Complex Load Growth Creating Uncertainty Around Demand Center Operations and Supply Stack
The electric load growth era is here. Weather-adjusted demand is climbing across the United States outside of the Northeast, driven by data centers, which are sending load growth projections into hard-to-comprehend projections from the ISOs.
Our forward-looking demand forecasting and infrastructure tracking data seem to indicate a more modest load growth profile over the next couple of years. Plus, Yes Energy's real-time Live Power data on demand centers shows that facilities are operating well below their theoretical max power draw and operating in a manner that shows an ability to flex load.
To meet current and forecast load growth, supply buildout has picked up, driven by solar capacity growth around the US. Solar has effectively crushed on-peak market fundamentals in the California Independent System Operator (CAISO) and the Electric Reliability Council of Texas (ERCOT), showing a potential future for ISOs that have been slower to adopt solar. Solar has created interesting market dynamics with increased cycling on an aging thermal fleet and high ramp rates needed when the sun sets.
This is where batteries have entered the picture, providing unique generation characteristics that help soak up mid-day solar and flatten thermal ramp rates with a shift to discharging power onto the grid when the sun sets.
Highlights Regarding Load
- Data center capacity has tripled since 2018, sitting at 36.2 GW by the end of 2024. Data center capacity is projected to hit 57 GW by 2027, with ~21 GW of capacity under construction and online by 2027.
- Cryptocurrency mining projects drove 30% of data center capacity growth. Crypto capacity will hit 15 GW by 2027, with 7.7 GW under construction and online by 2027, doubling current capacity.
- Data centers are not operating at their theoretical maximum power draw, or contracted interconnect amount with ISO. Yes Energy's Live Power data and ERCOT 60-day state estimator data show operational data center load at 30-50% of contracted load.
Highlights Regarding Capacity Growth
- Solar leads the way in growth since 2020, with ~100 GW of capacity added across the US. ERCOT has added ~51 GW of new capacity since 2020, with 23 GW of new solar, the largest capacity buildout compared to other regions.
- Forward-looking capacity projections show that it's the tip of the iceberg for supply buildout. Batteries are bursting on the scene across the US, with ERCOT and WECC seeing the largest share of projects. ERCOT has 77 GW of capacity projected to come online by 2030, including 39 GW of solar and 30 GW of batteries.
- ERCOT averaged 25 GW of daily peak-hour solar generation in August, an incredible solar generation buildout for an ISO that saw only 3.5 GW of equivalent generation in August 2020.
- Large solar generation increases have led to increased thermal cycling, but batteries have stepped in, particularly in CAISO, soaking up midday solar and flattening sunset thermal ramp rates over the last five years.
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About the author: Alex Bennitt is the product manager for Live Power and partner content integration at Yes Energy, where he utilizes a seven-year background in market fundamentals and Live Power operations to help steer product direction. In his free time, Alex is an avid skier who chases snow almost year-round.