States urged to lead long-term clean energy planning in deregulated markets

Solmar Insights

States with deregulated power sectors should take on a more direct role in long-term resource planning to accelerate the deployment of clean energy technologies prone to long development timelines and market barriers, according to a new report from the Clean Air Task Force. The report, published September 16, 2026, cites nuclear, offshore wind, and long-duration storage as requiring more coordinated state-level planning in regions served by competitive electricity markets.

Clean energy faces deployment barriers

The CATF report finds that clean energy options with long development cycles, such as offshore wind and nuclear, now face significant barriers in areas served by competitive wholesale electricity markets. As state and federal clean power targets ratchet up, several high-profile offshore wind projects have seen delays or cancellations, including in New York, where clean electricity targets are at risk partly due to project setbacks offshore Montauk. State mandates and market-based programs have boosted renewables penetration but, according to the report, have failed to offer long-term certainty for technologies that require greater time and investment to materialize.

Deregulated power markets, operated by ISOs and RTOs, generally rely on price signals in energy and capacity markets to inform development, but these prices reflect near-term supply and demand and do not account for emergent grid needs over a 10- to 20-year horizon. As a result, the incentive structure can leave technology classes like offshore wind and advanced nuclear unable to secure financing or long-term contracts without additional state or federal support. CATF highlights that robust planning mechanisms are needed to ensure these resource types can progress beyond the development phase.

Market structure and planning gaps

Kasparas Spokas, the report’s lead author and director of the CATF electricity program, explains that while deregulated markets have improved system efficiency and enabled regional electricity trading, they have also led to a disaggregation of long-term system planning. When many states shifted to competitive structures, much of the explicit resource planning previously conducted by vertically integrated utilities was abandoned in favor of market-driven procurement for new supply.

In practice, this transition removed institutional mechanisms for considering major system needs decades into the future, particularly crucial as the sector faces new reliability constraints and unpredictable load growth, such as rising demand from electrification or AI data centers. Spokas states that the current grid environment now exhibits notably greater congestion compared to two decades ago, challenging the incremental approach enabled by existing price signals. Without coordinated scenario-based planning, technologies with non-marginal costs and multi-year construction phases struggle to advance past early development.

CATF recommendations for states

The report recommends that deregulated states adopt periodic, scenario-based assessments of long-term system needs, such as projections of generation, grid upgrades, and resource diversity, rather than relying exclusively on market signals or renewable portfolio standards. CATF suggests that these state-led processes can bring forward resources like advanced nuclear and offshore wind, which face unique permitting, siting, and financial barriers but are seen as essential for decarbonization targets and reliability.

Critically, CATF asserts that states need not abandon competitive market models or revert to vertically integrated utility planning. Instead, states should supplement market operations with consistent frameworks for evaluating and guiding investment in portfolios of resources that might otherwise be overlooked or significantly delayed. The report says this could also address non-monetary barriers, such as local opposition, lengthy permitting timelines, and alignment of transmission and new resource siting.

Implications for buyers and developers

For institutional investors, developers, and large energy buyers, the lack of long-term planning increases risk for projects that require multi-year commitments or large upfront capital outlays. Merchant market developers of nuclear, geothermal, or offshore wind in deregulated states face uncertain timelines and higher financing costs without the visibility that periodic, state-led planning would provide. Market participants could see a greater role for states in coordinating procurements and aligning policy mechanisms with infrastructure and technology lifecycles.

States looking to meet ambitious decarbonization schedules must recognize that simply relying on ISO/RTO mechanisms has not proven sufficient for advancing long-lead technologies. The proposed shift would give buyers clearer signals regarding which resource types may receive support, and at what scale, especially as intermittent renewable buildout approaches integration and grid reliability limits. Institutional buyers may need to revisit procurement strategies and engage with state-level planning efforts as these processes develop.

Reporting via the original publisher