Policy and Legal

The artificial intelligence–driven rise in energy demand from the tech sector is adding more strain to the U.S. power grid, boosting the risk of outages to “new highs,” regional power market executives said at a regulatory conference this week (POLITICO Pro’s ENERGYWIRE, subscription).

What’s going on: “Grid rules developed during periods of relatively slow growth aren’t equipped for the demands of Silicon Valley’s investment in artificial intelligence, extreme weather shocks and deep national and state political divisions over energy and climate policy, grid operators told members of the Federal Energy Regulatory Commission.”

• PJM Interconnection, which has 67 million customers in the eastern U.S., forecasts a 32-gigawatt power demand increase through 2030, “of which 30 is from data centers,” CEO Manu Asthana told FERC.
• Southwest Power Pool, with approximately 19 million customers in the Great Plains states, said it projects peak demand “to be as much as 75% higher 10 years from now,” largely due to data centers and electrification.

Why the outage threat is worsening: Extreme weather events and greater use of weather-dependent energy sources such as wind and solar make “outages … 125 times more likely to happen [now] than eight years ago.”

What’s needed: C-suite leadership told regulators there are steps that can—and must—be taken to mitigate the worsening risk. These include:

• Stabilized market rules and “find[ing] that intersection between reliability and affordability that works both for consumers and suppliers, and that intersection is getting harder and harder to find”;
• “[M]uch deeper insight” into future electricity supply and demand and probabilities of extreme weather;
• More and better real-time information about the effect of dangerous storms on gas pipeline deliveries to electric turbines;
• “[S]tronger modeling of fuel and capacity performance to assess reliability risk”; and
• The establishment of an agreed-upon profile of the risks operators likely face.

Adding to the problem: Making matters worse are the vastly different climate policies between states, which put regional power markets “in an impossible position,” FERC Chair Mark Christie said at the conference.

• One possible solution: give states more responsibility for fixing grid reliability problems on their own.

The NAM says: As the NAM recently told the House’s AI and Energy Working Group, led by Rep. Julie Fedorchak (R-ND), “A reliable, resilient modern grid is required to enable the historic growth in data centers, which in turn can contribute to manufacturing growth.”