Sep 14, 2026 · 1h 21m
Grid bottlenecks test competitive power markets
Are power markets fit for purpose? The debate over reliability, affordability and who pays for the grid
As data centers accelerate electricity demand, market design and cost allocation will determine whether reliability gains remain affordable and broadly shared.
- 1Competitive markets can reward reliable generation, but capacity prices and investment signals remain contested.
- 2Data-center forecasts may overstate actual demand, while interconnection and transmission delays constrain growth.
- 3Islanded power solutions could speed large-load expansion while shifting costs and reliability risks onto other customers.
Don't miss
Stacey Doré warns that private or islanded power arrangements could produce separate systems for wealthy companies and everyone else.
The brief
Stacey Doré of Vistra joins Amy Myers Jaffe and Ed Crooks to examine whether competitive electricity markets can deliver reliable, affordable power as data centers drive demand growth.
The debate turns on market structure: competitive generators bear investment risk, while regulated utilities earn approved returns, creating different incentives for long-lived power assets.
Doré cautions that proposed data-center demand is not the same as real demand, and says queue management, proof of customers, and timing should shape planning.
The episode’s sharpest warning is that private or islanded generation could create a two-tier grid, giving wealthy companies faster access while other customers bear broader system costs.
The panel concludes that reform, not a wholesale return to regulation, is the likeliest path—but only if capacity markets and cost allocation prevent gaming.
What was said on this episode
65 statements · 36 positive · 24 negative · 5 neutral
Grid connection failures could create separate power systems for wealthy companies and other customers.
“If all of this load growth has to go off-grid because we can't get it connected on the grid, then we have failed as an industry for us to have two grids.”
Listen at 0:00
New nuclear generation takes a long time to build.
“However, it takes a really long time to build brand new nuclear.”
Listen at 0:23
A two-tier grid would ultimately harm residential customers.
“that is not good for. ultimately residential customers in the long run for us to have two grids”
Listen at 12:30
Connecting large loads sooner would distribute fixed grid costs across more customers.
“the sooner these large loads can come to the grid, the sooner they can start sharing the fixed system costs”
Listen at 14:13
Competitive wholesale electricity markets produce greater customer cost efficiency than regulated utility models.
“This results in the greatest cost efficiency for customers”
Listen at 18:30
Competitive electricity markets produce greater customer cost efficiency than regulated utility models.
“This results in the greatest cost efficiency for customers versus a regulated utility model”
Listen at 18:30
ERCOT’s retail competition has produced relatively low electricity prices for customers.
“ERCOT customers have reaped the benefits of that for years. And we still have among the lowest electricity prices in the country in ERCOT.”
Listen at 19:09
ERCOT has among the lowest electricity prices in the United States.
“we still have among the lowest electricity prices in the country in ERCOT.”
Listen at 19:15
Competitive-market prices rise with demand and fall when demand declines.
“In normal... full free markets, prices rise when demand rises and prices fall when demand falls.”
Listen at 21:45
Competitive power-market prices increase with demand and decrease when demand falls.
“prices rise when demand rises and prices fall when demand falls.”
Listen at 21:48
High peak demand combined with insufficient supply raises electricity prices.
“when you have times of really high peak demand and there's not enough supply on the system, you are going to see prices rise.”
Listen at 22:00
ERCOT prices barely increased despite a record peak-load increase.
“prices barely responded.”
Listen at 22:42
Customers pay more over the long run in regulated electricity markets.
“in the long run, the data is clear, customers pay more in regulated markets.”
Listen at 23:41
More than 700 gigawatts of queued U.S. load by 2030 will not materialize.
“that is not going to happen.”
Listen at 34:54
Headline forecasts of U.S. electricity-load growth are overstated by at least tenfold.
“the forecast people are seeing in the headlines every day are overstated by 10x or more.”
Listen at 35:58
Interconnection queues should require stronger evidence from prospective large loads.
“Let's raise the bar on these interconnection queues.”
Listen at 36:38
Interconnection queues should impose stricter qualification requirements.
“let's raise the bar on these interconnection queues”
Listen at 36:38
Interconnection fees alone cannot adequately filter speculative data-center requests.
“Fees alone are not enough.”
Listen at 37:53
Data-center developers should provide customer contracts before receiving grid connections.
“we should be doing things like requiring the data center developers to show a customer contract”
Listen at 38:17
The existing grid can meet projected near-term load growth during 99% of annual hours.
“our existing grid today during 99% of the hours in a year. has more than enough generation to meet this near-term load growth”
Listen at 39:15
Near-term reliability challenges are concentrated in a few annual super-peak hours.
“the problem we're trying to solve is the super peak, the few hours of the year where you may have... supply running all out and demand approaching that amount”
Listen at 39:42
Data centers can use backup generation during grid emergencies to provide demand response.
“data centers are often bringing backup generation that they can turn on during grid emergencies”
Listen at 40:06
Rising PJM capacity-market prices are signaling investment in generation.
“the capacity market has been rising, and that is sending an investment signal”
Listen at 41:15
Expected electricity-load growth itself encourages generation investment.
“the low growth itself, just the fact that low growth is coming is an investment signal”
Listen at 41:40
Competitive generators added or announced over 43 GW in PJM since mid-2024.
“competitive generators have announced or added more than 43,000 megawatts of capacity in PJM since mid 2024.”
Listen at 42:25
PJM’s latest interconnection cycle includes 811 projects totaling approximately 220 gigawatts.
“There are 811 projects. representing approximately 220 gigawatts of potential new generation that have entered PJM's latest generation interconnection cycle”
Listen at 42:33
PJM natural-gas generation in the cited cycle increased from 569 megawatts to 102 gigawatts.
“natural gas generation went from 569 megawatts in a generation cycle called TC cycle one to in the most recent interconnection. generation interconnection cycle, which is called Cycle 1”
Listen at 42:53
Hyperscalers favor nuclear contracts because they prioritize carbon-free generation.
“most of the deals announced are nuclear because they're very committed to carbon-free generation”
Listen at 44:31
New nuclear construction does not meet hyperscalers’ near-term speed-to-power needs.
“it takes a really long time to build brand new nuclear. That doesn't meet their... speed to power objective”
Listen at 44:42
New nuclear generation does not meet hyperscalers’ near-term speed-to-power needs.
“it takes a really long time to build brand new nuclear.”
Listen at 44:42
Hyperscalers will eventually invest in new nuclear generation.
“they will eventually invest in new nuclear as well.”
Listen at 44:49
The current grid can handle near-term electricity-load growth.
“the grid today can handle the near-term load growth.”
Listen at 45:32
Grid policy should connect customers providing backup generation for five to ten annual hours.
“We should be saying to these customers, if you bring backup gin and you can turn it on, you know, five or 10 hours a year when we need you, then we're going to get you connected”
Listen at 45:46
Flexible backup generation should qualify data centers for grid connection.
“if you bring backup gin and you can turn it on, you know, five or 10 hours a year when we need you, then we're going to get you connected”
Listen at 45:47
Islanded power projects bypass ERCOT’s ordinary interconnection process.
“if you're building an islanded solution, you're not in the ERCOT interconnection process.”
Listen at 47:53
Large customers prefer grid connections because they view them as more reliable and cost-effective.
“they really want to be on the grid. They want to be on the grid because they know it's more reliable. They know it's more cost effective.”
Listen at 48:23
Large customers are exploring temporary off-grid power because grid connections are delayed.
“they're feeling forced to explore these bridge power solutions until they get on the grid.”
Listen at 48:37
Large loads should be connected to the grid faster.
“we should be getting them connected on the grid faster.”
Listen at 48:46
Large electricity loads should be connected to the grid faster than current timelines.
“we should be trying to figure out how to get these loads connected much faster than that.”
Listen at 49:21
The U.S. electricity industry can accommodate large new loads through innovation.
“I believe that we can accommodate these loads and we'll find the right solutions.”
Listen at 51:39
Batteries will be an important component of large-load grid integration.
“I think batteries will be an important part of the solution.”
Listen at 51:57
Flexible-load technologies will be deployed within five to ten years.
“Those are the kind of things that we're going to see come to pass in the next, you know, five to 10 years.”
Listen at 52:43
Grid-connected large loads can spread costs and support U.S. AI competitiveness.
“we'll be looking back and saying, good thing that, you know, we figured out how to get these loads on the grid to spread cost for other rate payers, but also so that we can win the AI race.”
Listen at 52:49
Allowing regulated utilities to rate-base generation would harm customers.
“our view is that that's not going to end well for customers.”
Listen at 54:26
Rate-based utilities have no demonstrated speed or efficiency advantage over IPPs in building generation.
“there's no evidence that even if utilities were allowed to build rate-based generation today, that they can do so any faster or more efficiently than IPPs can”
Listen at 54:34
Rate-based generation would not accelerate generation construction.
“it doesn't actually solve the problem of getting generation built faster.”
Listen at 55:09
Rate-based utility generation would ultimately cost customers more than competitive generation.
“it will actually cost customers more at the end of the day because utilities want to do that in a way where they're taking no risk”
Listen at 55:15
Tech companies’ main power constraint is grid interconnection, not generation supply.
“what they really mean is interconnection is our number one constraint.”
Listen at 58:20
Existing grid generation is sufficient for near-term load growth.
“No one has, you know, proven to me or shown me that we don't have enough power generation on today's grid to serve what is the near term load growth.”
Listen at 58:34
Co-locating load with generation is the most efficient and cost-effective connection method.
“the most efficient and cost-effective way to connect load is actually to co-locate it with generation”
Listen at 59:05
Co-location is the fastest way to connect large loads.
“the fastest way we're going to get that load connected.”
Listen at 59:37
Current planned chip supply could support only about 60 GW of U.S. data-center growth by 2030.
“it's likely that only about 60 gigawatts of data center growth in the U.S. by 2030 could be accommodated with the current planned chip supply.”
Listen at 1:00:41
Planned chip supply could support only about 60 gigawatts of U.S. data-center growth by 2030.
“only about 60 gigawatts of data center growth in the U.S. by 2030 could be accommodated with the current planned chip supply.”
Listen at 1:00:42
Regulated utility models incentivize maximizing capital spending while preserving guaranteed returns.
“the regulated utility model incentivizes spending as much capital as you can within the boundaries of getting your guaranteed rate of return.”
Listen at 1:06:21
Competitive transmission could potentially drive innovation and cost savings.
“if competition drives innovation and cost savings. in the generation space and in every other space in American life, then why not in transmission?”
Listen at 1:08:16
Higher capacity prices are needed to signal investment in new generation.
“You do need prices to rise to send the investment signal.”
Listen at 1:10:47
Transmission and distribution charges are the fastest-growing part of customer bills.
“the fastest rising portion of customer bills across our markets is the T&D portion.”
Listen at 1:11:09
Transmission and distribution account for nearly 40% of electricity bills.
“The T&D portion is close to 40 percent”
Listen at 1:12:05
Transmission and distribution charges are the fastest-rising portion of customer bills.
“the fastest rising portion of the bill are the T&D charges.”
Listen at 1:12:24
Connecting large loads would help distribute rising transmission and distribution costs.
“get the large loads on the system so they can start sharing those rising T&D costs”
Listen at 1:12:37
Competition will outperform regulation over time in electricity markets.
“I believe over time that competition wins”
Listen at 1:16:55
Electricity market design is the central determinant of market outcomes.
“Market design is really the critical thing.”
Listen at 1:17:30
ERCOT’s thin forward market can enable traders to manipulate the system.
“one of the problems with that is that you've had these periods of time where a trader comes in and really games the system.”
Listen at 1:17:44
Thin forward markets can enable traders to manipulate electricity markets.
“you've had these periods of time where a trader comes in and really games the system.”
Listen at 1:17:47
Reforming electricity cost allocation first could make broader market reform easier.
“if we started with cost allocation first. it might be an easier lift.”
Listen at 1:19:44
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.