State regulators should be skeptical about utility plans to build gas-fired power plants to meet growing electricity demand, according to a brief released Thursday by Energy Innovation.
“As the clean electricity transition accelerates, these plants could become stranded assets, with costs ultimately falling to electricity customers,” Energy Innovation analysts said in the brief, Learning How to Grow Again. “Utilities and their regulators should examine a wider portfolio of solutions that are lower risk and more compatible with utility and state climate goals and customer preferences.”
Georgia Power, for example, is seeking to add 1,400 MW of gas-fired generation to meet growing demand while Duke Energy’s latest integrated resource plan calls for an additional 2,700 MW of gas capacity for a total of 8,900 MW by 2035, according to Energy Innovation.
Energy Innovation urged regulators to consider two main approaches for meeting increasing demand: prioritizing energy efficiency to slow the growth and elevating resource and market solutions that can be quickly put in place to bolster resource adequacy.
Utility energy efficiency programs, efficiency and building standards and voluntary industry efforts — such as data center efficiency initiatives — can help tamp down demand growth, according to the energy policy organization.
On the supply side, Energy Innovation called for building clean energy and energy storage where possible.
“Even though interconnection queues are clogged, there remain plenty of places to connect renewables to the grid that reuse existing interconnection infrastructure, starting with the sites of retiring coal plants,” the group’s analysts said.
Utility regulators should consider distributed resources such as rooftop solar and having utilities work with their large customers on flexible demand programs that can help avoid the need for new peaking power plants, according to Energy Innovation.
Regulators should also consider grid-enhancing technologies like dynamic line ratings to quickly increase capacity on the existing transmission system, the group said.
Texas demand growth met with renewables
Texas shows that electricity demand growth can be met with clean energy resources, the Institute for Energy Economics and Financial Analysis said in a report released Wednesday.
In the last decade, electric demand in Texas grew about 27% to 496.5 million MWh in 2023, with the increased usage met with new wind and solar generation, according to IEEFA, a nonprofit group that supports moving away from fossil fuels.
“This ability of power producers in Texas to meet the blistering pace of growth over the past decade with renewables is instructive for utilities across the country that are now preparing for what they project will be a sharp upswing in demand growth in the coming decade,” IEEFA said.
And in New England, on sunny days behind-the-meter solar regularly accounts for about 30% of demand while 1,800 MW of energy storage cleared ISO New England’s last capacity auction, according to the group.
However, Georgia Power, Duke, the Tennessee Valley Authority and Dominion Energy have proposed gas-focused development plans, according to the group.
“None seem to have absorbed the lessons of either the Texas or the New England transition examples: Strong demand growth and a renewable energy transition can go hand in hand, and gas is not the only option available for utilities and grid operators,” IEEFA said.
