Electricity politics are catching up to electricity physics. As data-center demand accelerates, states are experimenting with pauses, the White House is testing voluntary compacts, and regulators are rediscovering just how hard it is to manage prices without managing supply. This issue tracks how power policy is drifting toward intervention — and where markets are still doing the real work.

New York Democrats this week proposed one of the most aggressive interventions yet in the AI infrastructure boom: a sweeping pause on new data center construction tied to electricity, water, and community-impact concerns. The proposal would effectively freeze large new projects while the state reassesses grid capacity, local impacts, and cost allocation — a move that reflects growing political anxiety as AI-driven demand collides with rising power prices.

At the same time, the Trump administration is pursuing the opposite tactic. According to a draft obtained by POLITICO, the White House is seeking a voluntary compact with major tech companies that would require hyperscalers to fully cover the cost of new generation, transmission upgrades, and grid infrastructure tied to their data centers — while committing to long-term power contracts and emergency load flexibility. The goal: prevent household electricity prices from rising while allowing data center construction to continue at speed.

The compact would stop short of formal regulation, instead relying on public commitments, bespoke contracts, and political pressure. It reflects mounting concern that data-center electricity demand — projected by federal agencies to potentially triple between 2025 and 2028 — is becoming a liability in regions already facing tight capacity and rising rates, particularly across PJM.

Why It Matters - States are reacting to demand growth with pauses and price politics, while the federal government is trying to pre-empt backlash without slowing construction. Both approaches avoid the harder question: how fast the system can actually add firm supply.

Grid Take - Demand doesn’t need to apologize for existing. Treating load growth as something that must be frozen, bargained down, or pre-contained risks suppressing the very price signals that attract new capacity. You don’t protect consumers by blocking demand — you protect them by building supply faster than politics.

New Jersey regulators this week directed utilities to significantly expand virtual power plant (VPP) programs as part of the state’s response to rising PJM capacity costs. The Board of Public Utilities ordered utilities to scale customer-side resources — including residential batteries, rooftop solar paired with storage, EV chargers, and controllable load — into dispatchable portfolios capable of participating in peak events.

Under the directive, utilities are expected to file expanded VPP implementation plans in 2026, with targets tied to measurable peak-load reductions rather than pilot-scale demonstrations. While the BPU has not yet finalized budget totals, similar utility filings in PJM states suggest programs in the hundreds of megawatts of aggregated capacity over the next several years.

The move comes as PJM capacity prices have surged and as New Jersey faces limited near-term options for adding new firm generation within the state.

Why It Matters - New Jersey is betting that aggregating demand and behind-the-meter assets can offset capacity shortages faster than building new supply — even as those assets remain weather- and performance-dependent.

Grid Take - VPPs can shave peaks, but they don’t create surplus. Treating aggregation as a substitute for firm capacity risks turning scarcity into a permanent operating condition rather than a temporary planning gap.

The EPA is reconsidering its “Good Neighbor” rule, which imposed additional emissions requirements on power plants in upwind states whose pollution was deemed to contribute to downwind air-quality violations. The rule affected coal and gas plants across more than 20 states, requiring costly controls or operational changes that utilities argued discouraged continued operation and reinvestment.

Grid operators and utilities have warned that the rule accelerated retirements and reduced maintenance investment at existing baseload facilities, tightening reserve margins in regions already facing demand growth. The reconsideration follows mounting reliability concerns after recent winter stress events.

Why It Matters - Environmental compliance rules can reshape capacity outcomes even when reliability impacts aren’t the policy’s primary target.

Grid Take - When regulation penalizes firm power without providing viable substitutes, it distorts competition. Reliability erodes not from one rule, but from cumulative disincentives that make maintenance and life-extension uneconomic.

Western states are again weighing deeper electricity market integration, as California, Arizona, and neighboring utilities revisit proposals to expand participation in regional energy markets beyond today’s limited real-time trading. Proposals under discussion focus on expanding day-ahead and capacity-style coordination while preserving state authority over resource planning.

Supporters argue broader markets could reduce curtailment, improve reliability during extreme events, and lower costs by sharing reserves. Skeptics remain concerned about governance, cost allocation, and California’s outsized influence over market rules.

Why It Matters - The West’s reliability challenges are increasingly regional, while its planning authority remains fragmented.

Grid Take - Markets scale faster than bespoke state systems. The risk isn’t integration — it’s pretending isolation is cheaper.

Dutch startup Ore Energy has completed a successful grid-connected pilot of its iron-air energy storage system, demonstrating the ability to store and discharge electricity for up to 100 hours. The pilot, the first of its kind in Europe, tested the technology under real-world grid conditions and varying load profiles.

Iron-air systems store energy by oxidizing iron during discharge and reversing the process during charging, offering multi-day duration at lower material cost than lithium-ion batteries. Ore Energy says the pilot validates the technology’s suitability for long-duration backup rather than short-duration balancing.

Why It Matters - Multi-day storage is one of the few tools that could meaningfully complement variable generation without relying on gas.

Grid Take - Long-duration storage helps — if it scales, performs, and clears economically. Until then, firm generation remains the backbone.

A new poll commissioned by First Solar found 79% of GOP-aligned voters support allowing all forms of electricity generation — including utility-scale solar — to compete fairly without political interference. Support jumps significantly when projects are American-made and untethered from Chinese supply chains.

Notably, 68% agreed that building all forms of generation is necessary to lower electricity costs, reinforcing the idea that voters are more market-oriented than many policy debates suggest.

Grid Take - Voters are ahead of policymakers. They want competition, not carve-outs.

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