A new report from the U.S. Department of Energy, titled “Resource Adequacy Report: Evaluating the Reliability and Security of the United States Electric Grid,” has some concerns looking forward.

The report begins by noting: “Our Nation possesses abundant energy resources and capabilities such as oil and gas, coal, and nuclear. The current administration has made great strides – such as deregulation, permitting reform, and other measures – to enable addition of more energy infrastructure crucial to the utilization of these resources.”

However, according to the report, even with these foundational strengths, the accelerated retirement of existing generation capacity and the insufficient pace of firm, dispatchable generation additions (partly due to a recent focus on intermittent rather than dispatchable sources of energy) undermine this energy outlook.

Absent decisive intervention, the report continued, the Nation’s power grid will be unable to meet projected demand for manufacturing, re-industrialization, and data centers driving artificial intelligence (AI) innovation. “A failure to power the data centers needed to win the AI arms race or to build the grid infrastructure that ensures our energy independence could result in adversary nations shaping digital norms and controlling digital infrastructure, thereby jeopardizing U.S. economic and national security,” said the report.

Despite current advancements in the U.S. energy mix, this analysis underscores the urgent necessity of robust and rapid reforms. Such reforms are crucial to powering enough data centers while safeguarding grid reliability and a low cost of living for all Americans.

Key Takeaways:

1 – Status Quo is Unsustainable. The status quo of more generation retirements and less dependable replacement generation is neither consistent with winning the AI race and ensuring affordable energy for all Americans, nor with continued grid reliability (ensuring “resource adequacy”). Absent intervention, it is impossible for the nation’s bulk power system to meet the AI growth requirements while maintaining a reliable power grid and keeping energy costs low for our citizens.

2 – Grid Growth Must Match Pace of AI Innovation. The magnitude and speed of projected load growth cannot be met with existing approaches to load addition and grid management. The situation necessitates a radical change to unleash the transformative potential of innovation.

3 – Retirements Plus Load Growth Increase Risk of Power Outages by 100x in 2030. The retirement of firm power capacity is exacerbating the resource adequacy problem. A total of 104 GW of firm capacity are set for retirement by 2030. This capacity is not being replaced on a one-to-one basis, and losing this generation could lead to significant outages when weather conditions do not accommodate wind and solar generation. In the “plant closures” scenario of this analysis, annual loss of load hours (LOLH) increased by a factor of a hundred.

4 – Planned Supply Falls Short. Reliability is at Risk. The 104 GW of retirements are projected to be replaced by 209 GW of new generation by 2030; however, only 22 GW would come from firm baseload generation sources. Even assuming no retirements, the model found increased risk of outages in 2030 by a factor of 34.

5 – Old Tools Won’t Solve New Problems. Antiquated approaches to evaluating resource adequacy do not sufficiently account for the realities of planning and operating modern power grids. At a minimum, modern methods of evaluating resource adequacy need to incorporate frequency, magnitude, and duration of power outages; move beyond exclusively analyzing peak load time periods; and develop integrated models to enable proper analysis of increasing reliance on neighboring grids.

The report added: “This report clearly demonstrates the need for rapid and robust reform to address resource adequacy issues across the Nation. Inadequate resource adequacy will hinder the development of new manufacturing in America, slow the re-industrialization of the U.S. economy, drive up the cost of living for all Americans, and eliminate the potential to sustain enough data centers to win the AI arms race.”