Imminent Surge In US Power Demand Challenges Utilities Companies - Wood Mackenzie

KUALA LUMPUR, Oct 18 (Bernama) -- Wood Mackenzie in its latest Horizons report revealed that the United States (US) power demand is set to soar for the first time in decades, with growth between four per cent and 15 per cent through 2029, depending on the region.

According to the report, “Gridlock: the demand dilemma facing the US power industry”, the growth in electricity demand is driven by the rise of data centres, a resurgence in manufacturing, and greater electrification in transport and heating.

Moreover, individual utilities may be facing even steeper increases as the demand being added to the grid is not evenly spread and one large load can have a significant impact on the growth of individual utilities.

All of this will prove a major challenge for utilities to adapt and provide interconnection and new supply, as well as companies with large electricity needs to sustain growth, according to a statement.

Data centres and the burgeoning artificial intelligence industry have become main drivers of activity, with Wood Mackenzie identifying 51 gigawatts (GW) of new data-centre capacity announcements since January 2023.

In the report, Wood Mackenzie has considered a scenario in which electricity demand from data centres grows by a mid-range estimate of 15 per cent per year over the next five years, which is about 25 GW of new data centre capacity.

Data centres will be competing with a resurgence in US manufacturing, particularly in the areas of battery, solar wafers and cells and semiconductors, which are projected to add up to 15,000 megawatts (MW) of high-load-factor demand over the next few years.

Lastly, the wider electrification of the economy will drive demand, with electric vehicle use continuing to grow and electrolysers connecting to the grid potentially adding another 7,000 MW of demand through 2030.

Many constraints are impacting the system’s ability to meet this demand growth, such as coal plant retirements, the lack of transformers and breakers needed to interconnect new plants and large loads, and the slow pace at which interconnection studies are completed and transmission capacity is added to the grid.

Furthermore, from now to 2030, Wood Mackenzie forecasts annual utility-scale renewable additions to grow from around 29 GW to 40 GW per year.

The report concludes that transmission planning, permitting and construction are the biggest bottlenecks to meeting future demand growth. It will take an integrated approach from utilities, regulators and policymakers to meet this challenge and buildout needed to protect US national security, boost strategic economic growth and decarbonise the power sector to address climate change.

-- BERNAMA