Why No One Will Build a Power Plant in Delaware
September 10, 2026
The following article is provided by the Caesar Rodney Institute, a Delaware-based nonprofit 501(c)(3) public policy research organization.
It comes from a Policy Center Director who works to help Delawareans by providing fact-based analysis in four key areas: education, energy and environmental policy, economy and government spending, and health policy.
Part One: The Energy Market
Delaware needs more electricity. Demand is rising, existing power plants are aging, and concerns about whether enough new generation is being built are growing. So why isn’t anyone building a new power plant in Delaware? The answer begins with a major change Delaware made more than two decades ago in how we produce and buy electricity—a change that most Delawareans probably know little about, but that still shapes where our power comes from and whether new plants get built today.
Delaware changed the rules for who can and can’t build our power plants.
Under Delaware’s 1999 Electric Utility Restructuring Act, Delaware deregulated electricity generation, ending the old system in which Delmarva Power both generated and delivered electricity. Delmarva delivers power but no longer serves as the traditional monopoly owner of the generation supplying its customers. So every new plant serving our region must be built by a private, independent developer who recovers the investment from the wholesale market. That market is now structured so that new dependable generation cannot be financed. Here is the mechanism, step by step.
How the market sets the price.
The highest-priced electricity needed sets the price for everyone. Our regional grid operator, PJM, starts with the lowest-cost electricity available and keeps adding electricity from more expensive sources until there is enough to meet demand. The price of the last source of electricity needed sets the market price paid to all the generators supplying power at that time. PJM’s own market operations manual spells out this system, called Locational Marginal Pricing (LMP).
Why wind and solar bid zero — and below zero.
Federal subsidies can allow wind and solar to bid at zero — or even below zero. Because wind and solar have no fuel cost, the cost of producing one additional megawatt-hour once a facility is built is very low. That does not mean wind and solar are free to build; their construction, financing, maintenance, and other costs still have to be recovered. But those costs generally do not determine what a generator is willing to accept for one additional megawatt-hour of electricity. Federal production tax credits can push that advantage further, allowing some generators to keep producing even when wholesale electricity prices fall below zero. This is not speculation — it is documented by the federal government itself. The U.S. Energy Information Administration explains that generators collecting the Production Tax Credit “may be willing to sell their output for as low as –$22/MWh to continue producing power” — literally paying the grid to take their electricity, because the subsidy still pays them. The Congressional Research Service reached the same conclusion: wind’s ability to bid negative prices “is a result of value received from federal production tax credit incentives.”
What that does to the plants we depend on.
Zero and negative bids can reduce what dependable power plants earn. Because the lowest-priced electricity is used first, zero and negative bids from wind and solar can push more expensive coal and natural gas generation out of the market. That does not mean everyone is paid zero. If a more expensive generator is still needed to meet demand, that generator sets the price and all generators supplying electricity receive that higher market price. But when enough low-priced electricity enters the market that the most expensive generator is no longer needed, a less expensive generator sets the price — lowering the price paid to everyone. That does two things to coal and natural gas plants. First, it displaces them — they run fewer hours. Second, it drags down the clearing price for the hours they do run. Peer-reviewed research on PJM confirms this price-suppression effect — economists call it the “merit order effect” — operating across market conditions. Coal and natural gas plants have fuel and operating costs that wind and solar do not, making it much harder for them to compete at zero or negative prices. So they lose revenue two ways at once: fewer running hours and a lower price for each one.
But if wind and solar are cheaper, why shouldn’t they replace coal and natural gas?
Zero and negative bids do not necessarily mean they cost less overall. Federal subsidies can help wind and solar generators offer electricity into the wholesale market at very low—and sometimes negative—prices, while taxpayers bear costs that do not appear in the wholesale electricity price. Berkeley Lab found that additional wind and solar generation lowered average wholesale prices by less than $1.30 per megawatt-hour in most markets it studied, and by about $2.20 per megawatt-hour from solar in California. At the same time, the U.S. Energy Information Administration reports billions of dollars in federal support for renewable energy. So a lower wholesale market price does not, by itself, tell us the full cost of the electricity being produced.
More importantly, the grid still needs dependable generation when the wind is not blowing or the sun is not shining.
So while subsidized wind and solar can reduce what coal and natural gas plants earn, the grid may still need those plants to remain available. The question then becomes: who pays for that reliability?
The “missing money.”
The revenue shortfall for reliable power plants is known as the “missing money” problem. As federal tax credits allow some wind and solar generators to bid electricity into the market at zero or even negative prices, coal and natural gas plants can run fewer hours and collect less revenue from the energy market. But those plants still have to cover the costs of remaining available when the grid needs them. The result is what PJM’s own independent market monitor describes in its filings as “missing money”: the gap between what a dependable plant needs to stay in business and what the energy market actually pays it. In fact, PJM’s Independent Market Monitor explains that a primary reason for having a capacity market is that the energy market alone does not provide enough net revenue to attract and retain all the generation needed for reliability.
And the plants being subsidized cannot replace the ones being lost.
Wind and solar entering the market cannot replace the dependable power being lost. If new wind and solar could simply replace retiring coal and natural gas plants, the loss of those plants might not matter. But PJM’s own capacity accounting determines how much electricity each type of power source can actually be counted on to provide when the grid needs it most, to “reliably perform at times of highest system risk.” Wind and solar are credited at only a fraction of their potential output because their actual output depends on whether the wind is blowing or the sun is shining when electricity is needed most. You cannot retire 100 megawatts of dependable power and replace it with 100 megawatts of wind or solar and expect the same reliability.
The proof is in how anything gets built now.
The electricity market is no longer providing enough incentive to get dependable power plants built. Not through a market price signal. Instead, new projects are moving forward through administrative workarounds, including PJM’s one-time Reliability Resource Initiative, which hand-selected 51 projects outside the normal queue, and private co-location deals now being formalized in PJM’s tariff that marry a new generator directly to a single large customer — a data center. When financing a power plant requires a captive buyer outside the market, the market has stopped doing its one job.
There is supposed to be a safety net for exactly this problem: a second market that pays plants simply to exist and be ready. It is screaming “build” at the top of its lungs — and nothing is coming.
That is part two.
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