Why is US energy demand soaring – putting climate goals at risk?
What’s happening with US energy?
Demand for power is soaring, creating a new energy crisis for the United States – one that could make the climate crisis even worse.
After more than 30 years of falling or flat demand for electricity, forecasts say the nation will need the equivalent of about 34 new nuclear plants, or 38 gigawatts, over the next five years to power data centers and manufacturing and electrify buildings and vehicles, according to filings made to the Federal Energy Regulatory Commission and compiled by Grid Strategies.
Since those filings, several utilities have said they will need even more power.
Georgia Power, which has more than 2.7 million customers, told regulators in 2022 it would need the equivalent of an extra single mid-sized power plant for the rest of the decade. But late last year, it said it will need 17 times more electricity – the equivalent of four new nuclear units – because of new data centers and manufacturing.
The nationwide estimates don’t necessarily include the growth of hardto-track but energy-hogging cryptocurrency or cannabis farming, which are estimated to be using up to 2.3% and 1%, respectively, of the nation’s electricity. Energy demand in these industries has shot up with the popularity of cryptocurrency and legalization of marijuana.
What’s driving demand?
Data mining is driving demand in Texas, where bitcoin and other crypto miners have requested the equivalent of roughly 41 new nuclear power plants to power their energy-intensive computer processes to generate the cryptocurrency. The growth of data centers, overall, including crypto, is pushing power demand up worldwide. A recent International Energy Agency report says the amount of electricity needed for the centers could double by 2026.
In Virginia, Dominion Energy has threatened to turn away planned centers, saying it can’t meet the power demand.
In 2023, Dominion said data centers would increase demand by 376% by 2038. Even if that growth is tempered, Dominion still expects overall demand for power to grow by 85% over the next 15 years as consumers shift to electric appliances, heating and cooling units, and vehicles.
The Tennessee Valley Authority, meanwhile, is another hotspot for data centers, which have driven 65% of the load growth since 2019, the public power provider said. The TVA has contracts with additional centers not yet built that will increase the need for electricity by 40% to 50%. The quasipublic utility has proposed or is building eight new natural gas plants to fill the demand.
“The timeframe that [data centers] can get online has been aggressive on their part,” said Lori Stenger, the TVA’s director of enterprise, forecasting and financial planning.
Growth of new manufacturing for things such as heat pumps and electric vehicles, spurred in part by the Inflation Reduction Act’s climate-change-mitigating provisions, has boosted plans to build power plants to burn methane, a fossil fuel also known as natural gas, or to delay closing coal plants.
“Electric vehicle charging stations, the big charging stations for fleets, are going to be a pretty big driver. So it is a whole bunch of things coming together at the same time,” said Rob Gramlich, president of Grid Strategies.
The growth is happening as studies and experts have made clear the world’s climate goals will only be possible if overall demand for electricity is reduced, including from renewable sources. The US’s goal is to reduce greenhouse gas emissions by about 50% below 2005 levels by 2030, reaching 100% carbon pollution-free electricity by 2035.
“We see [the gas buildout] as a huge threat – we are at a moment where we need to be phasing out fossil fuels and not locking it in decades longer,” said Gudrun Thompson, energy program leader for the Southern Environmental Law Center.
Why utilities are building natural gas instead of renewable energy
Utilities say they can’t meet the soaring growth with wind, solar and other renewable energy, but a large group of businesses including Google and Microsoft beg to differ. The 400member Clean Energy Buyers Association (Ceba) said fossil fuels were not aligned with its goals.
Many members now consider, if not prioritise, their ability to access clean energy when looking to locate and expand, wrote Priya Barua, Ceba’s market and policy innovation director, said in written testimony about Georgia Power’s request to add more capacity.
Electric utilities, though, view natural gas plants as the more logical, and profitable, choice. In some states, they make more money building multibillion-dollar power plants than renewable generation.
Natural gas power plants are also the cheapest and quickest to build, especially since the US has failed to build the necessary transmission lines to move wind and solar power to where it will be used. Clean energy advocates say utilities, states and regions should have planned better for this surge in demand.
“They were warned that they were low-balling, certainly on their EV forecasts,” said Tyler Norris, a doctoral fellow at Duke University, who testified that Duke Energy was not planning for enough increased power demand from electric vehicles. “None of us really encountered these scenarios anytime in the last 20 to 30 years at this scale. We’re all scrambling to kind of figure out how real this is and how we’re gonna get to meet it.”