Executive Summary
In the summer of 2024 one of America’s largest regional grid operators, PJM Interconnection, faced a significant challenge—outdated and expensive fossil resources were starting to retire and new resources were not coming online fast enough to meet spiking demand for electricity.
These dynamics came to the fore in the 2024 annual auction for capacity resources.
Across its multistate service territory, PJM’s primary role is to maintain a reliable grid, which means balancing ever-changing electricity supply and demand down to the minute. PJM’s approaches are designed to meet this goal, while also minimizing the costs to electricity customers. Yet due to the mismatch between retirements and new generation, PJM’s 2024 capacity auction, which procures resources to meet the highest forecasted electricity demand, resulted in prices nearly ten times higher than the year prior.[1] These high prices mean customers will have to make $14.7 billion in additional capacity across PJM’s service territory as a part of their electricity rates.
PJM’s multibillion-dollar conundrum is shared by utilities and grid operators across the country: How are we going to meet growing demand for electricity, maintain a reliable grid, and manage the transition to new clean energy resources in a cost-effective way?
Abundant, reliable, and affordable electricity is central to economic prosperity, energy security, public health, safety, and comfort. In America and around the world, electric grids are undergoing transitions driven by myriad factors. But electric utilities are now facing increasing demand from data centers, manufacturing, and cryptocurrency mining, as well as electric vehicles, industrial equipment, buildings, and appliances. A rapidly changing climate and more extreme weather-related events are placing unprecedented strains on all systems, including aging electric grid infrastructure—70 percent of transmission lines and power transformers are 30 years or older.[2]
Fortunately, policies, regulations, consumer demand, and favorable economics have been accelerating the deployment of carbon-free, clean electricity generation, including wind, solar, and battery storage for over a quarter century.
Throughout the transition, ensuring a reliable and resilient electricity grid remains a top priority. The resources to maintain a reliable grid are available—for example, over 2600 gigawatts of new clean projects are waiting to connect to the U.S. grid. That amount of new generation is nearly double the grid’s current capacity.
As the grid continues to evolve, it is time to update the way we think about and approach grid reliability. Utilities and grid operators need to build and interconnect new generation faster and more efficiently, while simultaneously deploying strategic demand-side solutions at scale. While the task may seem daunting or infeasible to some, the power system is no stranger to evolution. In the early 2000s, a combination of cheap natural gas due to the shale boom, advancements in gas turbine technology, and environmental regulations led to a rapid shift from coal to natural gas power.[3] From 2007 to 2023, the share of coal generation within total U.S. electricity production declined from 50 percent to 16 percent, gas generation nearly doubled from 21 percent to 43 percent, and wind and solar grew from less than 1 percent to 15 percent.[4]
Continuing cost declines in wind and solar have made them the cheapest new electricity resources,[5] and cost reductions for utility-scale battery storage technologies have exceeded forecasts year-over-year—in 2024, the amount of battery storage installed nationwide doubled.[6] That same year, wind, solar, and batteries made up 93 percent of the new electricity resources added to the grid.[7] Clean energy helps keep the lights on.
Yet grid operators, reliability authorities, and utilities are ringing reliability alarm bells,[8] and outdated views on grid reliability are colliding with slow-moving institutions.
Thankfully, proven methods can enhance grid reliability while adding new clean energy resources and tapping demand-side resources. Around the world, grids are already reliably operating on high penetrations of carbon-free renewable energy: large grids in the Midwest, Texas, and California regularly operate using more than 70 percent renewable energy,[9] and individual states run on much higher percentages of renewables than the country as a whole—Iowa and South Dakota generated roughly 60 percent of all their electricity in 2023 from wind power.[10] In Hawaii, South Australia, and Denmark, grids are already operating using 100 percent renewable power for days at a time.[11] These jurisdictions have adjusted their planning and operating practices to integrate higher penetrations of renewable energy and battery storage without compromising reliability.
But the technical aspects of grid reliability are often daunting to navigate for those not involved in day-to-day grid operations. Policymakers and regulators tasked with ensuring a reliable grid and utilities operating electric grids within their jurisdiction may avoid asking tougher questions that dig into the real risks of outages, safety issues, or cost overruns. Grounding reliability discussions in meaningful solutions requires bridging the world of utilities and grid operators and those who regulate their businesses and oversee their operations.
This report provides that bridge with an accessible primer on the basics of planning and operating a reliable grid in the context of the clean energy transition—reducing dangerous climate emissions and electrifying industry, vehicles, and buildings. This report demystifies how clean energy resources can provide reliability services while discussing the challenges in achieving a 100 percent clean electricity grid with targeted recommendations for policymakers, regulators, utility planners, and grid operators to accelerate the addition of clean energy resources, while ensuring reliability and affordability.
Each chapter of this report focuses on a primary element of grid reliability, highlighting relevant research, data, and insights from experts in grid reliability:
- Chapter 1 defines key reliability terms and highlights the importance of moving beyond a reliability construct that depends primarily on baseload power to one that depends on a broad portfolio of resources and load flexibility. This broad portfolio also leverages supply, demand, and storage assets using strategic management methods.
- Chapter 2 discusses evolving approaches to resource adequacy, including changes to planning processes to incorporate new types of resources. It highlights the need to move beyond planning reserve margins to incorporate weather-dependency and energy limitations in a system that relies on large amounts of energy storage.
- Chapter 3 discusses the resource attributes needed to keep the grid functioning in real time, including voltage stability, frequency regulation, and inertia, as well as how a diversity of resources and new technologies contribute to a reliable grid.
- Chapter 4 highlights the value of flexible, responsive demand in a time of load growth and identifies strategies to optimize deployment of demand and supply-side resources in concert.
- Chapter 5 defines clean firm energy and discusses the development stage of various technologies and their importance to reducing emissions.
This report is not a comprehensive treatise on grid reliability but instead synthesizes research and real-world experiences to solve challenges facing the electricity grid today. Policymakers can gain confidence that a high-renewable, dynamic, and increasingly carbon-free electricity system can keep the lights on and be more resilient in the face of extreme weather, even as demand for electricity grows.
A summary of our recommendations and takeaways for each chapter is available in a separate document.
[1] Ethan Howland, “PJM Capacity Prices Hit Record Highs, Sending Build Signal to Generators,” Utility Dive, 2024, https://www.utilitydive.com/news/pjm-interconnection-capacity-auction-vistraconstellation/722872/.
[2] Robert Walton, “Aging Grids Drive $51B in Annual Utility Distribution Spending,” Utility Dive, 2018, https://www.utilitydive.com/news/aging-grids-drive-51b-in-annual-utility-distribution-spending/528531/.
[3] Energy Information Administration, “More than 100 Coal-Fired Plants Have Been Replaced or Converted to Natural Gas since 2011,” Today in Energy – Energy Information Administration, 2020, https://www.eia.gov/todayinenergy/detail.php?id=44636.
[4] U.S. Energy Information Administration, “Electricity Data Browser – Net Generation for All Sectors,” U.S. Energy Information Administration, 2025, https://www.eia.gov/electricity/data/browser/.
[5] “Lazard LCOE+,” Lazard, 2024, https://www.lazard.com/media/xemfey0k/lazards-lcoeplus-june-2024- _vf.pdf.
[6] Clarion Energy Content Directors, “U.S. Battery Storage Projected to Nearly Double in 2024,” Power Engineering, 2024, https://www.power-eng.com/energy-storage/batteries/u-s-battery-storageprojected-to-nearly-double-in-2024/.
[7] Dan McCarthy, “Chart: 96 Percent of New US Power Capacity Was Carbon-Free in 2024,” Canary Media, 2025, https://www.canarymedia.com/articles/clean-energy/chart-96-percent-of-new-us-powercapacity-was-carbon-free-in-2024.
[8] PJM, “PJM, ERCOT, SPP and MISO Join Together on Comments on EPA Emissions Rule | PJM Inside Lines,” PJM Inside Lines, 2023, https://insidelines.pjm.com/pjm-ercot-spp-and-miso-join-together-oncomments-on-epa-emissions-rule/.
[9] Debra Lew et al., “Getting to 100% Renewables: Operating Experiences with Very High Penetrations of Variable Energy Resources,” IET Renewable Power Generation 14, no. 19, December 2020,: 3899–3907, https://doi.org/10.1049/iet-rpg.2020.0573.
[10] Office of Air and Radiation, “Data Explorer,” U.S. Environmental Protection Agency, 2020, https://www.epa.gov/egrid/data-explorer.
[11] Lew et al., “Getting to 100% Renewables,” The Institute of Engineering and Technology, 2020, https://digital-library.theiet.org/doi/full/10.1049/iet-rpg.2020.0573.