The electricity sector is experiencing a major shift, transitioning from a period of relatively flat power demand to one with significant growth. This transformation presents both challenges and opportunities for grid planners, utility companies, and regulatory bodies, necessitating a re-evaluation of existing infrastructure and investment strategies.
For the past decade, grid planners have operated under the assumption of relatively small electricity demand growth, forecasting annual increases of just 0.5 - 2%. However, this perspective has been continuously challenged in recent years, with projections for electricity demand growing exponentially. This surge is driven by substantial investments in new data centers, electrification initiatives in transportation and construction, as well as insourcing manufacturing.
The increasing reliance on data-intensive technologies, including cloud computing and artificial intelligence, has fueled a surge in data center construction. These facilities, often described as "power-hungry," require massive amounts of electricity for their operations. Some planned AI data centers require up to a gigawatt of power each, equivalent to the electricity needs of a small city.
Additionally, initiatives aimed at bolstering domestic manufacturing -following sustained supply chain challenges since the COVID-19 pandemic-coupled with private sector investments in electric vehicles and batteries, are leading to a resurgence in industrial activity. This growth translates into a significant increase in electricity demand, as new factories and production lines come online.
While not as immediately impactful as data centers and industrial growth, the ongoing transition towards electric vehicles and the adoption of electric heat pumps in buildings are steadily increasing electricity demand. This trend is expected to become a dominant driver of load growth shortly.
Addressing the challenges posed by surging electricity demand requires a multi-faceted approach involving complex modeling backed by comprehensive data collection and analysis strategies. Grid planners need to adopt a forward-looking approach that anticipates future load growth driven by factors like distributed energy resources (DERs), accurate profiling of customers, and proactively managing large-load additions. This requires accurate and up-to-date load forecasting that incorporates the latest trends in technology (e.g. smart grid) and data science.
As the world is ushering into a new phase of electrification and significant power demand growth, the shift requires proactive and coordinated planning from asset investment teams and grid planners to ensure reliability and resiliency in the grid.
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Navid Pourmomtaz is a Senior Solutions Consultant at Engineered Intelligence. He is an enterprise asset management professional with a Bachelors of Science in Software Engineering from the University of Calgary. At Engineered Intelligence, he works closely with our customers to implement ENGIN.