NERC warns of ‘urgent need’ for new energy over next decade

Unfortunately, the North American Electric Reliability Council (NERC) didn’t offer any warm Christmas wishes. Instead, the nonprofit regulator ended 2024 with a warning for everyone: We need more energy, and fast.

“More than half” of the continent is at high or very high risk of energy shortages over the next five to 10 years, according to NERC’s 2024 Long-Term Reliability Assessment (LTRA). The assessment highlights key reliability challenges the power industry will face over the next decade, including meeting growing energy growth, managing generator demand, and removing barriers to resource and transmission development.

In its LTRA, NERC noted that generator retirements will continue over the next 10 years, while electricity demand and energy growth are climbing rapidly. New data centers are a large part of the demand growth, but electrification across industries and other large commercial and industrial loads, such as new manufacturing facilities and hydrogen fueling plants, also play a role.

“With demand growing faster than at any time in the past two decades, meeting future energy demand for all seasons presents unique challenges in forecasting and planning,” said Mark Olson, NERC Reliability Assessment Manager. “At the same time, generator retirements announced over 10 years total 115 gigawatts (GW), mostly replaced by variable generation. The resulting resource mix will be able to meet energy demand most of the time, but will require a sufficient number of dispatchable generators and a guaranteed supply of fuels, such as natural gas, to be always reliable.”

NERC’s LTRA shows that summer peak demand is expected to increase by more than 122 GW over 10 years, 15.7% above current levels. The 10-year summer peak demand forecast has increased by more than 50% since last year’s LTRA; the winter peak demand forecast is expected to increase by nearly 14% over 10 years.

NERC added that this year’s indicators, compared to last year’s LTRA, suggest that investments and improvements in regional planning processes will increase to support grid expansion, with more transmission projects reported as being under construction or planned for the next 10 years.

“While we are encouraged by the substantial growth in transmission development, industry and policymakers must address ongoing challenges in siting, permitting, and construction to ensure this growth becomes a reality,” said John Moura, NERC’s director of reliability assessment and planning analysis. “Overcoming these barriers is critical to achieving a more reliable and resilient grid.”

NERC found in its Interregional Transmission Capacity Study (ITCS) that an additional 35 GW of transmission capacity in the U.S. would enhance energy adequacy in extreme conditions. NERC believes that increasing transmission capacity between adjacent transmission systems could help alleviate energy shortages and could be one of the solutions that entities pursue to address resource adequacy issues identified in the LTRA. While NERC said multiple regions have been identified as being at “high risk” under extreme conditions, the Midcontinent Independent System Operator (MISO) was highlighted as not having enough reserves to meet resource adequacy standards under normal conditions because resource additions are not keeping pace with generator requirements and demand growth.

NERC’s assessment provides recommendations for energy policymakers, regulators, and industry to promote actions to help meet growing demand and energy needs while transforming the resource mix:

Industry, regulatory, and policymaking agencies should “carefully review and manage” the pace of generator requirements in light of projected reliability risks;

Strengthen long-term assessment processes by combining wide-area energy analysis with modeled interregional transmission capacity, as found in ITCS;

Support from federal, state, and provincial regulators and policymakers is urgently needed to address siting and permitting challenges and remove barriers to resource and transmission development;

Collaboration between regulators, the electric industry, and gas industry member organizations can help address operational and planning needs for interconnected gas-electric energy systems;

Ensure that regional transmission organizations, independent system operators, and regulators maintain essential reliability services