AI Is Putting America’s Electrical Grid at Risk

A watchdog for the utility industry says that a surge in demand for electricity could pose a problem for grid reliability across the United States and Canada as utilities have been slow to make necessary upgrades. The North American Electric Reliability Corporation said in a new report that electricity demand is growing faster than at any point in the past two decades at the same time as more than 115 gigawatts of coal-burning capacity is scheduled to shut down in the next ten years. The Financial Times first covered the report.

“We are experiencing a period of profound change,” said John Moura, director of reliability assessment at NERC. The report estimates that peak summer demand will rise by 15%, or 132 gigawatts, in the next decade. That’s a large increase over the 80 gigawatts that NERC estimated in last year’s report, which the organization of course attributes to the rapid construction of data centers to power AI and crypto mining, as well as the rise of electric cars and heat pumps. Peak winter demand is expected to rise by 149 gigawatts in the next decade, or 18 percent, versus the previous estimate of 92 gigawatts.

As anyone knows, infrastructure projects in the U.S. move at a glacial pace, and so it should be no surprise that the existing electrical grid was not designed to handle a world in which everything is battery-powered. Peak demand may have previously meant the times of day when everyone is at home, with some lights and a TV on. But now when many people come home they will be plugging in their car to charge its massive battery pack. Or they might have a heat pump, which can draw a lot of energy to heat and cool a home—a recent estimate from EnergySage found that the typical heat pump in a typical home uses 5,475 kilowatt-hours per year. They estimate that’s enough electricity to run nine full-size fridges year round, or power a Tesla Model 3 for 15,000 miles. In order to accommodate all that demand pressuring the grid, energy generation needs to increase, but power lines and transformers also need to be upgraded.

Although tech companies like Meta and OpenAI have been investing massively in new data centers for AI which still has a ways to go to prove its usefulness, one potential benefit of this boom is that there has been a renewed interest in bringing back nuclear. As it stands, solar and wind energy capacity is not enough to meet demands, and most grids do not have battery packs to store energy for use later. There’s hope amongst those in tech that it’s time for a return to nuclear as a clean, abundant energy source. They have also proposed locating data centers next to nuclear plants to avoid stressing the grid.

That being said, nuclear energy isn’t perfect—the waste has to be stored somewhere, typically deep underground, and can take an extremely long time to decay. It also remains unclear whether the general population has forgotten past disasters and is ready to have nuclear reactors near their homes.

In the past, a potential solution presented for the grid issue has been using electric cars themselves to power homes when the grid is facing peak demand, or send energy from the car back to the grid itself. However bidirectional systems have not been widely adopted by automakers or electrical utilities.

Impulse Labs, a startup developing a new induction stovetop, has built a battery into the product that it believes could be used to store a buffer of energy so that households are not all trying to access the grid simultaneously. The idea would be that the battery is slowly charged by the grid, and then households access energy from that battery when needed. Impulse Labs believes that products like Tesla’s Powerwall, a stationary home battery, have not been adopted more widely because it is expensive and appeals largely to doomsday preppers. By building a battery into a standard household appliance, Impulse believes it found a backdoor way to address the grid problem.

NERC warns that under the current conditions, a shortfall in energy capacity could leave the supply buffer falling below required levels in nearly every jurisdiction across the U.S. during the decade. “Most of the North American [bulk power system] faces mounting resource adequacy challenges over the next 10 years as surging demand growth continues and thermal generators announce plans for retirement.”