Keith Romer

Reason number one is a timing mismatch.

The capacity market only guarantees a price for capacity for one year.

And that price could go right back down for the next year.

Reason number two has to do with the different ways electricity can be generated.

Probably the fastest way to bring new power online would be to build wind or solar.

But for the most part, renewable energy counts for way, way less in the capacity market.

So what about natural gas plants?

Obviously, they are not great for climate change, but historically, they were pretty easy to build quickly.

But that brings us to the third reason why more power plants are not being built.

Right now, there is actually a shortage of the gas turbines that gas power plants need to operate.

Manufacturers can't make them fast enough to keep up with demand.

The last problem comes from PJM's system for connecting new power plants to the grid.

Even if a company decides to build a new plant and they can get their hands on gas turbines, they still have to wait in a years-long line to get hooked up to the grid.

So they might not be able to start sending out electricity anyway.

And that problem, along with all the other problems we talked about in the capacity market, they all add up to local utilities spending an extra $12 billion.

$12 billion that was supposed to incentivize new power plants to start supplying electricity.

But instead, almost all that money is going to power plants that are already up and running.

And most of them would have made electricity even without all that extra money.

And so this is kind of our answer.

The reason Cannon-Carroll's electricity prices went up was mostly not because data centers increased costs for the last mile distribution of electricity, and not because of what data centers did to the costs for new long-distance transmission lines.