What’s the rush with load growth?
The drumbeat about load growth has been loud and continuous for several months now, kicked off by Grid Strategies’ report “The Era of Flat Power Demand is Over” in December of 2023, followed by Georgia Power’s 2023 IRP update, in which the utility updated its load forecast for 2031 from 400 MW in the 2022 IRP to 6,600 MW. Yes, load growth is coming, we have known this for a while—the whole point of electrification is to move vehicles and buildings off fossil fuels and onto a clean electricity grid. What has surprised many utilities is the sudden load increase from re-industrialization and data center growth.
GridLab is concerned that the noise around load growth is driving a false sense of urgency, and utilities are using this to push for new gas to meet this rising load and in the worst case, delay coal retirements. Utilities with clean energy commitments and state goals including Duke, NIPSCO, and Dominion in Virginia are now proposing new gas generation, and in some cases, multiple GW of new gas. Utilities are pointing to a host of factors as to why they need gas and not clean energy: clogged interconnection queues, supply chain woes, inflation, and reduced capacity value (e.g. reliability) of clean resources. What they often do not tell regulators is that gas faces all these same issues: inflation, interconnection delays, supply chains, plus, gas often needs costly and long lead time pipeline upgrades. Let’s drill down into these concerns, and debunk them one by one.
Interconnection queues. Yes, there are record numbers of GW in queues, and the time to get through the queues have increased. But utilities have a head start; there are 300 GW of projects with executed interconnection agreements ready to construct today. Utilities (and clean energy buyers) need to contract with those projects that are ready and get them built. New gas projects also have to go through the interconnection queue, and there are just 13 GW of gas projects with executed interconnection agreements, far less than the 300 GW of clean that are ready to go.
Supply chain. The EIA projects 63 GW of new capacity in 2024, a huge 55% increase from 2023. 96 percent of this new capacity is clean generation. The supply chain woes of the COVID era appear to be behind us, and supply chains for batteries and solar panels are very much unstuck, given that prices are dropping for both. Not true for gas. The lead time for new gas turbines is getting longer, as demand hits an industry that had scaled back manufacturing capacity. Utilities are telling us that a gas plant in the planning stages today will not be online until the early 2030s.
Inflation.The cost of materials and labor has unfortunately increased dramatically over the past few years, and those costs have impacted all generation facilities – not just clean energy. Given that the most expensive part of a gas plant (the turbine) is facing supply chain woes, prices for turbines are high. On the flipside, prices for solar panels and batteries are dropping dramatically as new manufacturing capacity comes online. Battery pack prices in China have dropped 51% in the past year, and solar has come down a similar percentage, with the global price for solar modules closing in on a bargain $0.10 per watt.
Reliability. Utilities argue that clean energy resources have low capacity value, and therefore gas is the only resource that can provide reliable power. What this argument leaves out is that gas is often assigned inflated reliability numbers that don’t account for poor winter performance, including fuel supply challenges. Wind and solar can be coupled with storage, efficiency, and demand response to improve performance during critical periods and capacity value. And if the load growth issue is real, utilities need both capacity and energy, so over-building clean energy can provide both.
What about the huge surge in data center load? Right now data centers consume roughly 4 percent of electricity load, and EPRI estimates this could roughly double to 9 percent by 2030. While this is a large increase, it’s not the frantic forecasts that AI could gobble up a quarter of US electricity by 2030. Yes, there will be regional impacts, but the overall increase is well within the ability of the industry to plan and implement for. There are now voices cautioning that this increase in load may not materialize, given forecast efficiencies in new chips. Even Microsoft, in their IRP testimony, scolded Georgia Power for using speculative numbers to come up with their 6,600 MW forecast.
Now is not the time for hype to overtake logic. Answering the question, “is this load growth real?” presents an opportunity for regulators to establish transparency in planning, to pull back the curtain on forecasting, and challenge assumptions. And it’s imperative to use this moment to demonstrate clean energy’s ability to meet the challenge with falling prices, reliability, and performance.