As we put this post-election issue of Climate Law Matters
together, my colleagues and I noticed an interesting common thread
in our reflections: without minimizing the impact a negative turn
to federal policy could have on many fronts in the fight against
climate change, we share the belief that the data tells us
something profound about the future of renewable energy that the
results of the election might not indicate. In short, renewable
energy is not a trend but a robust industry that cuts across all
sectors of the economy, benefits our citizens without regard to
party, and is an irreplaceable component of reversing climate
change and creating the next wave of national and global growth and
prosperity. Clean energy provided more than half of our energy jobs
in 2023 – a rate of job creation more than double any other
sector of the economy. In the two years since the enactment of the
Inflation Reduction Act, total clean energy and technology
investment grew by 76% over the two years prior to the IRA. Not
only has investment in clean energy generation risen by 26% between
2023 and 2024, but manufacturing serving the clean energy and
ClimateTech space (which indicates a significantly embedded
economic commitment) increased by 86%, led by batteries (which
doubled between 1H23 and 1H24) and solar and wind component
manufacturing (up 709% and 434%, respectively, from their modest
pre-IRA baseline).
But perhaps the most potent force driving the continued momentum in
the clean energy economy, and particularly the renewable power
sector, is the marked uptick in electricity demand nationwide.
After roughly two decades of flat or declining electricity demand,
the United States is projected to enter a sustained period of
electric load growth in the coming years.
Wood Mackenzie, a provider of data and analytics solutions for the
energy sector, released a report in October called Gridlock, predicting that electricity
demand would grow ~3% per year over the next decade, equating to
approximately 75 - 80 Gigawatts (GWs) of new power needs in the
U.S. over the next five years. "In most industries, demand
growth of 2-3% per year would be easily managed and welcomed,"
the report states. "In the power sector, however, new
infrastructure planning takes 5 to 10 years, and the industry is
only now starting to plan for growth." Indeed, an environment
of demand expansion will be unfamiliar to most public utility
commissions and incumbent utilities. This type of rapid rise in
electricity demand has not been seen in the United States since the
1940s, amidst the country's World War II mobilization efforts.
Moreover, the growth phase we are entering reverses a decades-long
growth trend in GDP outstripping electricity growth, a reversal
that has left most electricity system planners flat-footed.
Fortunately, the inherent nimbleness and speed of the renewable
energy industry position us to absorb a substantial portion of
increased demand while traditional energy systems are slow to
pivot.
In a report released just this month, the
consultancy Grid Strategies makes an even bolder prediction for
growth in U.S. electricity demand: based on analysis of regional
power planners' filings with the Federal Energy Regulatory
Commission, their analysts estimate growth of around 16% by 2029
marked especially by what the report describes as
"shocking" peak demand forecasts. "Over the past two
years, the 5-year load growth forecast has increased by almost a
factor of five, from 23 GW to 128 GW," Grid Strategies
reports.
Driving the surge in demand in the U.S. is a vast array of proposed
and in-construction data centers being assembled by large
technology companies to serve the rapacious consumption of
artificial intelligence. Estimates of expected electricity
requirements for proposed data centers alone vary widely, ranging
from 25 GWs to 100 GWs, with Wood Mackenzie landing at a prediction
of 50 new GW needed over the next five years. Add this to the
electricity consumption by cryptocurrency platforms and other tech
usage at all levels of the economy, the requirements of a resurgent
manufacturing sector and the electrification of transportation, and
increasing market and regulatory pressure to clean up the
production of electricity, as well as industrial hydrogen, and the
need for renewable energy and other generation growth may be far
higher than what we can currently project.
Meeting this explosion of electricity demand presents an array of
challenges and opportunities for system planners, renewable energy
developers and advocates, and our economy and climate in general.
Experts from all corners of the energy industry are racing to do
the math and create the efficient systems necessary to manage this
watershed transition. For now, a few reflections:
- As we have explored at length in these pages and many others have noted, our grid and transmission infrastructure need a substantial overhaul to interconnect new generation resources (of all types) as they are developed and to deliver electricity to where it's most needed. These challenges are no less daunting than they were before the recent A.I.-driven surge in electricity demand (when primarily clean energy and climate advocates were focused on the issue), but given the economic urgency now being felt by major stakeholders, we may see real political will at local, state and federal levels to allocate resources and solve persistent policy challenges necessary to truly modernize and build out our grid. Will we finally see a step-in by FERC to take control of the grid nationwide? We are all staying tuned.
- Grid-related headwinds are also spurring deployment of new grid-enhancing technologies such as battery storage, which, while they have been greeted with tepid enthusiasm from grid operators, are becoming an unavoidable necessity.
- A related concern is what new sources of electricity generation can rise to the challenge of this surging demand and whether new deployments will reverse the trend towards zero or low carbon generation. Although we have seen a slew of announcements by large tech companies about their investments or commitments to new nuclear projects or technologies, and SMRs and renovation of existing large reactors can help solve for increased low-carbon power, the sluggishness of nuclear deployment is out of sync with booming power demand in the near term. And despite the dizzying pace of renewables deployments over the past years (some of which are already built in for the years ahead), it seems unlikely that renewables alone could fully meet the expected rising demand through the end of the decade, even if the projects were being deployed in the right places and the right hours (which current policy does not always properly incentivize). Climate advocates must prioritize generation, transmission and control solutions that can intercept what will be a natural tendency to default to fossil fuel generation.
Ultimately, while renewable energy advocates have been quite worried in the wake of the election that President-Elect Trump and a Republican-controlled Congress could weaken the policy support for renewables that has helped drive so much growth over the past few years, the focus on "energy dominance" and the need for "ALL forms of American energy" suggests that, while our climate goals may recede to the background, the thirst for power (in the form of electricity) will not only persist but grow, and may continue to drive renewables deployment – and maintain the accompanying climate benefits – in the years ahead.
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