Southwest Power Pool COO: Peak electricity demand could rise 50% in next decade

In testimony before Congress on Tuesday (March 25), Southwest Power Pool COO Lanny Nickell said his regional transmission organization’s planners predict electricity needs in its footprint may grow by 50% over the next decade.

“SPP forecasts that peak demand over the next 10 years could be as much as 50% higher than today’s levels. Dispatchable power plant retirements due to age or environmental limits have been occurring and are expected to continue to occur, steadily reducing the amount of firm capacity available to serve customers,” Nickell said.

He was speaking before the House Committee on Energy and Commerce at a hearing titled “Keeping the Lights On: Examining the State of Regional Grid Reliability.” Little Rock-based Southwest Power Pool (SPP) coordinates electricity transmission across 14 states in the U.S.

“The demand for electricity in our region has increased faster than we had previously projected,” Nickell said. “SPP set our latest record peak for instantaneous demand in August 2023, around 56 gigawatts (GW), equivalent to the output of more than 50 Hoover Dams. That was roughly 10% higher than the peak set two years earlier.”

Nickell said the increase has been driven by a number of factors, including economic expansion, conversion of gas to electric heating, harsh weather conditions, and an emerging proliferation of datacenters that require immense power.

In Arkansas, state lawmakers and Gov. Sarah Sanders recently moved forward with legislation that alters the process for raising rates for electricity generation companies in order to expedite new construction for projects that consume power and population growth.

Nickell warned that power brownouts, seen in some parts of the country, are not just limited to high summer demand anymore. He said peaks are becoming more widespread in the winter and summer, and overall electricity usage has been increasing. Between 2014 and 2024, he said the annual electricity consumption in SPP’s region grew by roughly 25%.

“Seasonal risks are no longer confined to summer months,” he said. “Winter electricity demand has surged dramatically, reinforcing our need for increased reserve margins and dispatchable generation.

“One of these drivers — the rise of advanced computing and artificial intelligence (AI) — deserves special mention. AI and high-performance computing are fueling a new wave of data centers that consume immense amounts of electricity. Our region’s affordable and reliable power has already attracted interest from companies looking to build these energy-intensive facilities within SPP’s footprint. Serving these emerging large loads will require us to strategically plan and aggressively expand our grid — ensuring we have sufficient generation and reinforcing transmission to deliver power where it’s needed.”

Nickell warned that the nation’s electric transmission infrastructure is not prepared to handle the forthcoming demand for more energy. He also said power sources reliant on the weather, while encouraged, have limitations.

“Compounding the challenge, the majority of new generation that has been added in our region over the last several years has been intermittent wind,” he said. “In other words, a large amount of around-the-clock generation was retired and largely replaced with weather-dependent resources. The nation’s transmission infrastructure is simply not ready for this accelerating future. Even SPP’s latest transmission expansion plan called for more than five times the investment of any prior plan — underscoring the massive scale of infrastructure needed to reliably meet rapidly growing electricity demand.

“The good news is that we have a robust pipeline of new resources eager to come online. SPP has more than 100 GW of generation projects interested in connecting to our grid — almost twice our peak demand as of today, with over a third of those projects consisting of battery storage and gas generation, which will help offset the variable nature of the renewable generation we have today. If even a fraction of these projects gets built, and if we can construct the needed transmission to support them, they’ll greatly improve our resource adequacy.”