America’s Newest Energy Crunch

(Photo by NASA on Unsplash)

[Editor’s note: This story originally was published by Real Clear Wire.]

By Rob Bramlich & Tom Hasseboehler
Real Clear Wire

From Arizona to the Carolinas and the Midwest, the U.S. is experiencing a resurgence of domestic manufacturing, largely driven by the growing needs of America’s digital economy. This resurgence is boosting economic development, increasing the number of high-quality jobs, and addressing the imbalance within our existing supply chains.

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Alongside this new growth, an emerging challenge is facing the country. For companies to invest and expand operations in the U.S., they need an ever-increasing number of reliable and clean electrons to power their supply, information technology infrastructure, and skilled workforce.

However, the U.S. electric grid is not prepared for this significant load growth. After two decades of stagnant load growth forecasts, grid planners are being caught off guard by the near doubling of five-year load growth forecasts. These developments are reflected in the first nationwide compilation of utility load growth forecasts, compiled by Grid Strategies, which is based on official forecasts filed by over 60 planning areas with the Federal Energy Regulatory Commission (FERC).

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Even more startling, these forecasts are likely an underestimate. Several recent updates are adding more gigawatts (GWs) to that forecast and next year’s forecast is likely to show an even higher nationwide growth rate. Utilities in Georgia, North Carolina, Tennessee, and Arizona further increased their load growth forecasts above the amount counted in the official FERC filings. For example, Arizona’s 2023 forecast just doubled and the five-year demand growth is forecasted at more than 20%.

In short, the era of flat power demand is over! During the next five years, forecasts anticipate 38 GWs of new power demand across the U.S.

What does this mean for our nation’s electricity infrastructure?

Grid planners are scrambling to account for the construction of tens of billions of dollars’ worth of new generation, transmission, and distribution equipment. Additionally, it is widely understood that the U.S.’ existing electric grid is near or even at capacity in many regions of the country. This constraint will impede this growth, stifling America’s economy.

Unless states, utilities, and federal policymakers respond quickly by accelerating the planning and construction of required infrastructure, including transmission development, there is a risk of stalled construction at sites hosting nearly $500 million of planned industrial and manufacturing facilities and an additional $150 million in new data centers. Even worse, some of these planned developments could go to other countries.

Infrastructure planning required little attention when the U.S. had no growth. However, that is not the case for today. With the acceleration of artificial intelligence computing systems, production of hydrogen, electric vehicle charging, transition to electric heat pumps and other building technologies, and extreme weather events, utilities are steadily increasing their load growth forecasts. Transmission planners, regulators, and other stakeholders must now be equipped to do careful load growth forecasting, accounting for the specific drivers in their region.

Utilities across the U.S. installed 1,700 miles of new high-voltage transmission miles per year on average in the first half of the 2010s, however, that number dropped to 645 miles per year on average in the second half of the 2010s. In addition, according to data from the Edison Electric Institute, investor-owned utility investment in transmission to serve new load decreased over the past three years.

Reducing barriers to new supply, including through addressing permitting, interconnection, and grid congestion challenges, while unleashing more flexible demand response is imperative for both reliability and economic development. Organized electricity markets also have a growing reliability advantage given the changing resource mix.

Current forecasting and planning practices are simply not keeping up with economic growth. Without reform, a failure of planning will curtail investments, jobs, and system reliability for all new and existing electric customers.

As we look ahead to the acceleration of load growth demand in the U.S., today, states, utilities, and federal policymakers should re-energize efforts to reform regulations that restrict both investment in transmission as well as the opportunity for energy developers to connect new clean generation to the nation’s electric grid.

Rob Gramlich is Founder and President of Grid Strategies LLC, a consultancy focused on bulk electric power systems.

Tom Hassenboehler is a partner at COEFFICIENT and serves on the Advisory Council of the Electricity Customer Alliance.

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