New manufacturing facilities and data centers are driving increased electricity demand
Energize Weekly, December 27, 2023
The U.S. electric grid is ill-prepared for a surge in demand coming from new manufacturing, data centers and in future years, electrification of transport and building heating. Meanwhile, the queue of generation projects waiting to get on the grid is growing sharply.
Those are the findings of two studies – one by Grid Strategies and another by the Lawrence Berkeley National Laboratory – looking at the state of the nation’s electric grid. Grid Strategies is a power sector consultant.
For the last decade, grid planners have been forecasting a 0.5 percent annual growth rate in electricity demand, according to Grid Strategies, but the forecast for the next five years has already jumped to 4.7 percent from 2.6 percent.
The projection for peak demand growth through 2028 is 38 gigawatts (GW), which will require the planning and construction of new generation and transmission.
At the same time, there are nearly 2,000 GW of generation, mostly solar and wind, and storage sitting in line waiting to be connected to the grid, according the Berkeley lab.
The capacity entering the queue annually has grown from about 100 GW in 2013 to nearly 700 GW in 2022. There are now more than 10,000 projects representing 1,350 GW of generation capacity and 680 GW of storage seeking interconnections.
“Most projects that apply for interconnection are ultimately withdrawn, and those that are built are taking longer on average to complete,” the report said. Commercial projects that came online in 2022 had waited an average of five years to connect to the grid.
The main drivers for increased electricity demand over the next five years are investments in new manufacturing and data centers, the Grid Strategies analysis said.
Since 2021, commitments for new industrial facilities have reached $481 billion, and data center growth through 2028 is forecast to surpass $150 billion.
Other growth drivers, including electric heat pumps and transportation electrification requiring electric vehicle charging, tend to be less volatile and will have more an impact in the 2030’s, the report said.
Investments in transmission have not kept pace. In the first half of the last decade, the U.S. installed an average of 1,700 miles of new high-voltage transmission lines a year. In the second half of the decade, that dropped to 645 miles a year.
In the last three years, investor-owned utility investment in transmission decreased, according to data from the Edison Electric Institute cited in the Grid Strategies report. In 2021, expansion-related transmission expenditures were forecast to be $8.8 billion for 2023, down from $9.2 billion in 2021.
“It’s worrisome that a resurgent American manufacturing sector may face headwinds from the limited ability of the nation’s electricity systems to respond,” the Grid Strategies report said. “Electricity systems need to supply new generation, connect that generation to load, and – of course – connect new load to the system.”
“There are real risks that some regions may miss out on economic development opportunities because the grid can’t keep up,” Grid Strategies said.
Much of the investment in manufacturing and data centers is centered on the Southeast, Midwest and Southwest. – particularly Arizona, Nevada, Michigan, Indiana, Georgia, and the Carolinas, according to the report.
Utilities like Puget Sound Electric, Duke Energy, Georgia Power, and Tennessee Valley Authority have already said that their load expectations have grown higher, while others, including Arizona Public Service and Portland General Electric, are factoring in the impacts of higher temperatures and extreme weather events on future load.
