Energy costs can be a significant portion of any business operation and in certain energy- intensive industries, these costs account for more than 50 percent of total operating costs. Pennsylvania has historically been an energy exporter due to the richness of traditional sources such as coal, oil, hydroelectric, nuclear and natural gas. Traditional sources and renewable energy sources such as solar, wind, hydro, biofuels and biomass form a diverse portfolio of energy sources.
WHERE WE ARE TODAY
When we flip the light switch, we expect the light to go on. That is a reasonable expectation for the following reasons:
- Pennsylvania is a national leader in energy production and export, especially for natural gas and nuclear power.
- Pennsylvania is the second-largest net supplier of energy to other states, trailing only Texas. Pennsylvania ranks second in natural gas production (after Texas), second in nuclear electricity generation (after Illinois), third in coal production (after Wyoming and West Virginia)
- Pennsylvania is a major energy exporter, supplying large amounts of electricity and fuel to the Northeast.
- Pennsylvania is a significant energy producer, outpacing many countries, and is responsible for a notable share of global energy output.
PROBLEMS
There are three critical challenges we face today:
The First Challenge is the need for increased power generation for the PJM interconnection* electricity grid which is driven by the increased electrification of everything: homes, buildings and vehicles. That is coupled with the new growth of energy-intensive industries like data centers, cryptocurrency mining and the reshoring of key manufacturing. Our electricity supply is not keeping pace with this rising demand. In fact, it is decreasing, potentially leading to future shortfalls in the PJM Interconnection region.
* PJM is a regional transmission organization that operates the electricity grid and coordinates the wholesale electricity market for 13 states.
Background
The PJM grid issue could be solved if Regional Greenhouse Gas Initiative (RGGI) was repealed, and Pennsylvania avoided future cap-and- trade program that deflects investment to neighboring states. Developers of natural gas- fired power plants have said they will not build in Pennsylvania as long as RGGI (or anything similar) remains a possibility. Timing is critical. Electricity shortages are possible in the next few years while building out a power plant is a large, timely endeavor.
The Second Challenge is the push to transition from fossil fuel to renewables. Meeting these growing energy demands and making a thoughtful transition are crucial for Pennsylvania’s economic prosperity. For example, retiring a power plant to improve the environment may easily compromise the reliability of the grid. It has to be done only when suitable and sufficient replacement resources are in place. The acceleration of fossil fuel plant retirements, coupled with long construction timelines for cleaner alternatives, means Pennsylvania needs to find a way to bridge the gap amid a projected 20-percent rise in energy demand over the next four years. Take note that Pennsylvania, at least for now, is where 25 percent of the power necessary to run the PJM grid is generated.
The Third Challenge is the creation of a comprehensive statewide energy plan focusing on innovation and the pursuit of an all-of-the-above energy policy. As energy intensive-industries flock to Pennsylvania, their needs can be addressed in a way that complements, rather than compromises the PJM electricity grid.*
SOLUTIONS
To solve the problem of power generation, we must invest in grid reliability while simultaneously moving toward a cleaner and more sustainable energy future. The MBA understands that reducing our carbon footprint is challenging and will involve innovative solutions, practices and technologies from the private sector.
The MBA also supports balanced policies that allow producers and suppliers from all energy sectors located in our Commonwealth to compete and enable business to secure a reliable and affordable supply of energy. Read the full position and proposal at MBA-2025-ENERGY-State-Position-and-Policy.pdf.
Eileen Anderson is the director of Government Relations at The MBA. Contact her at 412/805-5707 or eileenanderson@mbausa.org.
