Study Supercharges U.S. Grid, Powers AI Without New Plants

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A new analysis has concluded that the U.S. electricity grid can accommodate much of the anticipated surge in demand from artificial intelligence (AI) data centers by enhancing its flexibility, potentially reducing the necessity for new power plants, according to a piece by Dan Gearino for Inside Climate News on February 11.

In this context, flexibility refers to grid operators collaborating with their largest clients to better manage electricity consumption during peak demand periods.

"The United States is currently engaged in a significant economic competition surrounding artificial intelligence, and this paper indicates that these new mega loads can be integrated relatively swiftly if they adopt a certain level of flexibility," Tyler Norris, a fellow at Duke University’s Nicholas School of the Environment and the report's lead author, told Gearino.

Titled "Rethinking Load Growth: Assessing the Potential for Integration of Large Flexible Loads in U.S. Power Systems," the report was released in February by Duke’s Nicholas Institute for Energy, Environment & Sustainability.

The findings reveal that regional grids across the country have considerable capacity available to accommodate large new users. The crucial factor is for grid operators and major customers to collaborate in making short-term reductions in demand during periods when electricity supply is most constrained.

The potential advantages are significant, Gearino noted. The report estimates that the nation could add 76 gigawatts of new electricity demand — roughly 10 percent of the country’s peak demand — using existing grid resources if these new users could reduce their consumption for just 0.25% of the time they are typically active.

During these reduction periods, large customers could utilize short-term power sources available on-site, shift computing tasks to other locations for a few hours, or temporarily halt operations. The duration of these reductions would be minimal, averaging less than two hours, the report said. By implementing such strategies, they would lower the overall costs of the electricity system, as there would be less need to construct new power plants.

How to Deal With Load Growth

On Shayle Kann's "Catalyst" podcast on Latitude Media on March 27, Norris said, "AI specialized data centers are going to be likely the single largest driver of U.S. electricity load growth for the next five to seven years, with some numbers suggesting about 44% of all U.S. load growth will be from data centers."

The idea for the study came from trying to figure out how to deal with load growth.  Originally, the modeling looked at an up to 5% reduction in consumption.

"What we found was that the numbers were so substantial in terms of how much new data center load you could add to the grid that we decided to run it at 0.5% and then again 0.25%," Norris said. "To be honest, we were very surprised by the amount of headroom that appears to be available on a large number of balancing authorities."

The team then ran the numbers for 22 of the largest U.S. balancing authorities, which is about 95% of the country's load. What they found is that at 0.5% flexibility or curtailment of the new data center load, the U.S. could add up to 98 gigawatts of new data centers.

"At 0.25% curtailment of the new load, you could add 76 gigawatts," he said.

Norris said during 90% of hours, more than 30% of the power system is unused.

"We actually found that on average across those 22 balancing authorities, that the average load factor, meaning the average consumption over the peak consumption, is 53%," Norris said. "What that basically means is that in any given hour, on average, approximately half of all generation and transmission infrastructure is unused in the U.S. And it's actually worse than that, because you're not counting for all the reserve margin that’s on top of those existing peaks."

The number of hours of curtailment required would be 85, he said.

"But in 73 of those 85 hours, at least 50% of the new load is retained," Norris said. "And then in 50 of those 85 hours, at least 75% of the load are retained. So, we're really talking about partial curtailment here and the vast majority of cases."

Contractual Innovation

Leading data center firms are already investigating ways to adjust their electricity demand in response to power availability and other market conditions, Norris noted in Gearino's article. The report encourages companies and grid operators to proactively establish arrangements during the planning stages of new facilities.

This research is set against a backdrop of power grid planners expressing concern over how to meet the demands of new data centers and the expected growth in demand from manufacturing, air conditioning, and electric vehicles, among other sectors.

Meanwhile, a construction boom for new power plants and delays in retiring older ones is overtaking the industry. Consumer and environmental advocates worry that a surge in new power plant construction could lead to significant increases in utility costs for vulnerable customers and higher greenhouse gas emissions, the Inside Climate News story said.

The concept of companies agreeing to reduce their energy consumption when requested is not new; this practice is known as "demand response" and can take various forms.

What is relatively new is the application of demand response principles to AI data centers. Both data center companies and grid operators have a vested interest in finding ways to lower their electricity demand, as this would lead to a more cost-effective grid. The primary challenges lie in implementation, which involves the interactions between regulators, grid operators, and large electricity consumers.

The Duke report suggests that agreements outlining how this flexibility would function could be incorporated into the standard contracts that companies sign to access the grid. This could lead to the standardization of methods for managing electricity demand.

"Much of this involves contractual innovation," Norris acknowledged to Gearino, admitting that it may sound dull when phrased that way, but it "could have significant consequences."

Every Electron Needed

The U.S. needs every bit of energy it can get, as electricity demand is rising for the first time in many years, according to industry analysts and executives, reported NPR's Michael Copley on March 12.

One way to get there is accelerating nuclear power and geothermal projects, increasing reliance on natural gas, and, in some instances, postponing the closure of aging coal plants. However, in the race for electricity, renewable energy and battery facilities are essential, as analysts and executives emphasize, because they can be constructed rapidly and offer relatively low-cost electricity.

Nonetheless, the renewable energy sector is facing potential turmoil, Copley wrote. The Trump administration attempted to block federal funding that Congress had previously allocated for climate and clean energy initiatives, such as solar and wind. Additionally, Trump instructed the government to temporarily halt the issuance or renewal of leases for offshore wind projects in federal waters.

The Department of the Interior restricted which officials within the agency can grant permits for renewable energy projects on public lands, potentially delaying the permitting process, Copley noted. Furthermore, conservative lawmakers are advocating for Congress to eliminate tax incentives for clean energy. If these disruptions escalate, companies may reconsider their plans to construct new power plants, which could hinder economic growth and impede efforts to establish data centers for AI — a key focus of the Trump administration.

In a recent interview on Fox News, Trump did not dismiss the possibility of an economic downturn this year. "At a time when we're all very concerned about energy abundance and this administration's broad goal of re-establishing energy dominance, just the idea that we'd be constraining the build of new energy [infrastructure] really feels like it's rowing in the wrong direction," said Rich Powell, chief executive officer of the Clean Energy Buyers Association.

Here are three companies with different approaches to handling the crisis.

Enphase Energy Inc.

Enphase Energy Inc. (ENPH:NASDAQ) is a worldwide energy technology firm and provider of microinverter-based solar and battery solutions for dealing with this coming power crunch. On June 16, it unveiled its most powerful and adaptable battery to date, the IQ® Battery 5P™ with FlexPhase, for customers in Spain, Portugal, France, Sweden, Denmark, Belgium, and the Netherlands.

The IQ Battery 5P with FlexPhase is an integrated AC-coupled system that offers dependable backup power and accommodates both single-phase and three-phase applications, delivering exceptional flexibility to address various home energy requirements. Earlier this year, Enphase also introduced the IQ Battery 5P with FlexPhase in Poland, Luxembourg, Germany, Austria, and Switzerland.

The new battery can be tailored to suit the specific needs of homeowners, offering either grid-tied support or backup power. It is engineered to discharge up to twice the maximum continuous power for three seconds, allowing high-power devices to operate during a grid outage.

"Following recent blackouts in Spain, the demand for dependable home energy solutions has never been greater," said Miguel Rico Benitez, chief executive officer of HogarSolar, a Platinum-level installer of Enphase products in Spain. "There's an increasing urgency for reliable home energy solutions — and the IQ Battery 5P with FlexPhase provides the performance and resilience that households require now more than ever."

"The IQ Battery 5P with FlexPhase represents a significant advancement in energy storage for France," remarked Thomas Poncet, owner of IdeeSys, an installer of Enphase products in France. "With robust backup capabilities, scalable capacity, and long-term reliability, it’s precisely the type of smart, future-ready technology our customers are seeking."

Based in Fremont, California, Enphase said it is a global energy technology company and the leading supplier of microinverter-based solar and battery systems, enabling individuals to harness solar energy to generate, utilize, save, and sell their own power — all managed through a smart mobile app.

According to TipRanks, 25 Wall Street analysts offered price targets for the stock in the last three months. The average price target is US$47.83 with a high forecast of US$84.00 and a low forecast of US$28.00. The average price target represented a 15.81% change from the last price of $41.30.

Refinitiv said about 3% of the company is owned by insiders and management and about 92% is owned by institutions. The rest is retail.

Its top shareholders include The Vanguard Group with 12.03%, Baillie Gifford & Co. with 8.42%, BlackRock Institutional Trust Co. with 6.68%, State Street Global Advisors (US) with 3.83%, and Invesco Capital Management LLC.

Its market cap is US$5.37 billion with 131.21 million shares outstanding. It trades in a 52-week range of US$33.01 and US$130.08.

Sunrun Inc.

Sunrun Inc. (RUN:NASDAQ) said it is a leading provider of clean energy as a subscription service, offering residential solar and storage solutions with no upfront costs. The company's products and services connect homes to the cleanest energy available, providing energy security, predictability, and peace of mind.

Sunrun also manages energy services that benefit communities, utilities, and the electric grid while enhancing customer value.

On June 25, the company announced that its network of home batteries enrolled in distributed power plants delivered over 340 megawatts of peak power on the evening of June 24 to assist power grids in California, New York, Massachusetts, Rhode Island, and Puerto Rico.

These dispatch events occur as grid operators race to avert rotating blackouts amid a heat wave with triple-digit temperatures sweeping the East Coast. The extended heat has resulted in congestion and overheating of transmission lines, causing significant spikes in wholesale electricity prices. As soaring temperatures diminished the efficiency of conventional power plants, utilities faced challenges in meeting the surging demand for electricity.

"This summer is proving challenging for grid operators, as extreme heat and rising demand again push our aging infrastructure to its limits," said Sunrun Chief Executive Officer Mary Powell. "Home storage combined with solar is a dependable and controllable resource that can provide on-demand power to the grid to prevent blackouts and lower energy prices for all households. We must fully embrace these technologies if we’re to achieve energy security for America."

Sunrun said it responded to urgent requests for emergency power by dispatching stored energy from home batteries to the grid during the intense heat affecting the East Coast. The influx of power from thousands of Sunrun batteries helped bridge the gap in energy reserves.

In California, Sunrun's fleet of home batteries enrolled in a statewide distributed power plant dispatched 325 megawatts of peak power. The dispatched batteries functioned similarly to a traditional power plant, effectively reducing the state's evening peak electricity demand from 7 p.m. to 9 p.m. — a time when families typically increase their use of appliances and air conditioning after solar generation has ceased.

"Our distributed power plants are ready to help drive a more resilient and less expensive grid," said Chris Rauscher, vice president of Grid Services at Sunrun. "We are doing this at scale and creating real value right now. With an aging grid and growing demand, it is evident that the need for this capacity will only increase exponentially."

Based on 19 Wall Street analysts offering price targets for Sunrun in the last three months, TipRanks reported that the average price target is US$10.43 with a high forecast of US$20.00 and a low forecast of US$5.00. The average price target represents a 12.88% change from the last price of US$9.24.

According to Refinitiv, about 9% insiders and management and about 117% by institutions.

Top shareholders include BlackRock Institutional Trust Co., NA with 14.28%, The Vanguard Group Inc. with 10.24%, Greenvale Capital LLP with 6.63%, Scott Shleifer with 6.45%, and Grantham Mayo Van Otterloo & Co. LLC with 5.05%.

Its market cap is US$2.07 billion with 228.49 million shares outstanding. It trades in a 52-week range of US$5.38 and US$22.26.

Eguana Technologies Inc.

Eguana Technologies Inc. (EGT:TSX.V; EGTYF:OTC) is using its virtual power plant (VPP) technology to turn homes and buildings equipped with smart batteries into nodes on the power chain.

VPPs use those smart batteries at the edge of the grid (the homes and businesses that consume the energy) tied to software that helps distribute and store energy in the batteries when it's not needed and makes it available to the grid at peak times. "The process is seamless to the consumer," Eguana Chief Executive Officer Justin Holland said.

Last month, the Canadian electric utility firm British Columbia Hydro and Power Authority, known as BC Hydro, unveiled its initiative to transform homes into VPPs with battery storage supplied by Eguana.

BC Hydro said its Peak Saver project will provide uninterrupted power to customers while enhancing the flexibility of the electricity grid. The batteries can coordinate and switch to backup power during outages, as well as supply stored energy to others during peak demand periods. BC Hydro will oversee the operation of the Eguana Technologies Evolve LFP 14kWh/5kW batteries remotely to ensure optimal performance during high-demand situations.

Adrian Dix, the minister of Energy and Climate Solutions for the province, described VPPs as a "groundbreaking approach to test the future of energy management and build a more resilient, efficient, and sustainable power grid overall."

"By adjusting energy consumption, participants help reduce demand on the system while earning financial rewards," BC Hydro noted in its announcement. Incentive options are also available, including the Peak Saver Challenge and enrollment in smart home devices such as smart thermostats, electric vehicle chargers, load controllers, and home batteries.

Both the battery storage initiative and the Peak Saver program are part of BC Hydro’s CA$700 million expanded Energy Efficiency Plan, which aims to increase investments in tools, technology, programs, and rebates for customers over the next three years.

Each installed system generates monthly recurring revenue for Eguana through its combined software and hardware platforms. The Evolve hardware works in conjunction with Eguana's Exchange and Edge cloud platforms, allowing for system-level management via a Distributed Energy Resource Management System (DERMS). The utility's DERMS software partner oversees this grid support by coordinating charge and discharge cycles.

In addition to the progress in British Columbia, Eguana recently completed fleet-level demand response testing with a utility retailer in California. The company is also finalizing a summer rollout in Alberta to support a constrained feeder and has been invited to submit, and completed a proposal for an upcoming utility program in Ontario. Eguana continues to participate in demonstrations across Vermont, Oregon, and Nova Scotia.

Holland has noted growing interest in integrated battery and DERMS solutions among utilities, stating, "We can certainly feel a change in the air as more utilities move towards advanced batteries... to manage near term capacity and demand peak constraints on the grid."

*"The rickety traditional centralized grid structure is at or close to its limits and requires transformation," wrote Technical Analyst Clive Maund about the company on March 24. "The advantages of this transformation will be huge — a massive increase in capacity, vastly more efficient utilization of power generated, decreased demand on centralized power generation, and protection of the end user, corporate or private, from power outages."

Maund said he viewed the stock as having an "exceptionally positive risk/reward ratio" and rated it a Strong Buy for all time horizons, with targets of CA$0.20; CA$0.60, CA$0.70, CA$1, or CA$2.

According to the company, about 0.5% is owned by management and insiders.

24.6% is held by the Japanese ITOCHU Corp., the company said.

The company's market cap of CA$4.27 million, according to Refinitiv. Its 52-week range is CA$0.05 and CA$0.20.