FERC: high summer electricity demand driven by weather, data centers

The Federal Energy Regulatory Commission (FERC) released its 2024 Summer Energy Market and Electric Reliability Assessment last week. U.S. electricity demand is “expected to increase 2.7% this summer” compared to last summer, with “warmer weather, economic growth and data center expansions,” driving demand.

FERC is the agency responsible for regulating sales of electricity between power suppliers and utilities, as well as regulating the interstate transmission of electricity, natural gas, and oil. FERC also reviews proposals for liquified natural gas terminals and licenses hydropower projects.

The Midcontinent Independent System Operator (MISO) regional power grid operator, of which Minnesota is a part, may see generation shortfalls and outages this summer. MISO is set to retire 2.3 gigawatts of generation, the highest nationwide. MISO also does “not expect to add battery storage capacity through summer 2024.”

If all goes well, the report expects MISO will “have sufficient resources, including firm imports.” However, “above-normal summer peak load and outage conditions” could result in “demand response and transfers from neighboring systems.”

In utility-bureaucratese, demand response is simply using either carrots or sticks to get consumers to use less energy. The report notes that the performance of wind turbines during “periods of high electricity demand” will be a “key factor,” in whether MISO will need to resort to demand response. Demand response may be necessary in times of storm or unforeseen grid stress. But foreseeing demand response, and anticipating its use as a tool, is a pleasant way of saying that MISO is prepared for electricity shortages and rationing.

Data centers for artificial intelligence will be growing demand this summer. “Growth associated with data center power consumption from 2023 to 2024 is almost 2 GW,” according to the report. “Nationwide, data center demand is expected to reach 35 GW by 2030, up from 17 GW in 2022, and has been one of the major drivers behind the sharp increase in electricity demand in 2023.”

Rising demand for modern amenities like artificial intelligence and machine learning is one reason why reliable and affordable U.S. electricity generation is so important. Yet new strains on the electric grid are coinciding with federal actions that will already make it hard to keep the lights on. For instance, the Environmental Protection Agency’s power plant rule will prematurely force coal plants to retrofit or retire by 2039, and hampers the economics of opening new natural gas plants.

The added strains on the grid this summer, while reliable sources of electricity are pushed off, will result in a more vulnerable electricity supply.