US Is Considering Scrapping Multibillion-Dollar Power Auctions

Naureen S Malik | Source: Bloomberg | Posted 02/21/2025

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The top US energy regulatory agency will debate whether multibillion-dollar power auctions are still the best way to ensure enough electricity supply as demand is set for significant growth thanks to the boom for artificial intelligence.

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The Federal Energy Regulatory Commission (FERC) is set to evaluate the effectiveness of multibillion-dollar power auctions in ensuring adequate electricity supply amid rising demand driven by the growth of artificial intelligence and data centers. Chairman Mark Christie emphasized the urgency of addressing the reliability of the US electric grid, which is increasingly strained by aging infrastructure and severe weather. The upcoming two-day conference in June will explore potential alternatives to the current auction system, which has faced criticism for its volatility and inability to incentivize new power plant construction.

Particularly concerning is the situation with PJM Interconnection LLC, where capacity costs surged dramatically, leading to consumer outrage as these costs will impact utility bills. Christie highlighted the need for a reevaluation of capacity markets across various grids, including ISO New England and the New York Independent System Operator, questioning their viability in delivering reliable and affordable power. The conference aims to address these pressing issues and consider new strategies to maintain a stable power supply amidst growing demand.

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Source Link: https://www.bloomberg.com/news/articles/2025-02-21/us-is-considering-scrapping-multi-billion-dollar-power-auctions

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US Is Considering Scrapping Multibillion-Dollar Power Auctions

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