Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
North America’s electricity grid faces “critical reliability challenges” as power generation fails to keep pace with surging demand from artificial intelligence, the industry watchdog has warned.
Soaring electricity consumption in the next decade, coupled with the closure of coal-fired plants, will place huge strain on US and Canadian grids, the North American Electric Reliability Corporation has found.
The shortfall could cause blackouts during peak demand periods in both countries, and will be worsened by delays in adding solar generation capacity, batteries and hybrid resources to the grid, according to NERC.
Some areas of the US could face shortfalls as soon as next year, it said.
“Most of the North American [bulk power system] faces mounting resource adequacy challenges over the next 10 years as surging demand growth continues and thermal generators announce plans for retirement,” NERC concluded in its 2024 Long Term Reliability Assessment report.
The report is the latest warning that AI’s voracious power needs threaten to overwhelm an already frail power grid as it struggles to keep pace with the energy transition.
Electricity demand was growing quicker than at any point in the past two decades, NERC found, amid rapid construction of data centres to power AI and crypto mining, and as consumers buy electric vehicles and heat pumps.
Peak summer demand would rise by 132 gigawatts, or 15 per cent, over the coming decade — a sharp increase in last year’s forecast for a rise of 80GW. Peak winter demand will rise by 149GW, or 18 per cent, versus 92GW before, NERC said.
NERC is a not-for-profit body subject to oversight by the Federal Energy Regulatory Commission.
The International Energy Agency estimates global power demand from data centres alone could top 1,000 terawatt hours by 2026 — double 2022 levels and an increase equivalent to Germany’s total electricity needs.
Big Tech is scrambling to find ways to meet the staggering demand projections, announcing a host of new deals that have proved a boon to nuclear generation.
But NERC warned that the demand surge would coincide with the winding- down of fossil fuel generation, with 115GW worth of capacity scheduled to be shut down in the next 10 years.
The shortfall could leave the supply buffer falling below required levels in almost every jurisdiction during the decade, NERC warned. The Midcontinent System Operator, responsible for the grid in the US Midwest, faces potential shortfalls as early as next year.
