Energy Subcommittee Hearing: Scaling for Growth: Meeting Demand for Reliable, Affordable Electricity

Energy Conservation and Power

2025-03-05

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Source: Congress.gov

Summary

The meeting focused on the critical challenges facing the nation's bulk power system as it confronts unprecedented growth in electricity demand, primarily driven by energy-intensive AI models and domestic manufacturing. Discussions centered on maintaining reliable and affordable electricity while navigating complex policy, infrastructure, and technological landscapes.

Themes

Growing Electricity Demand

Historic increases in electricity demand, largely from energy-intensive AI models and domestic manufacturing, are exposing significant impediments to the grid's ability to provide reliable power. The Energy Information Administration projects U.S. data center growth alone could double or triple by 2028. PJM, the largest regional transmission organization, forecasts summer peak demand to climb to 220,000 megawatts over the next 15 years, a substantial increase from current levels. Speakers acknowledged that this demand growth is a positive indicator of a growing economy but requires urgent attention to energy supply.

Grid Reliability and Affordability Concerns

The rapid increase in demand, coupled with planned retirements of coal and thermal generation, raises significant reliability and affordability concerns.[ 00:05:49-00:05:52 ] Grid operators warn of potential shortfalls even under normal weather conditions, with extreme events posing catastrophic risks.[ 00:01:54-00:05:39 ] A supply-demand imbalance could lead to higher costs and reliability issues for consumers. The electric grid requires essential reliability services, such as ramp and voltage control, which traditional dispatchable resources provide.[ 01:43:39-01:43:49 ]

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Challenges in Generation and Infrastructure Development

Building new generation and transmission infrastructure faces significant hurdles, including permitting delays, supply chain constraints, and tariffs. Federal regulations, sometimes requiring multiple environmental assessments for a single project, contribute to added time and expense. Tariffs on essential electrical components like transformers increase costs and slow down necessary upgrades. The current manufacturing capacity for critical grid components is seen as insufficient to meet potential catastrophic events. The long lead times for new power plants (up to seven years) contrasted with the quicker development of data centers (three years) creates a mismatch in deployment speed.

Role of Different Energy Sources

The discussion highlighted the need for a diverse energy mix, with differing perspectives on the role of specific sources. Natural gas is considered essential for meeting rising demand, especially if permitting reforms address pipeline constraints, with Basin Electric actively expanding its natural gas generation.[ 01:55:18-01:55:27 ]

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 Nuclear energy is seen as a critical, reliable, and clean baseload power source, with Georgia's Plant Vogel cited as a success, though its expansion relies heavily on federal incentives. Renewables like solar, wind, and batteries are identified as the least expensive and fastest way to add new energy, comprising 94% of new utility-scale capacity. However, their intermittency necessitates dispatchable backup, especially in extreme weather conditions.[ 02:15:50-02:16:15 ]

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Policy Impacts and Incentives

Federal policies, particularly the Inflation Reduction Act (IRA), are viewed as crucial for stimulating investment in new energy sources and maintaining existing infrastructure, especially nuclear plants.[ 00:29:18-00:29:29 ]

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 Studies suggest that repealing IRA's technology-neutral tax credits could increase electricity prices for consumers by 7-10% and reduce the amount of new generation added to the grid. Conversely, regulations like the EPA's "Clean Power Plan 2.0" are criticized for driving premature retirements of baseload power and imposing financial burdens on coal-fired generators. Calls were made for consistent and rational energy policies to provide certainty for long-term investments.

Interconnection Queues and Solutions

Interconnection queues, with projects totaling 2,600 gigawatts, pose a major bottleneck for new generation. ERCOT's "connect and manage" approach, which allows generators to connect first and manages grid impacts in real-time, was highlighted as a more efficient model, resulting in significantly faster capacity additions compared to other markets like PJM. PJM has reformed its queue process but acknowledges challenges in the pace of construction for cleared projects. Expedited initiatives like PJM's Reliability Resource Initiative aim to address urgent supply needs.[ 01:06:32-01:07:51 ]

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Grid Modernization and Flexibility

Leveraging flexible load strategies from large consumers, such as AI data centers, is proposed as a way to integrate significant demand growth without requiring extensive new infrastructure. This includes options like reducing consumption during peak hours, deferring workloads, or shifting them to other regions. Demand response and virtual power plants are recognized as efficient methods to manage demand and improve grid utilization. The importance of building more transmission, both regionally and interregionally, was emphasized to enable more generation and enhance overall grid reliability and market efficiency.

Cybersecurity and Resilience

The electric sector faces significant cybersecurity threats from foreign adversaries, necessitating federal support and coordinated efforts with intelligence agencies.[ 02:31:40-02:31:48 ]

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 Utilities also prioritize resilience against physical attacks, geomagnetic disturbances, and natural disasters, employing robust planning, investments in infrastructure hardening, and mutual assistance programs for rapid recovery.

Tone of the Meeting

The meeting's tone was predominantly concerned and urgent, reflecting a shared understanding among most members of a looming reliability crisis and the immediate need for increased energy capacity. While there was bipartisan agreement on the existence of the problem, a contentious undercurrent emerged regarding specific policy approaches, such as the Inflation Reduction Act and the prioritization of different energy sources.[ 00:25:48-00:25:57 ]

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 Witnesses offered pragmatic and physics-based insights, emphasizing reliability, affordability, and the practical challenges of grid management and expansion.

Participants

Transcript

Good morning.  The subcommittee on energy will now come to order and the chair recognizes himself for an opening statement.  Welcome to today's hearing scaling for growth meeting the demand on reliable affordable   electricity.  Today we will discuss the state of our nation's bulk power system and the opportunities that lie ahead in the next generation economy.  Our economy's electric grid, built over the course of well over 100 plus years, has been referred to as the most complex, sophisticated machine known to mankind.  When operating correctly, the U.S.  grid efficiently delivers low-cost, reliable energy to communities of all sizes.   Through extensive planning, coordination, and collaboration from a host of government and industry partners, this complex process seamlessly responds in real time to maintain reliability in both normal and extreme weather conditions.   Yet today, historic increases in electricity demand, primarily from energy-intensive AI models and domestic manufacturing, are exposing key impediments to the ability of utilities, grid operators, and generators to keep the lights on.
When the lights go out, people's lives are at stake.  The entities charged with overseeing our electric grid have been warning of potential shortfalls under normal weather conditions
Extreme weather or unforeseen circumstances could turn catastrophic.  In 2025, the Energy Information Administration projects 12.3 gigawatts of coal capacities are set to retire.  By the end of the decade, the North American Electric Reliability Corporation projects as high as 52 gigawatts of thermal generation will retire.  The stakes could not be higher.   Across the world, our adversaries are seeking to undermine U.S.  leadership on the world stage to write the rules on the next-generation economy.  Nations like communist China, who do not share our democratic values, are seeking to develop world-leading AI models through an authoritarian military lens to export their command-and-control style of governance across the world.   Yet within this emerging crisis, there's an opportunity of our nation to correct course and grow jobs, creating industries right here at home.  But to get there, we need more energy.  We need it fast.  The Department of Energy's Berkeley lab estimates that U.S.  data center growth alone is projected to double or triple by 2028.   I know in my district, it's home to over 86,000 manufacturing jobs, and I'm keenly aware of this problem.  And I always say that we're not just operating with needing electricity and power in my district, we need affordable power to make sure.   The Clean Power Plan 2.0 is driving accelerated premature retirements of our baseload power.  Permitting barriers for new natural gas pipeline infrastructure are handicapping regions of the country, such as the Northeast, that are desperate for energy.   Meanwhile, subsidized intermittent energy resources and public policy decisions in favor of renewable energy are flooding interconnection queues and making baseload power from coal, natural gas, and nuclear near uneconomic.
Generation developers continue experiencing ongoing supply chain constraints for distribution transformers and generation turbines.   As we hear today, House Republicans are not alone in raising the alarm.  Today's discussion will help illuminate the ways in which grid operators, utilities, and co-ops are all addressing these challenging dynamics to protect reliability and affordability while providing the opportunity to grow jobs and creating industries.   The witnesses for us today will provide a holistic approach of the nation's electricity system, the unique characteristics of each respective region of the country, and the challenges facing grid governing regime.  PJM, the nation's largest regional transmission organization, which spans 13 states and Washington, D.C., organizes competitive wholesale markets to buy, sell electricity and monitors reliability standards across   their multi-state footprint.  In the West Basin Electric Co-op, members serve 3 million consumers across nine states, spanning both vertically integrated states and organized markets.  Southern Company, a traditional vertically integrated utility, reliably serves customers across the Southeast with a diverse portfolio of generating resources.   So I look forward to the discussion that we're going to have today with each of the respective entity and region and how they're confronting this new frontier in the demand expansion.  And this subcommittee will play an integral role in laying the groundwork to unlock the necessary capital investment for job creating industries while ensuring affordable and reliable energy for American households and small businesses.   And with that, I yield back the balance of my time with three seconds.  At this time, I recognize the ranking member of the subcommittee, the general lady from Florida, for five minutes for an opening statement.
Well, thank you, Mr. Chairman, and welcome to our witnesses.  Mr. Chairman, we've just received some very sad news that the passing of one of our colleagues, Congressman Sylvester Turner from Houston, and if Representative Fletcher were here,   She would say Houston is the energy innovation capital of the world.  Sylvester Turner was the longtime mayor of Houston.  He was just elected.  He was with us yesterday, had brought his guests to the capital.  So would you indulge us, Whit, for a moment of silence?
The Secretary will pause for a moment of silence.   Will gentlelady yield?

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