Rising electricity demand can help support the widespread deployment of emerging clean energy technologies, but doing so will require “a broad culture change” across utilities and the power sector landscape, Jigar Shah, director of the U.S. Department of Energy’s Loan Programs Office, said Thursday.
“This isn't just about technology,” Shah said in a discussion of a new DOE “liftoff" topic brief.
DOE has published liftoff reports covering power-sector technologies — including advanced grid solutions, nuclear, next-generation geothermal resources and virtual power plants — that agency officials say are part of a portfolio approach needed to address rising electricity demand. The topic brief published last week addresses how rising demand can accelerate deployment of those and other emerging technologies.
“Accelerating liftoff for these technologies could collectively add hundreds of gigawatts of capacity on the system to meet demand needs by the mid-2030s,” according to the brief.
Utilities have for decades “been using the same playbooks to build centralized generation and associated transmission and distribution to meet long-term demand needs. And it's largely worked,” Shah said. “But with demand growth accelerating from data centers, new manufacturing, a surge of electric vehicles and electrified appliances ... an old grid operations paradigm needs to be updated.”
After roughly two decades of stagnant electricity demand, the North American Electric Reliability Corp. now forecasts an approximately 15% to 20% increase in electricity consumption over the next decade, DOE noted in its brief. And by 2050, demand could double to meet net-zero emissions targets.
Importantly, this demand growth is not unprecedented, according to Louise White, a senior consultant with the DOE’s Office of Technology Transitions and Loan Programs Office. Before 2005, the U.S. experienced periods of 10-year load growth of up to 30%, she said.
“We will need to see investment across the entire power system to prepare for load growth, from grid-scale clean energy on the bulk power system, through the wires of the transmission and distribution system ... and then all the way through to the customer side, with energy efficiency and demand-side flexibility and resources,” White said.
Shah pointed to Google’s work in Nevada with NV Energy, where they are developing a clean transition tariff to help finance new carbon-free resources, as an example of how utilities are thinking differently. Under the supply agreement, NV Energy would buy electricity for Google from Fervo Energy’s 115-MW Corsac Station enhanced geothermal project.
“But this innovative tariff model could be more broadly used to bring on more clean energy resources,” Shah said, also noting Duke Energy’s work to develop a framework for offering clean energy to large commercial and industrial customers in the Carolinas, with an initial focus on Amazon, Google, Microsoft and Nucor.
“These are good examples of innovation that we need to build on. Failing to adopt new strategies and technologies is the higher-risk path for utilities today, given how quickly conditions are changing around them,” Shah said.
The Loan Programs Office also has a $250 billion energy infrastructure reinvestment program that can support projects that reuse energy infrastructure, Shah said. He pointed to the LPO’s conditional commitment for a $1.5 billion loan guarantee to restart the 800-MW Palisades nuclear facility in Michigan.
“We're seeing utilities look to our low-cost financing as an opportunity to invest in new technologies like [virtual power plants] and grid-enhancing technologies,” he said. “They're making investments in upgrading and expanding their infrastructure at lower cost to ratepayers.”
“Demand growth is quickly rising in many areas,” Shah said. “This is a call to action to utilities and the broader power sector to rethink their go-to solutions. We need to implement a new playbook, moving away from the traditional, very expensive solutions towards the most cost effective, reliable and clean energy solutions needed.”
