Resource Inadequacy: Why a Crucial Component of Keeping the Lights on Is Getting Harder

Jenya Kahn-Lang and Molly Robertson
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Jenya Kahn-Lang: Resources for the Future
Molly Robertson: Resources for the Future

No 26-01, RFF Issue Briefs from Resources for the Future

Abstract: Electric power is an essential resource for households, businesses, and economies, from keeping lights and life support machines on to powering water conveyance and transportation networks. When there is not enough electricity, the resulting outages can be expensive and even deadly, impacting business activity, comfort, and health.One prime example is the electricity shortage event that occurred in Texas in February 2021. Winter storm Uri caused 246 deaths according to official counts (DSHS 2021), primarily due to power outages, with one estimate putting the death toll over 800 (Weber and Buchele 2022; FERC/NERC 2023). The Federal Reserve Bank of Dallas estimated the total economic cost of the outages at $4.3 billion (Golding et al. 2021).Power outages resulting from extreme events, like the ones in Texas, are becoming more frequent and severe. The traditional methods for ensuring sufficient power supply and incentivizing new investment were not designed for the range of innovation in electric resources that has emerged or the speed of projected demand growth. In addition, it now takes longer to site, build, and interconnect new resources to the power grid. Beyond threatening reliability, current practices can exacerbate affordability concerns and slow decarbonization.This issue brief offers a primer for policymakers considering reforms to ensure sufficient power supply (“resource adequacy”). While resource adequacy is only one dimension of electric reliability, we focus on it because the complex economic fundamentals that have driven existing resource adequacy market designs are not always fully appreciated.

Date: 2026-02-13
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