Over the past few years, dozens of commentators and industry experts have emphasized that the ongoing Fourth Industrial Revolution is driving unprecedented growth in electricity demand in the United States and around the world.
In a report titled “The Era of Flat Electricity Demand is Over,” power consulting firm Grid Strategies found that U.S. grid planners, including regional transmission operators (RTOs) and public utilities, have nearly doubled their five-year electricity demand growth forecasts. After decades of minimal to flat growth, U.S. electricity demand is now projected to grow by up to 15% over the next decade, driven by the boom in artificial intelligence (AI), clean energy, and cryptocurrencies.
Now, major energy companies have joined the call. NextEra Energy (NYSE:NEE), Southern Company (NYSE:SO) and Dominion Energy (NYSE:D) has warned that meeting surging electricity demand is critical to the U.S. economy and national security, according to Petter Schantze, vice president of infrastructure development at NextEra Energy. Amazon, Inc. (NASDAQ:AMZN), Microsoft(NASDAQ:MSFT), Alphabet Inc.(NASDAQ:GOOG) and Meta Platform (NASDAQ: FB) is pleading with utilities to provide more power as it continues to rapidly build gigawatt-scale data centers that consume as much electricity as an entire nuclear power plant. Related: U.S. energy production sets new record
“This is a different imperative. We need this load to drive the next round of growth. They’re now coming to the power companies, knocking on their doors, saying we need to get this resource onto the grid.“The risks to the U.S. economy are big and a big challenge is whether there will be enough resources to connect these power-hungry data center projects to the grid,” Scanze said at the Reuters Global Energy Transition conference in New York City this week.
Meanwhile, CEO Chris Womack said the company is seeing demand at levels not seen since heat pumps and air conditioners arrived in the South in the 1970s and 1980s: The company expects demand to increase three to fourfold.
“Many of these rely on artificial intelligence, large-scale learning models, and data center consumption. The Southeast is experiencing rapid population growth and the domestication of manufacturing.” Womack said at the meeting.
Last month, U.S. Energy Secretary Jennifer Granholm said President Joe Biden’s administration was in talks with big tech companies to invest in climate-friendly power generation to meet surging demand.
“We’ve been talking to data companies. The big players are committed to net zero and they want clean baseload power. If tech companies are going to come in and pull clean power off the grid, they should bring their electricity with them. There are a lot of conversations happening right now between tech companies and utilities, and tech companies and nuclear companies.Granholm said in an interview with Reuters.
FERC Approves America’s First Large-Scale Electric Grid Upgrade
Thankfully, of America’s aging power infrastructure may soon get a much-needed makeover. In May, the Federal Energy Regulatory Commission (FERC) approved the first major changes to electricity transmission policy in over a decade. The changes are expected to accelerate the construction of new interregional transmission lines to help the grid keep up with surging demand. The new rules are FERC’s first revisions to long-term transmission planning and are seen as a major win for the U.S. government’s ambitious goal of generating 80% of the nation’s electricity from renewable sources by 2030 and 100% carbon-free electricity by 2035.
“I hope this rule will be implemented soon.” FERC Chairman Willie Phillips, who voted in favor of the final rule, told Reuters. “We need to act urgently to ensure the reliability and economics of our electricity grid. With incredible demand for electricity growing, the grid is at a transformational time.” He added, citing a surge in domestic manufacturing, an increase in data centers and more extreme weather events.
FERC has been working for nearly two years on reforming how it approves and pays for new transmission, with final rules requiring transmission project participants to submit plans for sharing costs between states and companies, determining whether transmission plans meet long-term needs in a cost-effective manner, and giving operators the ability to reevaluate projects that face delays or cost overruns.
Article by Alex Kimani of Oilprice.com
Other popular articles from Oilprice.com:
