plants—such as nuclear or natural gas.

But what about battery storage for intermittent sources?

The presence of energy storage does not make wind and solar any less intermittent. They are still intermittent, but it’s possible battery storage could help alleviate this problem.

Globally, battery storage is rapidly rising, and costs are decreasing. These trends should bolster the effectiveness of renewables—but the sheer amount of energy the United States uses is daunting. The Mackinac Center notes that the United States is set to add 191.6 gigawatt hours of battery backup systems between 2022 and 2026. This is a ton of storage. However, in 2021, the United States used 4,116,000 gigawatt hours of electricity in 2021 alone. Per calculations from the energy analysis group Doomberg, that nets out to 24 additional minutes of battery backup storage added over that five-year period.

Additionally, the International Energy Agency noted the difficulty of providing the materials for a mass battery and renewable expansion at scale. Compared to total mineral demand in 2020, it projects a need for six times as many total minerals for a “net-zero by 2050” scenario.

What’s a policy that could help boost grid reliability?

Last session, House Bill (HB) 1753 passed through the Missouri House but failed to make it to the floor in the Senate. This bill outlined that, prior to the closure of an existing power plant, there must be:

• A new “replacement” power plant secured and placed on the electric grid (which can be in another state) with an equal or greater amount of “reliable electric generation”

• “Adequate” transmission lines in place and ready to operate immediately or shortly after a plant is taken offline (depending on the interconnectedness of the plant being shut down).

The retirements of functioning power plants should not be done in haste. HB 1753 would have helped pump the brakes on an energy transition that seems to be barreling out of control. Even if you believe that renewables should be the primary energy source, there should be a highly dispatchable and reliable source backing them up.

Commissioner Mark Christie of the Federal Energy Regulatory Commission (FERC) noted:

I think the United States is heading for a very catastrophic situation in terms of reliability. . . .The core of the problem is actually very simple. We are retiring dispatchable generating resources at a pace and in an amount that is far too fast and far too great, and it is threatening our ability to keep the lights on. The problem is not the addition of wind and solar and other renewable resources. The problem is the subtraction of dispatchable resources such as coal and gas. . . . A nameplate megawatt of wind or solar is simply not equal in terms of capacity value to a nameplate megawatt of coal or gas or nuclear.

Renewable construction is good—it can bring development and diversity to the generation portfolio—but dispatchability needs to be emphasized, and an intermittent source should not be our backbone. We do not need to make the transition away from coal more convoluted than it is. HB 1753 would have protected energy reliability for Missourians. This policy should be given stronger consideration in the 2025 legislative session.

The post One Way Missouri Could Keep Its Energy Grid Reliable appeared first on Show-Me Institute.

Rush Island is not the first coal plant to be shuttered, and it will not be the last. At the end of 2022, the 827-megawatt Meramec Power Plant was shut down, and according to Ameren, it plans to phase coal out completely by 2045.

Below is a summary of Ameren’s 2023 Integrated Resource Plan:

Note: “Other Zero Carbon” is expected to include a combination of renewables, energy storage, nuclear energy, and new technologies.

The continued shuttering of reliable coal plants presents concerns for energy reliability and affordability.

Is there reason to be concerned with affordability?

North Carolina is another state on the path of shutting down all coal plants and inserting renewables largely in their place. In response to these state plans, the John Locke Foundation and Center of the American Experiment released an in-depth analysis of the state’s proposed paths forward. The analysis finds that North Carolina’s proposed plan would cost more than a more nuclear-focused one. This is largely attributed to the “build and rebuild” treadmill that wind and solar assets need due to their short lifespan (roughly 20 years), whereas nuclear plans have a lifespan of 80 years (and maybe more).

Utilities, like Ameren, are allowed to charge enough for electricity to cover the cost of providing the service to everyone in their territory, plus a government-approved profit, often set at 5–-10 percent, on their capital investments. As long as the expenses are approved by the regulator in their state, utilities make a profit on every dollar they spend on new builds such as wind turbines, solar panels, natural gas plants, or even renovating corporate offices. The more money utilities spend, the more money they make.

A Missouri-specific study of Ameren’s energy plans could be beneficial to future policy research. Nevertheless, there is some reason to be skeptical of the affordability of such a massive energy transition and continued research will be needed as technology changes.

What concerns are there with reliability?

Some sources of energy are more reliable than others, and there are numerous ways to measure this: accredited capacity, unforced capacity (UCAP), or capacity value. All three measure the general reliability value to the grid. The figure below displays capacity values for the two main regional energy organizations in Missouri—Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP):

Solar and wind, which are projected to replace much of the energy that retiring coal plants have produced, are intermittent and do not provide consistent streams of electricity, nor are they available at all times of day (although battery storage is improving). As shown in the table above, MISO rates the reliability of solar and wind far lower than coal and other replacement options. Relying so heavily on them may be dangerous.

There is also the task of building out a vast amount of advanced transmission infrastructure. The New York Times reports: “Already, a lack of transmission capacity means that thousands of proposed wind and solar projects are facing multiyear delays and rising costs to connect to the grid.” We should not bank on the ability to break this trend.

Will Ameren be able to replace 66% of its current generation while also meeting the needs of rapidly rising electricity demand? There is reason for concern. In my next post, I will discuss one policy that could help maintain and strengthen the reliability of our grid.

*Note: This post was updated on October 23 to more accurately reflect the circumstances of Rush Island’s closure.

The post Ameren to Shut Down Rush Island appeared first on Show-Me Institute.

You can read my past thoughts on the bill here and here.

Here is a summary of the policy changes in the ADVANCE Act:

1. Narrows which regulatory costs nuclear energy licensees have to pay (read more here).
2. Establishes an award program for pioneers in the advanced nuclear industry.
3. Streamlines the process to convert “covered sites” (land formerly used for coal plants, factories, etc.,) into nuclear reactor sites.
4. Mandates the Nuclear Regulatory Commission (NRC) to expedite the “combined license” process for applicants building at a site where a nuclear plant currently operates or has previously operated.
5. Seeks to increase manpower at the Nuclear Regulatory Commission (NRC).
6. Updates the mission statement of the NRC to be more supportive of nuclear energy.

While the federal government got something done, Missouri missed an opportunity this past session to repeal its own burdensome anti-nuclear regulations. One particular letdown was the failure to revise the construction-works-in-progress (CWIP) law. You can read specifics on that policy here.

In 2022, Ameren Missouri (the state’s primary utility) relied on coal for 66 percent of its electricity generation. By 2045, Ameren plans to bring that number to zero. Missouri could mimic Wyoming and turn one of these soon to be “covered” sites into an advanced nuclear reactor site. The ADVANCE Act, if signed, will expedite this process in the future—just in time for our energy transition.

Additionally, there have past efforts to add another unit to the Callaway Nuclear plant, Missouri’s one and only commercial nuclear reactor. The ADVANCE Act would allow “combined licenses” mentioned above, which would make more units at the Callaway Plant eligible for a faster review.

Isn’t it time to pass nuclear reform in Missouri? The federal government has made its move—now it’s Missouri’s turn to repeal anti-nuclear regulations such as the CWIP law and perhaps form a Missouri Nuclear Energy Advisory Council (similar to Tennessee’s). Missouri leaders ought to ensure nothing stands in the way of strengthening our grid with clean, reliable, and powerful nuclear energy.

The post Congress Moves to Advance Nuclear Energy appeared first on Show-Me Institute.

HB 1753 mandates that prior to the closure of an existing power plant, there must be:

• A new “replacement” power plant secured and placed on the electric grid (which can be in another state) with an equal or greater amount of “reliable electric generation”
• “Adequate” transmission lines in place and ready to operate immediately or shortly after (depending on the interconnectedness of the plant being shut down).

What does “reliable electric generation mean?” This is calculated by taking the average of the summer and winter accredited capacity (the most a plant could produce in each peak season) of the plant being shut down and comparing it to the plant(s) replacing it. For example, let’s say a Solar Plant Alpha could produce a maximum of 600 MW in the summer, but only 200 megawatts (MW) in the winter. The amount of “reliable electric generation” would then be 400 MW. This is an improvement from using nameplate capacity, which is how much a plant could produce if it produced at full power 100% of the time.

HB 1753 also mandates that the new plants replacing a closing power plant must be also comprised of at least 80% dispatchable energy (dispatchable energy is from a source that is available for use on demand and can have its power output adjusted to market needs). The bill defines dispatchable as: natural gas, nuclear, hydroelectric, biomass, petroleum, geothermal, and coal.

While the 80% rule may sound like a strong protection ensuring that most of our energy is dispatchable, I am concerned that the provision isn’t strong enough.

Let’s say Missouri has coal plants that produce 800 MW of dispatchable energy and solar farms that produce 200 MW of intermittent, non-dispatchable energy, for a total capacity of 1,000 MW. In this scenario, dispatchable energy comprises 80% of total energy capacity.

If you shut down a 100 MW coal plant (which is dispatchable) and replace it with 80 MW of new natural gas (dispatchable) and 20 MW of new solar (non-dispatchable), the total capacity now would be 780 MW of dispatchable energy (800 – 100 + 80) and 220 MW of intermittent, non-dispatchable energy (200 + 20).

Then let’s say you shut down seven more 100 MW coal plants and replace them with seven new 80 MW natural gas plants and seven new 20 MW solar farms. Now after these closures, you would have 640 MW of dispatchable natural gas plants (780 – 700 + 560) and 360 MW of non-dispatchable solar farms (220 + 140). Now, in this new scenario, dispatchable energy comprises 64% of total energy capacity—a gradual erosion.

California, in which non-dispatchable energy makes up around 40% of its portfolio, has had significant issues with energy reliability. During particularly hot summers in recent years, Californians have been urged to ration energy usage:

Officials are urging Californians to run their air conditioning earlier in the day, when more power is available, and to turn up the thermostat starting at 4 p.m. They’re also asking people not to use large appliances, like washing machines, dishwashers and dryers, between 4 p.m. and 9 p.m., which are peak hours for electricity use.

HB 1753 is a step in the right direction and would help provide energy stability for Missourians, but it could be strengthened by changing the 80% dispatchable rule to a 100% rule. There are other concerns that are outside the scope of this bill—in particular, how to account for the growing energy demand in Missouri—but I will address that in a later post. For now, policymakers should consider tweaking HB 1753 to ensure energy reliability in Missouri.

The post Could HB 1753 Help Protect Missourians During a Future Energy Transition? appeared first on Show-Me Institute.

If you clicked on this post without reading Part 1, I encourage you to go back and read Part 1. In that post, I defined some of the energy jargon used in this debate. This post will focus on the provisions of SB 757.

Does SB 757 address capacity factor and dispatchability?

The bill does not explicitly mention capacity factor or dispatchability. Here is a passage from the bill text:

The new replacement reliable electric generation shall be equal to or greater than the full nameplate capacity of any existing electric generating power plant and shall be certified as an equal or greater amount of reliable electric generation by the Missouri public service commission and the regional reliability organization in which the electric utility company operates. (emphasis added)

Unless the public service commission comes up with its own system of power accreditation, it seems this bill will hinge on the actions of our regional reliability organizations.

While I will not go into all of the specific details, the two main regional energy organizations in Missouri—Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP)—have outlined their resource accreditation process for rating power sources and individual power plants (you can read MISO’s method here). MISO’s plan “informs long-term investment and retirement decisions by accurately representing the capacity value of a resource in the prompt year.”

What a statement like that means is that MISO (and SPP also) account for capacity factor and value on the grid by examining different yearly, monthly, and daily variables—all with declared intentions to “maintain reliability.”

However, we should still be cautious, as utilities also can miscalculate or serve other agendas. For example, California has dramatically increased its amount of renewable energy sources in the past 10 years, which now account for up to 42% of its net electricity generation. In the same timeframe, California has cut its nuclear supply by over half, down to 8%. As a result, the dispatchability problem has reared its ugly head in recent years, as in 2020 California had power outages due to insufficient energy for the first time in over 20 years. Sadly, 2020 wasn’t the end of California’s power struggles, as problems have continued. California’s regional reliability organization, California Independent System Operator (CAISO), has even at times called for residents to “use less power between 4 and 9 p.m.” Whether it was due to miscalculation or prioritizing other agendas, Californians are struggling because of a lack of dispatchability and reliability.

That brings me to my main questions concerning SB 787. Can Missouri citizens confidently rely on these regional reliability organizations (MISO, SPP) to protect their energy needs? Will these organizations continue to prioritize both capacity and dispatchability? Is there a way to ensure that other agendas are not prioritized over our energy needs?

On its face, this bill appears to add protection for Missourians, but these questions are worth answering. If there is any possible room for interpretation, shouldn’t it be made clear that both nameplate capacity and dispatchability must be taken into account?

The post Show-Me Energy: Decommissioning Power Plants Part 2 appeared first on Show-Me Institute.

In light of Ameren’s recent declaration that all coal plants will be decommissioned by 2045, this bill seems to add a level of accountability and protection, and could help prevent officials from undertaking actions that would compromise the energy needs of Missourians.

To make an energy grid truly reliable; we need both sufficient capacity and dispatchability.

Prior to examining SB 757, let me explain what these terms actually mean. I will examine the provisions of the bill in my next post.

First, what is nameplate capacity?

In simple terms, nameplate capacity is the amount of energy a power plant can produce if it is operating at 100 percent power all the time. So, if a coal plant is “rated” at a nameplate capacity of 1,000 megawatts (mw), that means 1,000 mw is the maximum the plant could produce—but that is not what it actually generates.

If the nameplate capacity isn’t what the plant generates, how much electricity do plants actually generate?

That answer depends on the type of energy source, the weather, the time of year, and the strategies used to generate energy. I wrote an earlier piece on all the types of energy sources in the United States that you can read here.

Another key variable that determines how much electricity is actually generated is something called “capacity factor.”

Capacity factor, in simple terms, is the percentage of time that a power plant is operating at maximum power (its nameplate capacity).

The capacity factor is not the same among different energy sources. For example, nuclear power plants operated at maximum power 92.7% of the time in 2021—meaning nuclear power had a capacity factor of 92.7%. Coal plants had a capacity factor of 49.3% in 2021, natural gas was 54.4%, wind was 34.6%, and solar photovoltaic (solar panels) was at 24.6%.

Let’s say five different types of plants have a nameplate capacity of 1,000 mw (enough to power around 565,000 homes). Here’s how the capacity factor would affect rates of electricity generation:

Now that we better understand capacity, what is dispatchability?

Dispatchability is essentially an energy source’s ability to be “dispatched” to the grid’s consumers whenever they need it. Energy is neither created nor destroyed, meaning that when we “use” energy, that energy has to be coming from somewhere.

There are a few main “baseload resources” that have ample dispatchability: nuclear, coal, hydroelectric, and natural gas. On the other hand, intermittent resources such as solar and wind have times of day and certain weather conditions where they lack production, meaning they have less dispatchability.

How does dispatchability come into play in decommissioning power plants?

The reason we produce energy is to power things society needs and wants—and we are living in a world where we want and need electricity 24/7. In an internet-driven society, we want to stream movies at night, meet on Zoom for work meetings, play video games, mine bitcoins, or potentially even have a “metaverse.” The growing number of data centers that power these activities devour large swaths of energy, and they have to be operating constantly. If electric vehicles become more popular, we will have millions and millions of individuals using an immense amount of energy overnight to charge them.

This is where some of the dilemma lies. The energy demand market is trending towards 24/7 energy, while many proposed replacement plants are intermittent and don’t produce energy at night, when it is cloudy, or when there is no wind.

Here is a table taken from the Midcontinent Independent System Operator (MISO), which shows the dispatchability of solar and wind and where loss of load occurs. The numbers 1–24 on the x-axis represent the hours of the day, and the y-axis represents the months of the year.

The top “loss of load” graph shows the times where both renewables struggle to be dispatchable when paired together. Some states like California have experienced this dispatchability problem and have tried to mitigate it with the vast expansion of battery infrastructure. This is a fine enough idea and does help with improving reliability. However, there is no realistic path to mass expansion for the needed battery infrastructure to maintain reliability if renewables continue to be scaled. The battery technology also still has problems that need to be ironed out. We should not bet our energy future on battery technology given all the existing issues.

That bet would be too risky, as it could potentially lead to utilities or the government dictating when individuals and businesses may use electricity— such electricity rationing.

In order to achieve dispatchability and maintain reliability, the replacements for coal cannot just be renewables—we need nuclear and other baseload energy sources. Even if you believe that renewables should be the primary energy source, there should be a highly dispatchable and reliable source backing them up.

Now that we understand the two legs that grid reliability needs to stand on, we can turn back to SB 757 in my next blog post.

The post Show-Me Energy: Decommissioning Power Plants Part 1 appeared first on Show-Me Institute.

The post Senate Bill 568 and Electronic Transmission Line Projects appeared first on Show-Me Institute.

The post House Bill 992 and Electric Transmission Line Projects appeared first on Show-Me Institute.

One such very bad policy idea is right of first refusal, which grants major Missouri utilities the automatic right to win all bids on new electric construction lines if they so choose. You may want to read that again. It doesn’t just give major utilities the right to bid on all projects—that goes without saying. It gives them the right to win any project they want, no matter what any other utility or construction company may bid. The idea here is to funnel projects to Missouri companies and “protect” Missouri jobs at the expense of out-of-state competitors. If you think this raises prices on consumers, as any grade school economics textbook would predict, it does. Significantly.

My former Show-Me Institute colleague Jakob Puckett wrote about this issue last year.  The same bills have been introduced again this session, so we shall return to Jakob’s arguments from last year:

Wouldn’t it be better for the legislature to propose subjecting transmission lines to competitive bidding, rather than shielding them from it? Since transmission costs are ultimately passed on to customers, it’s customers who bear the brunt, or receive the benefit, of cost-inflating or cost-saving policies.

Missouri will need more electric transmission lines built in the coming years. To build those lines at the lowest possible cost, Missouri needs more free-market activity in transmission projects, not less.

The state-based protectionism here is really something. While you frequently see such types of anti-market, anti-consumer protectionism at the national level (such as the administration’s ill-conceived plan to require only American-made products in our infrastructure efforts), you rarely see it at the state level. But here we have it. It is bad at the national level (with some exceptions, of course), but at least one can understand where it is coming from. As for this one, I’m at a complete loss. Are we really willing to cast everything aside because a company based in Arkansas that hires workers from Oklahoma might offer the best bid (and thereby save Missourians’ money) for a project near Joplin? (That’s a hypothetical project, for the record.)

As Jakob said, we need more markets in electricity, not less, and these bills power us in completely the wrong direction.

The post ROFR Makes Me ROFL appeared first on Show-Me Institute.

More transmission lines will need to be built to relieve this congestion. The two regional electric grids that Missouri belongs to—the Midcontinent Independent System Operator (MISO) and the Southwest Power Pool (SPP)—have released a draft study identifying several points along their shared electric grid borders—including spots in Missouri—where new transmission projects can help relieve congestion and increase connectivity between different grids.

The study noted several benefits of a more interconnected transmission network. Given that MISO and SPP’s wholesale energy markets select the lowest-cost electricity sources to meet regional demand, a more connected grid allows the most efficient power plants to produce electricity for a wider region. Greater transmission connection also increases reliability, as more power can flow between larger geographic areas in case one spot has trouble meeting electric demand.

The study estimated that the total benefits to customers in the MISO and SPP regions would be roughly $1 billion, savings which would cover a little over half of the expected $1.8 billion cost. It is important to note that these numbers are self reported, although the benefits of more integrated markets and transmission networks are widely understood.

Evidently, the need for expanded transmission capacity in Missouri has caught state legislators’ eyes. However, as I described recently, the bills in the House and Senate take the wrong approach to building out more transmission capacity. These bills give incumbent utilities veto power for new transmission construction proposals. Instead, Missouri should embrace a competitive bidding process, which on average cuts costs by 40 percent.

Electric delivery costs, which include transmission and distribution, are a growing fraction of the cost of providing electricity to customers. Given Missourians’ already rapidly rising electricity bills, policymakers should be keen on finding ways to reduce costs.

Missouri could benefit from expanded electricity transmission, but there are good ways and bad ways to go about doing that. Let’s hope legislators come down on the side of market forces and competition.

The post New Grid Operator Study Highlights the Need for More Transmission appeared first on Show-Me Institute.