The Risk of Being Demanding – An Energy Perspective

By Fred Carey, PE and Dawn Schilling, PE

This edition of Pulse is the first of a three-part series that explores anticipated implications of increasing energy demand related to the electrification of our society including what factors affect demand, what new energy sources are needed, and whether we have the transmission capacity and capability.

After two decades of flat or falling electricity demand, North America’s electricity needs are escalating and are anticipated to continue to rise as large commercial and industrial users increase, and electrification of our economy occurs.  What will consumption increase along with needed energy production mean for our environment? Are we ready to navigate the challenges ahead to satisfy this demand in a reliable and sustainable way?  On this Earth Day we reflect on this question with the first of three Pulse editions, focusing on where and why electricity demand is increasing.

Why Are We So Demanding?

Understanding electricity demand and consumption in the U.S. starts with recognizing that it’s far from uniform. It varies significantly based on regional factors such as climate, population density, the structure of local economies, and social or political influences. For example, a densely populated region in a hot, arid climate with a strong industrial base will likely consume far more electricity than a sparsely populated rural area with minimal industry and a mild climate. Additionally, the sources and locations of power generation vary across the country, often far from where the electricity is ultimately used. These differences contribute to a complex electrical grid, making it challenging to ensure that both current and future energy needs are met reliably and sustainably. The North American Electric Reliability Corporation (NERC), along with six Regional Entities, is tasked with coordinating and promoting a highly reliable, resilient, and secure North American bulk power system (BPS).

So, why is electricity demand on the rise? Multiple factors are driving the increase, including demographic shifts, evolving policies, environmental considerations, advances in technology, and industrial growth. The NERC 2024 Long-Term Reliability Assessment (LTRA) offers insight into these trends, as shown in Figure 1. From a policy and environmental standpoint, the electrification of household appliances such as heat pumps and the widespread adoption of electric vehicles are replacing traditional fuel sources with electricity. On the technology front, the growth of information technology—and more recently, artificial intelligence (AI)—has fueled demand for massive data centers that consume vast amounts of power. At the same time, emerging industrial sectors are expected to place additional pressure on the grid in the years ahead.  In aggregate, over the next 10 years these forces are expected to increase peak demand by as much as 132 gigawatts to 149 gigawatts respectively for winter and summer peaks

(NERC, 2024 LTRA)
Figure 1. Driving Energy Demand

What Are The Risks?

(NERC, 2024 LTRA)
Figure 2. Risky Business

A key finding from the 2024 LTRA is that, over the next decade, the BPS will face growing resource adequacy challenges. These challenges stem from two converging trends: rising electricity demand and the current state of our generation and transmission capacity. One significant issue—explored further in future editions of Pulse—is the retirement of older, traditional generators that have historically supported our baseload needs. It’s estimated that nearly 80 gigawatts of fossil-fueled and nuclear generation capacity could be retired by 2029, with that number reaching 120 gigawatts by 2034.  At the same time, delays in bringing new generation online—from sources such as natural gas, solar, and wind—are adding pressure to an already strained system. When combined with growing demand, these factors pose a real and increasing risk to the reliability of the electric grid, as illustrated in Figure 2

It’s important to recognize that this landscape continues to evolve. The LTRA was developed prior to recent shifts, including changes in federal administration, economic uncertainty, and new efforts to reopen decommissioned plants like the Palisades nuclear facility in Michigan. PHE stands ready to assist our federal and private partners in pursuing and assessing energy related projects that will strengthen the country’s energy BPS and grid. On this Earth Day we also encourage our readers, staff, family, and friends to find ways to be less energy demanding. Check out the Department of Energy’s Energy Saver site for tips.

Stay tuned for our next edition of Pulse, where we’ll take a deeper dive into our existing energy mix and what the future of energy supply may look like in North America.

For More Information:
PHE is a national consulting firm that specializes in environmental planning for Energy, Defense, and Civilian infrastructure.  The firm has supported efforts for the siting of novel and complex energy projects throughout the U.S. in the areas of fossil fuel, renewable, and nuclear energy sources.  For any questions or for more information, please reach out to Dawn Schilling, PE, AICP at dawn.schilling@phe.com.