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Federal and state governments, utilities, and independent power producers all play a role in shaping the makeup of energy generation. The federal government has used tax and other policies to support certain technologies. In Indiana, when making generation resource decisions, it’s about balancing the five pillars of reliability, resilience, stability, affordability and environmental sustainability.
The One Big Beautiful Bill Act accelerated the phaseout or termination of certain energy tax credits added by the Inflation Reduction Act. This most notably included the termination of tax credits for wind and solar projects that are placed in service after 2027, with an exception for projects on which construction begins on or before July 4, 2026.
The approval and vetting process through the Federal Energy Regulatory Commission, the independent system operator and any state regulatory agency may take years, creating a time gap between a utility deciding to undertake a project, seeking approval and having the project meet commercial operation.
Utilities need to identify projects to meet electricity demand while being mindful of this gap. Despite an overflowing amount of projects in ISO queues, some in the industry still believe the market is extremely competitive. Potential load growth driven by hyperscalers has only reinforced this belief.
These pressures further burden ISOs, such as the Midcontinent Independent System Operator, PJM Interconnection and the California Independent System Operator, to maintain reliability and ensure the lights stay on. Some of the ISOs have petitioned and received approval from FERC for updated generation queue processes in order to streamline and fast-track project approvals. MISO received approval for the Expedited Resource Addition Study (ERAS), which is a temporary process to expedite the study and approval of interconnection projects needed to address resource adequacy and/or reliability needs. The queue for this process is already full, highlighting its need and importance.
It’s all about balance
Solar and wind power are weather-dependent and pose challenges for balancing energy supply and demand. To bridge this gap, utilities have turned to designing diverse portfolios that include both renewable and other energy sources, such as coal, natural gas and/or nuclear.
New natural gas turbines have faster ramp-up times, enabling reliable load-following generation. Additionally, these newer turbine technologies offer promising avenues for striking that balance and can also use new and emerging renewable fuel sources.
There is also renewed interest in nuclear energy, which is clean-burning. Indiana has shown its excitement for nuclear by passing legislation supporting its study and deployment, and Indiana Gov. Mike Braun, in partnership with Purdue University, hosted a two-day nuclear summit in late 2025. Indiana anticipates advanced small modular reactors will be a key part of bringing additional safe, clean and affordable nuclear power options to the market.
State and federal regulations
Navigating the energy transition requires cooperation between state and federal regulators. Each state has its own regulatory system, and utility companies must understand and work within this framework to propose effective solutions. Being able to clearly communicate to regulatory commissions how these solutions overcome day-to-day and long-term challenges and how they preserve affordability and enhance the way families and communities live is key.
Balancing renewable energy goals with the need for grid reliability and protection against threats such as domestic terrorism is also crucial for long-term success. All of these changes and enhancements to utility service come at a cost, so appropriate rate recovery must also be top of mind.
Strategies for success
Success involves a methodical approach rather than rushing headlong. Rather than rely too heavily on one technology over another, states such as Indiana have concluded that a measured approach is best. Hence, the five pillars. Utilizing bridge technologies, exploring different rate recovery mechanisms and gradually retiring coal technology as it reaches the end of its useful life can ensure a safe, reliable and affordable energy market.
Finding opportunities to repurpose or refuel existing infrastructure and equipment has also proven successful. Reusing infrastructure and interconnection rights can not only streamline the approval process but also maintain the strength and vitality of energy communities that rely so much on the energy industry for its well-being.
Finding the right energy technology balance can provide both an opportunity and a challenge for utilities and independent power producers. A one-size-fits-all approach is not necessary. Different ISOs, states and utilities approach their energy make-up with differing strategies and varying successes. By understanding the complexities of regulations, fostering stakeholder cooperation and embracing innovative solutions, utilities can remain successful.•
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Aguilar is a partner in Barnes & Thornburg LLP’s Indianapolis office.
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