US electric utilities must build fast amid rising costs, demand: panel

US electric utilities are calling for fresh policy approaches to permit and fund new infrastructure at the breakneck pace required to meet dramatic demand growth and harden aging systems against extreme weather threats.

"Build everything you can as fast as you can," said Duane Highley, CEO of Tri-State Generation and Transmission Association Inc.

Supply chain challenges and relatively high interest rates, however, mean the cost of adding new infrastructure will be high. But legislative and technology solutions could ease the headwinds, Highley and other utility executives said Jan. 15 during a United States Energy Association webinar.

"We definitely have to build more but we have to expand on the capacity of the existing systems that we have, and that's both in the transmission system and the distribution level," said Karen Wayland, CEO of industry group GridWise Alliance.

Wayland pointed to the need for behind-the-meter resources to augment large-scale generation in meeting growing demand.

Portland General Electric Co. is seeking to source 25% of its peak load from its distribution system, said CEO Maria Pope, who is also chair of the Edison Electric Institute, which represents US investor-owned utilities.

Fueled by power-hungry datacenters, demand for electricity has surged over the last three years, added Jim Robb, president and CEO of the North American Electric Reliability Corp.

"Serving datacenter load is absolutely a national security challenge for the country, and it's going to stress our resource adequacy," Robb said. "Our resource adequacy situation in this country was difficult enough ... but if we add another 200, 300 GW of new loads over the next 10 to 15 years, we have to figure out how to build new generation and how to build long-distance transmission."

Over the last three years, the US generated and processed more data than it had in all of history, according to Pope.

Seeking synergies

In one of his final acts in office, President Joe Biden on Jan. 14 issued an executive order to boost the development of datacenters supporting AI and associated clean power resources on federal land. It included a mandate that those operators secure sufficient new clean power resources that align with the hourly electricity usage of higher-demand AI datacenters.

The tech industry, meanwhile, is working on making algorithms and chips more energy efficient, Pope noted. Looking ahead, "you'll see a whole series of solutions that will require more energy infrastructure, more integration between our industries with tech and utilities to be able to create synergies between how we operate the grid and how we process information and then overall energy efficiency."

However, some anticipated datacenter demand is being double-counted, she cautioned.

Utilities are also using AI to boost utility efficiencies, including using drone programs to seek out damage and shorten disruption.

Panelists are looking for the next wave of policy signals under President-elect Donald Trump, who has promised to issue a national energy emergency to increase domestic energy supplies. Whether that would extend to the US power sector is not clear, but Robb welcomed efforts to streamline the permitting process and address fuel supply issues, in particular with natural gas.

However, there are complex cost considerations at play in extending the lives of aging power plants, panelists observed.

"All retirement is not driven by environmental concerns and in many instances, just because of the changing nature of the grid ... you can't afford to continue to run a plant that's meant for baseload when it's running more like a peaking load," said Highley.

Natural disasters, such as wildfires, are a societal problem and a risk to the entire grid, rather than solely a regional problem, panelists added.

At Portland General Electric, wildfire operations and maintenance, as well as capital expenses for hardening the grid specifically for wildfires, are the primary drivers of cost increases, Pope said.

Legislative changes could help to address the issue, she added, such as amending federal land policies to ensure utilities have fast access for restoration work and clarifying liability to support the financial health of utilities.

"Electric companies cannot be the de facto insurer of last resort for what is a societal problem that needs societal solutions," Pope said.