Energy-generation permitting in the Mid-Atlantic continues to evolve in 2026 not through wholesale deregulation or uniform acceleration, but through procedural and permitting reform and the potential allocation of generation development authority to public utilities. States are enacting these changes to meet the reality of reliability concerns, transmission constraints, large load-growth, and to address frequent obstruction of energy projects by local government.
COMMENTARY
This alert briefly summarizes changing energy generation and development permitting in the Mid-Atlantic, most notably the States of Maryland, Delaware, Pennsylvania, and New Jersey, where this firm does considerable State-level energy generation development work, often in cooperation with global law firms acting as energy financing counsel for both banks and private equity investment funds.
Cross-Cutting Themes for 2026
Several interrelated themes are shaping permitting outcomes across the region:
Centralization of Review—Mid-Atlantic states are consolidating permitting authority at commissions and central agencies. Environmental, land-use, and community-impact analyses are increasingly absorbed into state proceedings rather than deferred to local governments. This is being done because local government tends to slow down and block energy generation projects, acting more on parochial concerns that federal and state energy demands and plans. In some instances, such as in New Jersey, centralized permitting review websites have been created, particularly for smaller projects, attempting to make permitting a more ministerial process. Centralizing permitting review at the state level is an effective tool.
Procedural Compression and Litigation Risk—Frequently, policy-makers attempt permitting reform by demanding less pages and less time for review. This tends not to work and increases litigation risk, as opponents can easily claim that a legally-required review was cursory or missed. Centralizing the review with one state-level entity improves this outcome, but these entities tend to be overworked as well. Effective proposals for permitting reform legislation for large-scale generation requires removing laws and policies baked into the review process; this is politically sensitive and thus effective permit reform efforts beyond centralization of review do not appear to have been proposed yet in the Mid-Atlantic states or by the federal government. As a direct result, meaningful permitting reform has been slow to develop.
Data Centers—Data centers continue to present a load growth challenge in the Mid-Atlantic states. Frequently, data centers are developed in a “campus” model, which can demand some 500 to 1,000 MW across multiple buildings; 500 to 1,000 MWs is the power of a coal-fired power plant, many of which have been taken offline in recent years. The combination of adding this demand coupled with the retirement of coal plants in the last decade creates unsustainable generation and transmission issues, particularly in Western Maryland and Northern Virginia. Pennsylvania appears to lead efforts to attract data centers and support co-location of data center and energy generation assets, creating a commission to study such development (on which Saul Ewing lawyers play an important role); whereas Maryland just overrode a governor veto in December 2025 to study the issue.
An emerging issue in many states, as well as at the Federal Energy Regulatory Commission (FERC) and the Regional Transmission Organizations (RTOs such as PJM), is the co-location of generation assets with data centers, using a behind-the-meter approach—meaning that the energy generated is used directly on site by the data center instead of being transmitted to, and pulled from, the grid and subject to grid-level energy markets. Although this proposal makes a lot of sense, and is efficient, from a data center development standpoint, existing federal and state laws and regulations generally fail to contemplate behind-the-meter uses at this magnitude, making the energy-regulatory and permitting paths unclear. In 2026, FERC, the RTOs and states must close voids in their laws and regulations on this issue, which may include modifying rules that would render an interconnected, behind-the-meter, co-located generation facility of this size and nature a “public utility.” In the meantime, we are aware of some potential work-arounds.
Utility-Scale Battery Storage—Utility-scale battery storage presents a key issue in Mid-Atlantic states, with the potential to boost effective energy capacity by drawing down energy during non-peak hours and discharging energy during peak hours. Utility scale energy storage is not “generation,” and it therefore falls into a legal and regulatory gap under most state’s permitting regimes and presents a use not previously contemplated in most local zoning codes. Maryland and New Jersey have created energy storage procurement programs, which appear to play a role of centralizing permitting at the state public utility board, although the role of state review versus local review for these projects remains murky. Maryland’s CPCN-like program for battery storage appears to centralize permit review at the public utility board and may preempt local jurisdictions; whereas in New Jersey, legislation presently is proposed to classify this use as an “inherently beneficial use” under the Municipal Land Use law, which may have the effect of preventing obstruction of these facilities at the local level. To summarize, although states have been quick to introduce incentives to encourage battery storage as a potentially quicker means to bridge gaps, the initiation of the incentive programs has moved faster than the energy regulatory and permitting pathway. FERC and the RTOs also have not fully implemented regulations or revised positions on battery storage as it relates to the interstate electric transmission grid.
Re-Entry of Public Utilities into Generation—A notable development entering 2026 is the growing interest of policy makers in having regulated electric utilities pursue direct ownership or sponsorship of generation assets, particularly where reliability, resource adequacy, or grid support is in demand. This creates legal and regulatory complications in most Mid-Atlantic states, which deregulated energy generation two decades ago and mandated that the utilities participate only in regulated energy transmission. Nonetheless, longer permitting times, load growth, backlogs at the RTOs, lack of new energy generation assets and lack of long-range transmission, as well as much higher energy bills due to high-demand market conditions, all have led the federal government and states to consider regulated utilities as a potential solution. This trend implicates new permitting and policy considerations:
- Regulatory scrutiny of cost recovery and ratepayer risk, especially for utility-owned dispatchable or hybrid resources.
- Tension between merchant developers and utilities over market participation, procurement preferences, siting leverage and financing, including the use of the rate-base versus market-rate mechanisms to capitalize generation projects.
- Confusion over the role of state public service commissions versus FERC and federal RTOs in the energy generation space.
—Thomas Prevas is a partner, and Dan Skowronski is counsel, with Saul Ewing.
