State Energy Infrastructure Permitting and Siting Series: Introduction and Methodology

After decades of flat electric power demand, electricity consumption in the United States is finally rising and projected to grow by 16 percent from current levels through 2050. Meeting this demand will require substantial infrastructure expansion throughout the energy sector. Yet even as demand rises, America faces an unprecedented level of restriction on new energy supply. Restrictive permitting and siting policies have received much attention at the federal level, with Congress passing reforms in 2023 and considering further reform in 2024 and beyond. However, the variance in supply constraints across the country suggests that the most restrictive policies originate at the state level.

Permitting and siting policies often intend to address legitimate local issues of concern (noise being a prominent example), but their unintended consequences are mounting. These include delays and unpredictability in project approvals and litigation that harm the economics of power infrastructure development. Such effects increase project costs, reduce revenues, and can result in penalties for failure to deliver on power purchase agreements. In some cases, permitting and siting restrictions are severe enough to deter development outright. Projects that survive such processes are delayed by years— sometimes a decade or more.

Deterred and delayed infrastructure is not just an economic problem. Amid resurgent demand growth, barriers to supply expansion are creating pronounced threats to grid reliability. The problem is not a lack of motivation from capital markets, but rather an outmoded regulatory architecture of which permitting and siting and generator interconnection approvals are the core culprits. Although federal permitting and siting presents major challenges, incremental reforms and bipartisan interest in further reforms signify progress. Having generally trended in a more restrictive direction, state-level permitting and siting now represents one of the most significant barriers to energy development in most of the country.

Methodology

This new series surveys the challenges state and local permitting requirements pose to new energy infrastructure. To keep analysis at a manageable level, our focus is limited to energy infrastructure types that meet the following primary criteria:

1. Permitting and siting policies only. Various forms of government approvals, such as generator interconnection, pose major barriers to infrastructure development but are outside the scope of this series.
   
2. State policies and decision making only. Federal permitting and siting laws are important, but they are not the emphasis of this series. We will cover salient federal permitting laws that delegate authority to the states, such as those under the Clean Water Act.
   
3. Policies that directly and indirectly affect bulk power industry infrastructure. This includes power generation and transmission facilities, as well as those affecting fuel supply and waste products (like pipelines). Thus, some technologies that face permitting and siting barriers like hydrogen are excluded. Our emphasis on bulk supply infrastructure also excludes policies that affect power consumption and on-site supply, such as building permits.
   
4. Technology classes with strong, demonstrated commercial expansion interest. There are a variety of indicators of commercial interest, including generator interconnection requests, utility integrated resource plans, and power agreement offtaker announcements and requests for proposal. Policies that adversely affect a technology without commercial interest may be poor practice, but it is unclear if there are adverse effects on development. For example, while coal faces considerable restrictions in some states, they do not appear to restrict expansion given the lack of commercial interest in areas without such restrictions. Thus, coal did not qualify for our analysis. Although hydropower faces major permitting barriers, which R Street research has previously covered, the majority of its permitting obstacles affect relicensing rather than expansion. Given commercial expansion indicators, hydropower narrowly missed qualification, while geothermal narrowly qualified.

Format

Using these criteria, we identified six technologies that warrant separate treatment:  

Series: State Energy Infrastructure Permitting and Siting

Meeting electricity demands over the next few decades will require substantial infrastructure expansion throughout the energy sector. This new series surveys the challenges state and local permitting requirements pose to new energy infrastructure.

Introduction

Wind Energy

Solar Energy

Electric Transmission

Nuclear Energy

Oil and Gas

Geothermal Energy

Meet the Team

This series will conclude with an analysis identifying common trends and contrasts in state permitting and siting laws and their impacts across technology classes by policy. The conclusion will also explain potential causes of observed trends in changes to state-level energy permitting and siting and the likely knock-on effects of those policies—even outside the specific geographic location where they are implemented.

Overall, this series aims to provide useful insight to policymakers and industry participants as to the expected effects of continued or increased utilization of state and local permitting restrictions germane to energy development in the United States.