On June 4, a subcommittee of the U.S. House Energy and Commerce (E&C) Committee held a hearing to discuss projected growth in electricity demand due to the expansion of artificial intelligence (AI). Members and witnesses not only called out the challenge of load growth, but also the most appropriate way to meet the anticipated demand on the electric grid. The discussion was the second formal hearing on load growth in the last two weeks, following a similar Senate Energy & Natural Resources Committee hearing on May 21. It is worth applauding the committees for trying to better appreciate and figure out how to get ahead of any potential adverse consequences of this increased demand.
While the recent E&C hearing centered on load growth due to AI, increased electricity demand can be attributed to several factors. The computing power needed to drive AI growth is one factor, but it is far from exclusive. A significant rise in domestic manufacturing and data center operations, as well as electrification of transportation fleets, home heating, and appliances will all drive demand for electricity.
In recent comments to the Environmental Protection Agency, EPSA cited numerous examples of load growth projections, including data from the National Renewable Energy Laboratory, the U.S. Energy Information Administration, former Energy Secretary Ernie Moniz’s EFI Foundation, as well as regional grid operators in Texas and New England. EPSA highlighted these examples merely as proxies for the deluge of studies predicting surging demand for electricity. This is perhaps a rare issue in the energy industry where it is difficult to find a contradictory voice – there is a noticeable absence of studies predicting flat or negative load growth in the coming years.
The June 4 hearing touched on the retirement of generators, and the challenges to retaining and investing in new resources in both competitive markets and vertically integrated regions. Regarding RTO/ISO regions, the witness from the Edison Electric Institute noted that it’s worth considering if existing stakeholder processes in competitive market regions are too cumbersome and fractured to successfully navigate the quantity of investment required to meet future needs. Former FERC Commissioner Tony Clark stated that modifying wholesale markets to encourage and incentivize viable levels of dispatchable, renewable, and storage resources while accounting for numerous public policy initiatives will be “extraordinarily difficult.” There were several references to the importance of more efficient interconnection processes to bring new generation online faster as well as the need for permitting reform to make projects a reality.
EPSA continues to believe that competitive markets – and the ratepayer protection embedded in those markets – are the most efficient and transparent solution to investment needs. We have provided recommendations for market reforms and Energy Expansion principles that can help meet the moment, while continuing to engage in discussions with regulators, policymakers, and grid operators to come to a holistic solution to existing challenges.
Markets offer transparency and diverse stakeholder engagement that – while it may appear messy to some – grants clarity into the process and costs of building and planning power resources. This allows for better outcomes than an opaque system that all too often leaves customers paying bills without alternatives. And, when properly designed, markets incentivize the innovation and efficiency that is desperately needed to quickly encourage investment in solutions at the pace and scale required to meet today’s demand surge while preserving reliability and mitigating costs.
EPSA is grateful for Congressional attention on a critical issue. However, now that the studies have been highlighted and we’ve arrived at a diagnosis, we must now move forward with the cure. EPSA members are some of the nation’s leading investors in renewable and clean energy assets – including wind, solar, and energy storage. We appreciate that renewable and clean energy will comprise a greater share of our nation’s annual electricity production moving forward and are proud to be on the leading edge of those investments.
That said, meeting our nation’s reliability needs can’t be accomplished only by highlighting the amount of renewable energy produced on an annual (or monthly) basis. EPSA urges policymakers and regulators to recognize and appreciate the vital role that will continue to be filled by dispatchable, firm resources that give grid operators the flexibility to maintain reliability as renewable output ebbs and flows. Not only will our country need to maintain the dispatchable generators currently on the system, but in a time of rising electricity demand, we need to create regulatory regimes that send the right economic signals and allow for the permitting and siting of new dispatchable assets.
