Storms, AI demand and policy failures are upending US grid
Ensuring the nation's power grids can reliably deliver electricity is clashing with the tech industry's voracious appetite for energy — pushing the risks of power outages to new highs, executives of regional power markets told federal regulators Wednesday.
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.
'AI is going to change our world,' said Manu Asthana, CEO of the PJM Interconnection, grid operator for 67 million customers in all or parts of 13 Eastern states and the District of Columbia.
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'In our forecast between 2024 and 2030, currently we have a 32-gigawatt increase in demand, of which 30 is from data centers,' Asthana said. 'We need to stabilize market rules and find that intersection between reliability and affordability that works both for consumers and suppliers, and that intersection is getting harder and harder to find.'
Lanny Nickell, CEO of the Southwest Power Pool, PJM's counterpart in a band of Great Plains states, said extreme weather threats and the increasing role of weather-dependent wind and solar power put outages at 125 times more likely to happen than eight years ago. 'As if this wasn't challenging enough,' he said, 'we are now projecting our peak demand to be as much as 75 percent higher 10 years from now, and that's largely driven by electrification and data center growth.'
Jim Robb, CEO of the North American Electric Reliability Corp., the architect of transmission grid standards, said grid operators need 'much deeper insight' into future electricity supply and demand and the probabilities of extreme storms and heat waves that could push power demand to new peaks. Limited real-time information about the effect that dangerous storms have on gas pipeline deliveries to electric turbines is also an area of concern that has been left unresolved by the broader energy industry.
Current industry risk analysis cannot do the job, Robb said in comments filed for a two-day conference at FERC's Washington headquarters.
'This will require stronger modeling of fuel and capacity performance to assess reliability risk,' Robb said. The industry needs to establish an agreed-upon profile of the likely risks operators face, like the 'design basis' accident scenarios that nuclear power plant operators are required to defend against.
Susan Bruce, counsel to a group of industrial power customers, said her coalition shares 'serious concerns' about regional grid reliability and the ability to add enough new electric generation to keep pace with demand, particularly from 'unprecedented but undefined' growth of data center and cryptocurrency mining operations.
'There is a lack of trust that even very high prices' in grid markets 'can move the needle' to get new nonrenewable generation in service, she said in remarks filed with the commission.
'New rules of the road are necessary,' she said.
'States leaning on other states'
Sharp divisions at national and state levels over climate policies is apparent inside PJM, said FERC Chair Mark Christie.
Christie told PJM's Asthana, 'You've got 13 states plus the District, you've got widely divergent policies from New Jersey to West Virginia, from Indiana to Maryland.
'It puts you in an impossible position,' Christie continued. 'How can you guys balance these incredibly divergent political goals and try to run a market … that fits the economic textbooks?'
One answer, broached by Christie and several state regulators at the conference, was to push more responsibility on states to meet grid reliability challenges. Panelists at the FERC conference debated whether electricity reliability and affordability would be helped if states ordered utilities to purchase part of the generation they expect to need in the future, rather than relying on PJM's competitive energy markets to deliver supply.
'How do we make it work without the states having a much larger role?' Christie asked.
'We acknowledge that the states need a role because we are responsible for resource adequacy,' said Jacob Finkel, deputy secretary for policy for Pennsylvania Gov. Josh Shapiro (D), who has led a challenge to PJM policies by Democratic governors in its region. 'We have a responsibility to our ratepayers for affordability.'
'It's easy to throw darts at PJM,' said Kelsey Bagot, a member of the Virginia State Corp. Commission. 'To the extent we want a larger role in the process, we have to demonstrate that as a group of states with very different regulatory structures and very different goals and policies, that we can actually function as a collaborative body and make decisions.
'I think that challenge has been handed to us,' Bagot said.
Dennis Deters, a member of the Public Utilities Commission of Ohio, sided with Bagot, a fellow red-state regulator. 'We are reactive,' he said. 'Too many states are relying on [PJM] to provide resource adequacy.
'I do shudder to think of injecting more politics into an engineering effort,' he added.
Michael Richard, a member of the Maryland Public Service Commission, said the divisions were over principle rather than politics. 'You know, Maryland policymakers, we believe the science on climate change.'
Christie several times pressed panelists for opinions on whether states should be held accountable if their utilities aren't building enough generation to meet reliability needs, which, in his calculation, means generation that can operate around the clock, not renewables. 'If you don't build enough, maybe you need to pay a penalty. Clearly, there are states leaning on other states,' he said.
'The states have the ability to do a lot of direct contracting and direct support for their policies,' PJM's Asthana said. 'We have seen the state of New Jersey, for example, directly support offshore wind. We have supported them in that pursuit, and that can work.'
Gordon van Welie, president of ISO New England, said that states can lose control. 'We know from experience that it's very hard building fossil resources in New England,' he said. A key part of the region's answer was investment in offshore wind. Now the Trump administration has thrown up barriers to that option, he added.
'So that puts us in a very difficult place as we enter 2030,' he said. 'Something's got to give in that equation. Otherwise we have trouble.'
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