The era of flat power demand is long gone, insists a new report from consulting firm Grid Strategies that highlights a trend of steep load growth nationwide and poses a critical question: Can new transmission development be spurred along by changes in policy in time to support the growth of burgeoning industries?
Over the past two years, the five-year load growth forecast has increased by almost a factor of five, from 23 gigawatts (GW) to 128 GW, according to Strategic Industries Surging: Driving US Power Demand. The official nationwide forecast of electricity demand shot up from 2.8% to 8.2% growth over the next five years to 66 GW through 2029, but after tacking on an additional 61 GW of growth in preliminary updates, nationwide electric demand is forecast to increase by 15.8% by 2029.
Authors John D. Wilson, Zach Zimmerman, and Rob Gramlich assess the trend as being mostly attributed to meeting the electricity requirements of new advanced manufacturing and data centers, particularly in a few select regions.
Six areas driving load growth through 2029
The report highlights the extent to which demand is increasing in six regions of the United States over the next five years:
- ERCOT, 43 GW: Driven by data centers in the Dallas-Ft. Worth area and some oil and gas production
- PJM, 30 GW: Driven by data centers in Northern Virginia, other data centers in Pennsylvania, and manufacturing in Ohio, among others
- Georgia Power, 13 GW: Driven by data centers around Atlanta and some manufacturing
- MISO, 9 GW: Relatively low growth rate but cracks the top six because of its size; manufacturing and data centers contributing
- Pacific Northwest, 7 GW: Driven by data centers and chip fabrication plants
- SPP, 6 GW: Growth dispersed, current growth focused in oil and gas producing regions in Minnesota and North Dakota, as well as near-term data center growth in Oklahoma and Missouri.
The dangers of standing still
For more than two decades, the utility industry has been in a low growth period, well below 1% per year. If the updated forecast is correct, annual peak demand growth will average 3% per year over the next five years. While 3% growth may seem small, it would necessitate six times the planning and construction of new generation and transmission capacity. That means expanding the grid will be critical to sustaining high load growth, meeting new large customer technology requirements, and maintaining reliability.
In addition, high-end sector forecasts suggest current load forecasts may not have caught up with growth, the report indicates. Data center growth forecasts vary, with some tech industry analysts anticipating growth of 65 GW and updated utility forecasts suggesting more than 90 GW. Some manufacturing data is difficult to account for, further complicating projections.
Grid Strategies’ analysis indicates load growth is driven by geopolitically and nationally strategic industries such as semiconductor chip manufacturing, artificial intelligence (AI), and battery manufacturing. However, there is often a mismatch between the development of those industries and the procurement of new generation and transmission to meet load growth.
Interconnection may take a year or longer, while it may take over four years to bring new generation online and even longer to build new transmission, including connections between regions to enable power-sharing during peak periods. Ample generation resources are under development across the country, but projects are often bogged down in technical review processes created for a different age and different technologies.
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