Over the past few years, dozens of industry experts and specialists have pointed out that the ongoing Fourth Industrial Revolution is driving unprecedented growth in demand for electricity in the United States and around the world.
In a report titled “The Era of Flat Electricity Demand Is Over,” electricity consultancy Grid Strategies found that U.S. grid planners, including regional transmission operators (RTOs) and utilities, have nearly doubled their five-year electricity demand growth projections. After decades of minimal or flat growth, U.S. electricity demand is expected to increase by as much as 15% over the next decade, driven by the rise of artificial intelligence (AI), clean energy, and cryptocurrencies.
And now the biggest energy companies have joined this clarion call. NextEra Energy (NYSE: NEE), Southern Company (NYSE:SO) and Dominion Energy (NYSE:D) have warned that meeting growing demand for electricity is critical to the U.S. economy and national security. Big Tech executives at NextEra Energy are Amazon Inc. (NASDAQ:AMZN), Microsoft Corp. (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and Meta-platforms (NASDAQ:FB) is calling on utilities to provide more electricity as they continue to rapidly build gigawatt-scale data centers. These giant data centers consume as much electricity as the entire output of a nuclear power plant. Related: US energy production hits new record
“This is another emergency that is coming. They need this load to drive the next iteration of growth. They now go to the utility company and knock on the door and say we need to put this resource on the grid.“The stakes are high for the U.S. economy,” Skantze said at the Reuters Global Energy Transition conference in New York this week, adding that one of the biggest challenges is having the resources to connect these energy-intensive data center projects to the power grid.
Meanwhile, CEO Chris Womack says his company is experiencing a level of demand not seen since the advent of heat pumps and air conditioning in the South in the 1970s and 1980s. The company expects demand to increase three to four times.
“A lot of it depends on what we see with artificial intelligence and all these big learning models and what the data centers are going to consume. You also see in the Southeast, this incredible population growth and you see all this offshoring in manufacturing,” Womac said at the conference.
Last month, U.S. Energy Secretary Jennifer Granholm revealed that President Joe Biden’s administration was in talks with major tech companies to invest in climate-friendly electricity generation to meet their growing demand.
“We’ve been talking to data companies. The big ones are committed to carbon neutrality and would like to see clean baseload power. If tech companies come in and want to get clean power off the grid, they should bring it with them. A lot of that conversation is happening right now between tech companies and utilities, tech companies and nuclear companies.” Granholm told Reuters in an interview.
FERC Approves First Major Upgrade to U.S. Electricity Transmission Grid
Fortunately, THE America’s aging electricity infrastructure may soon be getting a much-needed overhaul. In May, the U.S. Federal Energy Regulatory Commission (FERC) approved the first major update to its transmission policy in more than a decade, a move that is expected to accelerate the construction of new interregional lines to help the grid keep up with surging demand. The new rule marks FERC’s first-ever update on long-term transmission planning and is seen as a major victory for the administration’s ambitious goal of generating 80 percent of the nation’s electricity from renewables by 2030 and 100 percent carbon-free electricity by 2035.
“This rule cannot come soon enough,” FERC Chairman Willie Phillips, who voted in favor of the final rule, told Reuters. “There is an urgent need to act to ensure the reliability and accessibility of our network. We are at a time of transformation for the electricity network, with phenomenal load growth,” he added, citing the rise of domestic manufacturing, the proliferation of data centers and the increase in extreme weather events.
For nearly two years, FERC has been working to reform how new electric transmission projects are approved and financed. The final rule requires transmission project participants to submit plans for how to allocate costs among states and utilities, and also determine whether transmission proposals will meet long-term needs in a cost-effective manner and give utilities the opportunity to reevaluate projects facing delays or cost overruns or delays.
By Alex Kimani for Oilprice.com
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