Electricity demand is growing in the United States for the first time in nearly two decades, including from increased electricity use from new data centers. To meet the surging demand, many utility regulators are being asked to approve new gas power plants, putting utility customers on the hook for massive new costs.
ACEEE’s new report, Faster and Cheaper: Demand-Side Solutions for Rapid Load Growth, finds that programs investing in energy efficiency in homes and buildings, together with demand flexibility, could significantly offset the power needs of new data centers and other drivers of projected load growth at a far lower cost than building new gas plants, both combined-cycle and peaker plants.
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The report contains a set of recommendations for how state legislators, utilities, regulators, and large load customers can best utilize energy efficiency and load flexibility to meet our energy needs. These recommendations include:
- Establishing pathways for large load customers to benefit from bringing their own demand-side management capacity to their grid regions through channels like third-party aggregators, demand-side environmental attribute certificates, and utility energy efficiency programs.
- Requiring utilities to consider both supply- and demand-side resources in an integrated fashion before approving new investments to meet load growth.
- Utilizing proven solutions like introducing or strengthening state energy efficiency resource standards, establishing decoupling to remove utilities’ disincentive for saving energy, rewarding utilities for demand side performance, and supporting robust utility demand-side management programs, especially those that deliver savings during peak demand periods.
“Our power system needs to meet rapidly growing electric demand while ensuring reliability and affordability. The first-line approach should be tapping into our massive reserve of energy efficiency and load flexibility, not spending billions on new power plants. Demand-side measures are faster and cheaper to deploy today than new generation. They can be targeted to specific locations to defer or avoid the need to build new infrastructure, saving families and businesses money in the process.”
—Mike Specian, utility research manager at ACEEE and lead author of the report