How to avoid a US electricity crisis?

A meeting of energy experts organised by the Stanford Doerr School of Sustainability’s Precourt Institute for Energy has come up with six big ideas for managing soaring electricity demand in the US.

The gathering was convened in response to a prediction by the US Department of Energy that, after about 20 years of minimal growth, the nation’s electricity demand is expected to grow 15–20% in the next decade and to double by 2050. The resulting report has highlighted major areas to be considered by federal and state energy policymakers.

Electricity demand is being driven by artificial intelligence processing, the renewal of domestic manufacturing and the electrification of transportation, among other factors. Participants in the meeting agreed that this growth was positive, but that the US power system does not currently have the capacity to handle it.

There are various barriers to expanding the US grid and optimising its current capabilities while controlling costs and system reliability, which this report may help to overcome.

“Energy experts across the board realise that this is a pivotal moment and that we all must work urgently to secure America’s energy future,” said Arun Majumdar, Dean of the Stanford Doerr School of Sustainability.

At the meeting, Majumdar moderated a discussion between Condoleezza Rice, Director of Stanford’s Hoover Institution and Secretary of State during President George W Bush’s administration, and Jennifer Granholm, who was Secretary of Energy during President Joe Biden’s administration.

The readout report was drafted primarily by Stanford participants in the meeting and reviewed by 12 participants working in the energy, finance, IT, consulting, government and non-profit sectors. For each idea, the report presents a brief explanation of the problem and several policy options.

Six big ideas

It should be noted that the report’s six ideas are not consensus solutions from the all-day meeting. The participants have different political perspectives and work across the private sector, government, academia and non-profit organisations. Rather, these ideas synthesise the group’s conversations to provide starting points for addressing grid inadequacies already seen in some regions of the country.

1. Ensure American security

National security depends on meeting rising electricity demand, especially in the race to develop and implement AI technologies, which the US and its competitors already use for intelligence gathering, law enforcement and military operations. The grid is also vulnerable to cyber and physical attacks. Policymaking opportunities include negotiating trade agreements to strengthen supply chains, pursuing international partnerships to commercialise technologies like next-generation nuclear energy, and investing to reduce grid vulnerabilities.

2. A true ‘all-of-the-above’ energy strategy

The reports posits that market-driven production from all available electricity resources through mid-century — including renewable energy, nuclear power, natural gas and energy storage — could control costs and keep the grid reliable. Too often, however, people supporting an all-of-the-above energy supply policy want to leave something off the list, according to the report. Conducting energy portfolio planning with the short, medium and long term in mind could help ensure affordability. Policy options include pairing natural gas with carbon capture, and continuing technology-agnostic tax credits for renewable energy projects.

3. Create a federal and state grid investment fund

The US electricity system consists of six regional grids with limited interconnection. The ability to transfer more electricity between regions could help mitigate the intermittency of wind and solar power and reduce costs. Policy opportunities include creating publicly backed financing to build out a national transmission system, granting federal regulators the authority to facilitate such a system, and replacing key existing transmission lines with higher-capacity cables.

4. Streamline permitting

Permit timelines for new transmission lines, electricity generation and energy storage projects have significantly lengthened in the past two decades. Process modernisation could get such projects permitted more quickly and inexpensively without sacrificing environmental goals. Policy options include prioritising the most advanced projects, implementing permitting ‘shot clocks’, and using AI and machine learning to accelerate environmental reviews.

5. Make grid policies more flexible

The delay in bringing power generation and storage projects online also stems from requirements to determine both the infrastructure needed to connect new projects to the grid and grid adjustments needed to manage a new generation source at the outset. Policy ideas include regional grids adopting a connect-and-manage approach used successfully elsewhere, and improving the integration of distributed energy resources, such as commercial and residential electricity storage.

6. Modernise utility operations and business models

Currently, utility incentives prioritise large, capital-intensive projects over those aligned with intended goals, such as smart grid technologies to control costs and create better resilience to severe weather. Policy opportunities include transitioning from capital-based to performance-based consumer rates, incentivising transmission line capacity increases, and putting more transmission lines underground.

Collaboration is crucial

The meeting participants agreed that US economic growth and technological eminence could falter if the US electricity system is unable to modernise and expand quickly. The federal government, state and local regulators, utilities, financial institutions and large IT companies must collaborate on solutions, the report stressed.

“Expanding an affordable, reliable and secure grid is not a partisan issue. It is an American one,” William Chueh, Director of the Precourt Institute for Energy, and Karen Skelton, a visiting scholar and the project’s leader, wrote in the report. Skelton was a senior adviser to Granholm and White House Climate Diplomat John Podesta during the Biden administration.

“We urge policymakers and leaders across the country to consider, test and build on these ideas swiftly — because this is no longer some far-off challenge. America’s energy future has begun,” the two wrote.

Skelton has also co-written a related opinion article, ‘A plan to rescue America’s grid’, to be published by Heatmap.news. Additionally, the Precourt Institute has funded four related ‘flash’ studies, which will be published in the Northern Hemisphere autumn to help inform policymakers with data and analysis related to some of the ideas and policy opportunities in the report.

Image credit: iStock.com/choness