U.S. electric demand is expected to increase 2.7% this summer to 1,487 TWh compared to last summer, driven by warmer weather, economic growth and data center expansions, according to the Federal Energy Regulatory Commission’s annual summer energy market and reliability report, released Thursday.
U.S. data center load is expected to grow to nearly 21 GW this year, up from 19 GW in 2023, FERC staff said in the report. Electric demand from such facilities across the U.S. is expected to climb to 35 GW by the end of this decade, according to the report.
Northern Virginia, Dallas, Chicago, Phoenix and Northern California are the main data center markets, but data center development is expanding in more than 20 other metro areas, FERC staff said, citing a January report by Newmark.
Despite increased power demand, wholesale electricity prices this summer are expected to be about the same or lower than a year ago, outside of New England, according to the assessment.
In most areas, natural gas prices — a key factor affecting power prices — are expected to be lower this summer compared to last summer, reflecting a shift to a well-supplied market away from a tight supply-demand balance two years ago, FERC staff said.
The Henry Hub futures contract price for this summer averaged $2.25/MMBtu, down 9% from last summer’s settled price, according to the report. Natural gas storage inventories at the start of the injection season are 23% higher than last summer’s levels and 40% above five-year average levels, staff said.
On the power supply front, total net U.S. summer capacity is expected to grow 3.4% to 1,207 GW from 1,167 GW last summer, according to the report.
By the end of the summer, U.S. battery storage capacity is expected to grow by 12.2 GW from a year ago, adding to a 5.4-GW gain last summer, FERC staff said. Staff noted 5,100 MW is expected to come online in the California Independent System Operator footprint and 4,500 GW in the Electric Reliability Council of Texas market.
Meanwhile, the National Oceanic and Atmospheric Administration forecasts that most of the U.S. faces a hotter-than-normal summer, especially in the Northeast and the interior West, staff said in the report. There is a one-in-three chance this year will set a global heat record, according to NOAA, staff said.
Here are five other takeaways from the meeting.
What’s happening with transmission incentives? The agency will take action on a pending proposal to reform the incentives it provides for transmission development as well as on how it sets allowed return on equity for power line facilities “in the near term,” FERC Chairman Willie Phillips said during a media briefing Thursday. FERC proposed revising its transmission incentive policy in 2020, and a year later proposed additional changes. Also, in 2022 an appeals court vacated FERC’s decision setting an ROE for Midcontinent Independent System Operator transmission owners.
“These matters are on our radar,” Phillips said. “Trust me when I say I have a tremendous chart that keeps all of our orders right in front of me. Nothing's gonna fall through the cracks.”
FERC denies Invenergy PJM power plant complaint. The effort by an Invenergy subsidiary to collect a “lost opportunity cost” payment from the PJM Interconnection for 23 days of curtailment last summer at its roughly 1,485-MW gas-fired Lackawanna power plant in Pennsylvania failed. Output from the plant was reduced last summer by PJM because of a “stability limit” on a power line. In that situation, PJM isn’t required to pay for the plant’s reduced output, FERC said.
Agency clarifies DR aggregation requirements in ISO-NE. While FERC largely upheld its previous approval of ISO New England rules for distributed energy resource aggregations participating in its markets, the agency agreed with Advanced Energy United that one area needed refinement. ISO-NE’s basic description of its metering practices for DERAs is incomplete because its tariff does not include submetering requirements for DERAs participating as submetered “alternative technology regulation resources,” FERC said.
SPP planning reserve margin process needs more work. FERC largely approved refinements to the Southwest Power Pool’s process for determining its planning reserve margin, but found more work is needed. The agency gave SPP 30 days to propose how it will comply with a requirement to include in its tariff information on how it uses a “loss of load expectation” study to determine the reserve margin, along with other considerations that factor into that determination.
Protecting against cyber threats. FERC approved a cybersecurity proposal by the North American Electric Reliability Corp. that aims to protect communications and real-time assessment and monitoring data transfers between control centers that monitor the bulk power system. The new standard requires responsible entities to put in place ways to protect the availability of data in transit and to initiate the recovery of lost communication links.
