This piece originally appeared in American Affairs.
The American grid is in trouble. For years, our country has been retiring reliable power plants and building unreliable wind and solar resources. Moreover, most of the country’s power gets allocated in complex power markets where decisions are made beyond the public eye. And areas without markets still fall beneath the aegis of utilities, leviathans who toss their weight around in state politics and often get caught up in corruption schemes.
These were problems when America’s power demand stayed flat for decades. Even then, potential solutions felt more like a dizzying labyrinth of rules, regulations, interest groups, and technical minutiae replete with unobvious trade-offs and bizarre political deadlocks. And now that the AI revolution has dawned, America faces a surge in power demand that it is ill-prepared to meet. This new reality has only intensified both the need for grid reform and the difficulties of even understanding what needs reformation.
Some argue that the long queues to achieve interconnection in our power markets call for the legalization of microgrids that allow data centers and other private power consumers to pave their own way. Others who identify the same interconnection problem demand reform and streamlining within the markets. Another faction points to permitting as the lynchpin issue for all power projects—resolve that and most other problems dissolve. And then there are those who argue that federal subsidies have distorted our power markets, those who say the markets are fundamentally unworkable because market failures mean blackouts, those who decry the continued existence of monopoly utilities, those who see fossil fuels as the greatest problem attached to the power grid, and so on. Even in this incomplete list of perspectives there are shifting areas of overlap and mutual disagreement.
