North America is facing a potential energy crisis over the next decade, driven by surging electricity demand coupled with the retirement of power generators. The North American Electric Reliability Corp. (NERC) has highlighted this pressing issue in its Long-Term Reliability Assessment (LTRA) for 2024. The possibility of widespread energy deficits is a significant concern, particularly during peak summer and winter conditions. This scenario puts a spotlight on the urgent need for well-coordinated policy responses and strategic investments to tackle the growing demand and prevent severe reliability issues across the continent.
Rising Electricity Demand
Electricity demand in North America is expected to increase by more than 122 GW over the next ten years, which represents a 15.7% rise from current system peaks. This dramatic growth is fueled by several factors, including the proliferation of new data centers, the increased electrification of buildings and transportation, and a surge in new large commercial and industrial loads, such as manufacturing facilities and hydrogen fuel plants. According to NERC, projections for peak summer demand have surged by over 50% in just one year, underscoring the rapid pace at which demand is growing.
The exponential increase in demand poses a significant challenge to existing energy infrastructure. This evolving need for power is seen as unparalleled in recent decades, necessitating substantial investments in energy production and infrastructure to keep pace with the rising demand. The scale and speed of this demand growth indicate that, should investments and upgrades not occur in a timely manner, there will be considerable strain on the energy grid, potentially leading to stability and reliability issues.
Generator Retirements and Reliability Concerns
The anticipated retirement of power generators adds another layer of risk to the increasing demand problem. The Long-Term Reliability Assessment projects confirmed retirements of 52 GW by 2029, with a predicted total of 78 GW set to be retired over the full ten-year period. When including announced retirements that have not yet begun the deactivation process, these figures swell to 115 GW by 2034. Much of the retiring capacities are expected to be replaced by variable generation sources, such as renewable energy sources, which creates additional concerns regarding reliability.
Resource additions are not keeping pace with the accelerating demand and the planned retirements. This discrepancy is particularly evident in regions such as the Midcontinent Independent System Operator (MISO) domain, where high-risk energy shortages could begin as soon as next year. NERC’s report indicates that this trend of resource additions lagging behind generator retirements and demand growth is a common theme across various regions. This mismatch could lead to significant reliability issues if not addressed promptly.
Regional Risks and Challenges
Several regions within North America are identified as facing elevated risks of energy shortfalls, which could become more critical under extreme weather conditions. The Southwest Power Pool (SPP) and New England regions are specifically flagged for potential shortfalls starting as soon as 2025 and 2026, respectively. These risks are primarily attributed to natural gas supply risks and the potential underperformance of wind generation. Similarly, the PJM Interconnection region faces elevated risks beginning in 2026, driven by factors that include generator performance and fuel supply challenges, with winter seasons posing higher risks than summer.
Texas’s Electric Reliability Council (ERCOT) is also facing significant challenges due to the region’s surging load growth, which is leading to resource adequacy concerns. The state could see the most severe load-loss events during extreme winter weather conditions, highlighting the critical need for robust planning and effective resource management. ERCOT’s experience during the 2021 winter storm underscores the importance of preparing for and mitigating such events to ensure continuous power availability.
Stakeholder Perspectives and Policy Recommendations
Various stakeholders have stressed the critical need for appropriate policies to tackle the growing energy deficit effectively. Jim Matheson, CEO of the National Rural Electric Cooperative Association (NRECA), emphasized the need for federal policies that support energy production, manufacturing, and infrastructure. His concerns about system reliability reflect the sentiment that recent reports point towards increasingly significant threats to the reliable provision of electricity.
The Electric Power Supply Association (EPSA) has also weighed in, advocating for policies that support competitive markets as the best possible solution to ensure reliability during this transformational period. Todd Snitchler, President and CEO of EPSA, criticized the reliance on outdated resource planning models utilized by utilities. Snitchler argued for a more modern and adaptive approach to resource management, which could better align with the rapidly changing energy landscape and the surging demand.
Calls for Action and Policy Changes
North America is on the brink of a looming energy crisis in the coming decade due to a sharp rise in electricity demand paired with the impending retirement of numerous power generators. The North American Electric Reliability Corp. (NERC) has sounded the alarm in its Long-Term Reliability Assessment (LTRA) for 2024, stressing the urgency of this issue. The likelihood of facing significant energy shortfalls is particularly worrisome during peak summer and winter months. This scenario underscores the pressing need for coordinated policy responses and strategic investments to efficiently manage the escalating demand and mitigate severe reliability problems across the continent. Policymakers and industry stakeholders must prioritize infrastructure upgrades, invest in renewable energy sources, and enhance grid resilience to address these challenges. Furthermore, fostering collaboration between government entities and private sectors will be crucial in developing innovative solutions that secure a stable energy future for North America.