Decarbonization initiatives and renewable energy investments are compatible with the massive new energy requirements of the data center age, according to a panel of experts who spoke at the Ford School. What is needed is government policy that can guide those initiatives, which the current administration is opposing. Grid Strategies President Rob Gramlich, Ford School professors Catie Hausman and Kaitlin Raimi, and Alexandra B. Klass from the Michigan Law School examined “Decarbonization and the Future of Energy.”
(You can watch the on-demand conversation here)
Gramlich opened the discussion, offering his statistics and research on the state and future of the grid. He noted anticipated load growth is at an unprecedented pace, largely due to the rise in data centers. “Two years ago, nobody was talking about this. Literally just 24 months ago, it was not on anybody's radar unless you were maybe a utility in ‘Data Center Alley’ in Northern Virginia, getting requests from dozens and dozens of data centers to expand and, you know, double, triple their capacity. But now it is the number one thing for every electric utility in the entire power sector, because nationwide, we're looking at about 16% load growth by the end of the decade. Percentage-wise, that is not bigger than ever in history. But in terms of, because we're starting on a higher base, like gigawatt capacity-wise, this is unprecedented. It's a massive amount of power.” The concern of load growth and increasing demand remained a constant theme for the duration of the panel. How policy-makers and utilities will work together to tackle the issue of load and demand growth was an uncertainty brought up by the panel.
Another trademark of the conversation was the concern for the future of renewable energy in the industry. As the tides change in the political sphere, renewables have fallen under fire in the Trump administration. Gramlich raised the issue that renewable energy infrastructure is “very challenged in Washington right now. It's hard to even just get a permit for a very basic thing that you, you know, was almost automatic in the past. So we're not clear if renewables are going to continue. The economics are very strong. So even without policy support, you could take away the tax credits like the one big bill did. But they'll still move forward on an economic basis. But again, they have some challenges with the current administration.” The panel ultimately agreed that there are economic benefits for building clean energy infrastructure, but that those projects are facing harsh pushback from policymakers in the current administration.
Concurring with Gramlich’s sentiment on renewables, Klass chimed in that, “We see a major shift from the Biden administration to the current Trump administration in terms of what type of energy is supported, what type of energy is not. And this is all now happening at a time when utilities and state regulators and state legislatures are having to make decisions as to what utilities should invest in, can invest in what type of electricity they're going to provide to customers.” Klass asserted that the energy industry is experiencing a pivotal moment in time when infrastructure investments are necessary. Utilities and policymakers are at a crossroads in choosing how to spend while modernizing the grid.
The argument that utilities are experiencing a key time for energy investments was supported in Hausman’s perspective on moving forward with the decarbonization strategy. She insisted there are benefits for investing in decarbonization, and these decisions will impact the grid well into the future. “You hear people saying that we should be pulling back on decarbonization, either for political strategy reasons or to protect the economy or protect business. I don't, as an economist, I don't see the latter half of that argument at all. And that's why we need to be figuring this out now, if we're going to be building a bunch of stuff over the next 20 years, that stuff is going to be around for decades. We currently operate power plants that we built 70, 80 years ago. So decisions we make today around how to meet load growth are going to be with us for a very long time.”
Gramlich, Klass, Hausman, and Ramini ultimately agreed that decarbonization initiatives and renewable energy investments could be an important solution to the load growth dilemma, despite opposition from the current administration.
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