U.S. grid regulators warned that North America’s electric power system is not expanding fast enough to meet rising demand, meaning that several regions are at heightened risk of shortages over the next five years.
The North American Electric Reliability Corporation released its long-term reliability assessment, warning that generation and transmission growth are lagging for what is needed to support large loads, such as data centers. It also noted that shifting electricity supplies away from weather-dependent sources, such as solar panels and wind turbines, and reducing fuel diversity increases the risk to grid reliability.
More “fossil-fired generator retirements loom in the next five years, reducing the amount of generation that has fuel on site and impacting the system’s ability to respond to spikes in demand,” the report said. “The continuing shift in the resource mix toward weather-dependent resources and less fuel diversity increases risks of supply shortfalls during winter months.”
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“The overall resource adequacy outlook for the North American [bulk power system] is worsening,” it said.
The report identified several areas across North America at “high risk” or “elevated risk” of electricity supply shortfalls under both normal and extreme weather conditions over the next five years.
The high-risk areas include PJM Interconnection, the largest grid operator and wholesale electricity market in the country, which handles the grid for 67 million people in the Mid-Atlantic and Midwest. The report said the grid will be at high risk starting in 2029 due to resource shortages and expected generator retirements.
The report noted that grid operators MISO, which covers much of the Midwest and Great Plains; ERCOT, which covers Texas; and WECC-Basin and WECC-Northwest, which cover much of the Pacific Northwest are also at high risk.
The CEO of the National Rural Electric Cooperative Association, Jim Matheson, said in a statement, “Today’s report is yet another stark warning about the intensifying reliability risks facing America’s electric grid.”
“This report clearly highlights the need for smart, swift actions and serious conversations about how we will meet tomorrow’s energy needs as a country. Reliable and affordable electricity is the cornerstone of America’s national security and our economy,” Matheson said. “As electricity demand skyrockets, we urge policymakers to continue working with electric cooperatives to prioritize grid reliability and pursue smart energy policies that help set our nation on a more stable path.”
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NERC’s report comes as many in the eastern part of the country experienced a winter storm that left hundreds of thousands without power. Meanwhile, electricity prices have continued to rise, fueled by the rapid expansion of data centers, artificial intelligence, electrification, and the reshoring of manufacturing.
According to the latest Bureau of Labor Statistics consumer price index, electricity prices rose 6.9% for the year ending in November, faster than overall inflation, which stood at 2.7%.
The report said that electricity peak demand and energy growth forecasts over the 10-year assessment period continue to climb above levels seen in the past two decades.
“Over the 10-year period, aggregated assessment area summer peak demand is forecast to rise by over 224 GW. This is 69% higher than last year’s 10-year growth projection of 132 GW,” the report reads.
“Winter peak demand is expected to grow by 245 GW, continuing to outpace summer and exceed prior-year projections,” it added. “New data centers for artificial intelligence and the digital economy account for most of the projected increase in North American electricity demand over the next 10 years.”
The Trump administration, meanwhile, has placed blame on the Biden administration and Democratic governors’ efforts to push green energy for rising energy costs.
The administration has sought to limit the construction of clean energy projects, such as wind and solar power, while removing regulations and bolstering production of fossil fuels. For instance, the DOE has issued several emergency orders to keep retiring coal plants running to address reliability concerns as energy demand increases and electricity prices rise.
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At a White House cabinet meeting on Thursday, Energy Secretary Chris Wright said that coal generation has helped save thousands of Americans’ lives during the severe winter conditions on the East Coast, following Winter Storm Fern.
“I can say with some confidence, hundreds of American lives have been saved, because of [Trump] leaning in and stopping the killing of coal and revitalizing coal,” Wright said. “Coal, over the last few days, where we had peak demand and electricity, has delivered 20 times more electricity than solar and batteries.”
