Growing electricity demand puts pressure on utility planning – pv magazine USA

September 16, 2024 Michael Puttre

For the first two decades of the 21st century, electricity demand in the U.S. was relatively flat. That coincided with a surge in renewable fuel sources, especially solar and wind. But a new report from Virginia-based consulting firm ICF warns that the surge in electricity demand is putting pressure on energy transition efforts.

According to the ICF report, the U.S. faces an 8.3% increase in electricity demand (5.1% peak) through 2028, significantly higher than previous estimates. That translates to a 19% increase in electricity costs for utilities. Looking further ahead, the ICF projects average electricity demand to increase 18% by 2033 and 37% by 2050, compared with 2024 levels.

The increase in demand is being driven by a number of factors, including the proliferation of AI-powered data centres, electrification initiatives, the use of electric vehicles and the expansion of domestic manufacturing.

One key benefit of low demand is that utilities have been able to retire the dirtiest coal-fired and other fossil-fueled plants as solar and wind power have come online. In many ways, this is the essence of the energy transition.

The ICF report notes that retirements of older plants are already declining. Citing the U.S. Energy Information Agency, the report said plant operators plan to retire 5.4 GW of generating capacity in 2024, down from 13.5 GW in 2023 and the lowest since 2008.

As an example of the real-world impacts of this trend, the report said earlier this year, PJM asked Talen Energy to delay the retirement of 844 GW of fossil-fuel-fired generating capacity in Maryland for three years.

Shankar Chandramowli, Director of Energy and Capacity Markets at ICF and one of the authors of the report, said: pv usa magazine that delaying the retirement of older generation sources is just one of the problems resulting from increasing demand. Regions experiencing increasing demand often present a problem for the development of new generation sources, renewable or otherwise.

“We’re based in Northern Virginia, which is the data center capital for the country,” Chandramowli said, adding that siting new plants in Northern Virginia is always a challenge. “If you look at our paper, we’ve identified areas where the grid has the potential for more injection and take-off capacity. They don’t always align with areas where there’s more demand. For example, we’ve seen that PJM is likely to have a low level of expected reserve, in part because of supply-side demand.”

Chandramowli said utilities need to proactively identify these challenges upfront, then start planning for demand, keeping in mind the challenges of growing electricity supply while supporting clean energy. These challenges can include lack of solar or wind resources, permitting and other regulatory issues, interconnection scheduling and underlying network capacity.

Himali Parmar, Vice President, Energy Consulting, Interconnection and Transmission, ICF and co-author of the report, said: pv usa magazine that one of the goals of the electricity demand report is to help decision-makers make the right decisions, given the huge amount of data that needs to be considered.

“What we’re really trying to do with this report is show the information that can be generated from the data,” Parmar said. “There’s a ton of data. The grid is a complex place, with real-time, five-minute, hourly data available for seemingly endless substations in this country. So, you know, there’s a lot of data that needs to be mined, processed and simulated going forward.”

One of the report’s recommendations is that emerging generative AI systems can help analyze data, forecast demand and plan for increased supply to meet that need before reserve margins are squeezed. So one source of increased demand pressure could help planners find solutions.

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