Natural gas subsidy plan rolled out to stabilize the grid

(The Center Square) — As experts raise more questions about the future reliability of the energy grid and warn of blackouts, legislators are giving more serious consideration to bankrolling upgrades for power plants.

On Wednesday, Sen. Gene Yaw, R-Williamsport, shared his proposal to create a Pennsylvania Baseload Energy Development Fund, which would give low-interest grants and loans to electricity generators to build, maintain, modernize, and run their plants.

Doing so, he argued, would help to stabilize the PJM, the 13-state grid that supplies power to 65 million people.

“Pennsylvania alone supplies nearly 25% of baseload electric generation capacity to the grid,” Yaw said in a press release. “We must play a more active role in incentivizing generation and addressing looming reliability challenges with market-based solutions. The Pennsylvania Baseload Energy Development Fund can help us supply the grid with reliable, cost-effective energy, as well as the infrastructure and workforce to maintain it.”

The fund is modeled after one in Texas, which Yaw called “extremely successful.” Initially funded at $5 billion in 2023 after Winter Storm Uri wrecked the grid in 2021, the Texas legislature doubled funding. Wind and solar projects do not qualify for funds in Texas, but coal, natural gas, and nuclear do.

So far in Texas, natural gas projects have dominated as award winners.

The need for a fund, Yaw argued, is due to growing energy needs even as Pennsylvania loses more power plants.

“PJM has recently said that in the next 7-10 years there will be about 40,000 megawatts retiring and a need for an additional 40,000 megawatts in their service territory,” Yaw wrote in a legislative memo. “That would be an estimated 80,000 megawatt spread in power needs within the grid. This program would help provide opportunities to increase base load generation that connects to PJM within that time frame.”

Though high-interest rates can cause problems for some projects looking for financing, it’s not the only barrier. It may not even be the main one.

A report from Pittsburgh Works Together this week warned that the grid is “in peril” as government policy decisions make it difficult to build new projects and connect them to the grid. State and federal rules can push plants into early retirement. Delays in the approval process can also kill projects or limit how quickly more power can be added.

Though PJM officials are working to reform its interconnection process, where new projects get added to the grid, projects faced four-year delays in 2023.

If Yaw’s legislation copies the Texas approach and only offers loans to coal, natural gas, and nuclear projects, it would boost projects that are currently in the PJM minority. Of the 162,000 megawatts in the queue, solar and wind comprise 83,000 megawatts and another 50,000 megawatts are energy storage projects.

Natural gas projects account for fewer than 5,000 megwatts.