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Load growth is here. Utilities are not ready.

Utilities across the country are seeing load growth for the first time in decades and we are not ready. Electricity Demand is growing faster than anyone expected – and we are not ready. Data Centers, AI, Electric Vehicles, and our general shift to electrify everything are creating issues for utilities that now need 38 GW of new generation above the previous estimates.

The Good News

• We will be filling most of the needed generation with clean, renewable energy.
• The US will install approximately 36 GW of utility-scale PV this year. 
• That is 2X what we installed in 2023 (18GW), but still won’t close the gap with the new demand.
• PV and Energy Storage will make up 80% of new electricity generation coming online this year.

The Challenges

Labor

We currently don’t have enough experienced man/woman power to build enough infrastructure to meet our electricity needs.

• We need more Project Managers, Engineers, Electricians, and Installers to design and build all of these assets as there is not enough experienced talent to go around.
• Estimates claim we will need close to 50,000 more Electricians to power the energy transition.

Transmission and Interconnection Queues

We need a radical change in policy and investment in developing and building new transmission lines or it will take 100+ years to get where we need to be. Interconnection queues are packed as utilities and grid operators have enormous backlogs of projects looking to interconnect to the grid.

• Analysts at the DOE predict we will need over 90,000 miles of new transmission infrastructure by 2035 to deliver all of the power we need.
• We have averaged less than 700 miles per year for the last 5+ years.
• PJM, the largest grid operator in the country stopped accepting any new interconnection requests and they anticipate it taking 4 years to work through their backlog.
• Interconnection queues are packed as utilities and grid operators across the country have an enormous backlog of projects looking to interconnect to the grid.

Tax Equity

Demand for Tax Equity outstrips the supply of available capital. This has driven Tax Equity providers to hike rates and focus on larger deals or portfolios.

• Higher interest and costs of capital are squeezing projects and smaller deals may struggle to access a limited pool of tax equity.
• The Tax Credit Transferability that came with the IRA will help in the medium to long term, but the market is still very young and immature.

Closing Thoughts

We have some big opportunities and challenges in the utility-scale market. Expect another consolidation cycle as large strategic players acquire project pipelines, operating assets, and entire development organizations. Also, look for disruption and areas to leverage AI. Amazon Web Services just helped Duke Energy complete some power systems studies using new technology that reduced a months-long process to a few hours.

 If you would like more information about us or you’d like to ask us a question email jon@inpeakdemand.com. Make sure to check out our other blogs on the website.