Energy demand in the USAhas grown rapidly in the last three years. Jeff Schmid, president and CEO of the Federal Reserve Bank of Kansas City, said the nation’s volatility is concentrated in a few states. One of them is Texas.

There are a lot of things going on in the Lone Star State that are contributing to Texas’ burden growth. The state has an expanding footprint energy intensive data centers, artificial intelligence and cryptocurrency mininga growing population, extreme weather conditions and the rise of electric vehicles.

All of this comes from the work of the state’s grid operator, ERCOT. maintaining reliability amidst peak demandor when the consumer’s demand for electricity is highest. But peak demand is growing significantly faster, said Joshua Rhodes, an energy research scientist at the University of Texas at Austin. It grew faster between 2021 and 2023 than between 2006 and 2021.

It was stated that the increase in energy demand across the country has reached rates not seen since the end of the Second World War. Garrett GoldingHe is a senior business economist at the Federal Reserve Bank of Dallas. The demand growth rate of 1.3% is twice as fast as in the decade before the pandemic.

“These dynamics, along with the uncertainty in current forecasts, pose major challenges for grid planners, power producers, transmission developers, regulators and, at the end of the day, ordinary consumers across the wider economy,” Golding said.

Industry leaders, government officials, business leaders and bankers gathered at the Federal Reserve Bank of Dallas on Wednesday to discuss the need to develop domestic energy infrastructure across the country to keep up with growing demands.

The conversation goes like thisWorst-case models from Texas power grid operator ERCOTIt shows that if the state is affected by winter weather similar to that in December 2022, the state will have a 50% chance of experiencing an outage.

That figure would rise to nearly 80% if Texas experiences a more severe winter like the one in February 2021, when storms caused widespread outages and killed more than 200 people.

ERCOT said the probabilistic model is not a prediction. Grid operator officials said the likelihood of outages has decreased since the 2021 winter storm, thanks to state-mandated climate conditioning of power plants and programs that provide incentives for many power generators to keep spare fuel supplies in place.

Stacey Doré, Vistra Corp.’s chief strategy and sustainability officer, said more than $100 billion has been invested in ERCOT’s manufacturing sector over the past 20 years.

Insideresource adequacy report According to a report ERCOT released earlier this month, the grid operator said the low risk of ordering an energy emergency alert or controlled outage was influenced by the recent addition and forecast of data centers scheduled to operate 24/7.

The US operates 40% of the world’s data centers. Geoffrey Hebertson said Texas is expected to soon become the next market leader in data center installations nationwide. , Rystad Energy’s chief renewable energy analyst.

The Dallas-Fort Worth region accounts for nearly a third of the state’s data center structure, thanks to North Texas’ high Internet connectivity capabilities. Hebertson said the state is poised to surpass Virginia, which is currently the leader in data centers, handling about 70% of the world’s Internet traffic.

But data centers aren’t the only ones contributing to the increase in energy demand. This comes from a variety of sectors, Doré said. Focused on investments Domestic production increased demandalso artificial intelligence.

“It is important for us in the electricity industry to make sure that we do not discriminate against certain types of load customers, that we do not favor certain things over others,” Doré said. “A burden is a burden, a burden.”

Because Texas has its own isolated energy grid, it is responsible for producing most of its energy for its residents. Most of the state’s energy comes from natural gas, but there are other energy sources as well. So sun and windplayed a critical role in balancing high demand.

Texas, the nation’s leader in wind energy production, produced more than a quarter of the nation’s wind-generated electricity in 2022, according to the state comptroller.

In ERCOT’s resource adequacy report, the grid operator notes that the possibility of lower wind generation remains a significant risk to maintaining sufficient reserves for peak energy demand next January.

This is where the dollar mismatch lies, according to Doré. The majority of investments in ERCOT have been directed towards subsidized renewable energies such as wind and solar. Vista plans to convert one of its coal plants in Texas to gas.

“We believe that in the next 10 years we need to solve the resource adequacy problem with additional gas as well as renewable energy sources,” he said.

But Rhodes argues that it may be worth adopting a new mindset on the issue of supply and demand.

The old mindset says that when demand increases, it’s worth paying to increase supply. He argues that sometimes it might be cheaper to pay for energy demand not to rise as much, or even to fall.

Demand response can be accomplished by ERCOT by tapping industrial enterprises, such as large oil refineries or petrochemical plants, to cut off their power during emergencies, or by paying energy producers to reduce their load.

That could reduce the need for dirtier assets and save the state a lot of money, Rhodes said.

“The less we can control supply, the better it will be to be able to control demand,” Rhodes said.

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