Join Cheryl LaFleur, a former FERC chair and current advisory board member at the Center on Global Energy Policy, and David Hill, ex-general counsel of the U.S. Department of Energy, as they explore America’s shifting energy landscape. They discuss challenges of electrification, the resurgence of nuclear power, and the need for a diverse energy mix. The duo also dives into the complexities of modernizing the electric grid, the implications of AI and data centers on power demand, and the critical call for permitting reforms in energy infrastructure.
The expected significant rise in electricity demand in the U.S. emphasizes the urgency of adapting the outdated electric grid infrastructure.
Ensuring the reliability of the electric grid amidst increasing renewable energy sources requires adequate backup resources and careful management of supply costs.
Comprehensive permitting reform is essential for accelerating infrastructure development needed to meet future electricity demand and navigate regulatory complexities.
Deep dives
Electricity Demand and Future Projections
The upcoming transformation of the energy landscape is driven by an expected significant increase in electricity demand. Factors influencing this surge include the electrification of previously fossil-fuel dependent sectors like transportation and home heating, as well as the growing consumption by data centers, particularly those focused on artificial intelligence. Projections indicate power demand could rise by 2% to 3% annually in some regions, which poses both opportunities and challenges for the electric grid. As the demand grows, it raises questions about reliability, potential carbon emissions, and the capacity of the existing grid to adapt to these changes.
State of the U.S. Electric Grid
While there is often a narrative depicting the U.S. electric grid as dilapidated, experts assert that it remains a robust system built for previous energy demands. However, the current grid infrastructure is not optimized for future requirements, particularly with the transition towards renewable energy sources and increased electricity use. The existing grid was designed based on past resource availability, meaning significant adaptation is necessary to incorporate new technologies and energy sources. Ensuring reliability amid these changes is crucial, especially as the grid faces challenges from extreme weather and variable renewable energy sources.
Challenges of Grid Reliability and Cost
The reliability of the electric grid is a pressing concern as demand continues to escalate, particularly with the increasing percentage of intermittent renewable energy being integrated. Utility operators are emphasizing the importance of having adequate backup resources, predominantly from natural gas, to ensure stability amidst disruptions. Additionally, there is a growing worry about electricity prices rising due to insufficient supply and the high costs associated with building new generation and transmission infrastructure. The interplay of these factors indicates that maintaining a balance between affordability and reliability in energy supply is becoming increasingly complex.
Regulatory and Infrastructure Reform Needs
To meet future electricity demand, there is a consensus about the need for comprehensive permitting reform to streamline infrastructure development. Current proposals aim to simplify the approval processes by enhancing the Federal Energy Regulatory Commission’s authority and reducing regulatory overlaps, but progress remains slow. Achieving this reform is vital, particularly for building transmission lines that span multiple jurisdictions, as they involve navigating complex regulatory landscapes. Addressing these challenges effectively will enable faster and more efficient construction of necessary infrastructure to support the evolving energy landscape.
The Role of Emerging Technologies in Energy Production
Emerging technologies, especially in nuclear energy and natural gas, are critical to expanding the electricity generation capacity necessary to meet rising demand. New projects in nuclear energy, including advancements like small modular reactors, have the potential to play a significant role in future energy mixes. Concurrently, investments in natural gas infrastructure continue to grow, driven by the need for reliable baseload power to complement intermittent renewables. Balancing the integration of these new technologies while ensuring environmental goals are met will be essential for the sustainable evolution of the energy sector.
The headline from this year’s World Energy Outlook released by the International Energy Agency says, “The world is on the brink of a new age of electricity.” In the United States, electrification is set to transform the energy landscape, and the nation is expected to see a rapid rise in power demand.
Questions remain over how this demand will be met, and if this means increasing carbon emissions from the power sector. These questions are further complicated by the rise of artificial intelligence and an antiquated and fragmented electric grid.
So how do efforts to decarbonize the century-old power system impact both reliability and the cost of electricity? And what does this new era of rising electricity demand mean for domestic manufacturing, AI data centers, and other industries?
This week host Jason Bordoff talks with Cheryl LaFleur and David Hill about the incoming Trump administration, its impact on FERC, and the status of permitting reform measures.
Cheryl is an advisory board member at the Center on Global Energy Policy. Previously, she was one of the longest-serving commissioners on the Federal Energy Regulatory Commission from 2010 to 2019, and served twice as FERC’s chair. Since 2019, Cheryl has served on the board of directors of the Independent System Operator of New England (ISO-NE).
David is a non-resident fellow at the Center on Global Energy Policy. He served as general counsel of the U.S. Department of Energy during the George W. Bush administration. From 2012 to 2018, he served as executive vice president and general counsel of NRG Energy, Inc.
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