Growing Demand and a Power Sector Under Stress
Growing Demand and a Power Sector Under Stress
Growing Demand and a Power Sector Under Stress
Growing Demand and a Power Sector Under Stress
Growing Demand and a Power Sector Under Stress
Energy experts shared their thoughts on data center growth and the US electric grid at a packed panel on April 10. Hosted by the Institute for Climate and Sustainable Growth, the event attracted 90 attendees eager to learn about one of the most talked-about issues in energy.
Panelists Doug Scott, Chairman of the Illinois Commerce Commission, and Asim Haque, Sr. Vice President of Governmental & Member Services at PJM, were joined by moderator Travis Kavulla, Head of Policy at Base Power Company and lecturer at the Harris School of Public Policy.
EPIC’s Ryan Kellogg opened the event with an introduction framing the discussion within today’s energy landscape and the Institute’s mission of balancing climate and growth goals.
“We want energy to be affordable, we want it to be reliable, and we want it to do no damage to the environment,” Kellogg said. “Reliable and cost effective delivery of power has become a real challenge for the first time in a long time…What can policy do here?”
After around 20 years of relatively flat energy demand in the United States, the growth of large data center projects, or “hyperscalers,” has caused a massive spike in electricity demand. “This is different in size and scope and character than anything we’ve seen,” Scott said.
The panelists agreed that meeting this new energy demand with minimal consequences to electricity prices and to the environment will be a significant challenge in years to come. But they debated what kinds of policy and regulation could best address these challenges.
Scott shared his expertise on the energy policy and regulation already underway on the state level in Illinois. He cited the state’s 2021 Climate and Equitable Jobs Act (CEJA), which aims to promote electric vehicle adoption and phase out fossil fuels, setting a goal for the state to use 100 percent clean energy by 2050. He also mentioned the 2026 Clean and Reliable Grid Affordability Act (CRGA), which, among other provisions, aims to add 3 gigawatts (GW) of energy storage to improve reliability.
Haque explained his work at PJM, a grid operator coordinating electricity transmission in many US states. The nonprofit’s primary goal is grid reliability, Haque shared. PJM’s transmission area includes the Chicago area and “Data Center Alley” in North Virginia, which is experiencing rapid growth in electricity demand.
Though demand is clearly up, supply isn’t on pace, Haque explained. This imbalance drives up prices, and is tough to remedy for multiple reasons.
Firstly, new data centers can come online more quickly than power plants: a timeline of 1-2 years versus 5-7 years, Haque said. In addition, federal policy swings have created a “vulnerable investing climate” in the energy industry, making it more difficult to finance new projects.
Meanwhile, while we know data centers have huge electricity needs, the exact load increase in each region isn’t certain, making planning difficult, Scott said. Finally, data centers demand constant energy: they can’t shut down during times of peak electricity usage, shared Scott. This makes powering them with renewable energy sources all the more difficult.
So, how do developers, legislators and regulators proceed to resolve these issues? Kavulla, Scott and Haque each shared thoughts on how to manage grid access for data centers and finance the needed electricity and grid infrastructure.
At present, hyperscalers plug into the grid like any other user. But it may be necessary to treat hyperscalers differently, said Scott, by requiring them to pay for the buildout of the power generation they will use. Local and state governments are also creating guidelines for new data centers and power generation to come online.
Haque shared that data center growth could help “solve the new supply issue” by pushing the development of new energy generation. The panelists also expressed the importance of distributed energy resources like rooftop solar panels that can help meet demand during peak use times.
“There’s lots of different things that we can do, we just have to do something,” said Scott.
Speakers
