Experts see 'mismatch' between US utility planning cycles and data center builds

The rate of large new demand additions to the US power system is threatening to outpace traditional electric utility planning processes, industry experts said July 17.

"Time to market is huge for technology companies like Microsoft," Brianne Miller, Microsoft Corp.'s senior director of energy and sustainability policy, said during a panel discussion at the National Association of Regulatory Utility Commissioners' summer policy summit in West Palm Beach, Fla. Accelerating power demand growth from data centers and vehicle electrification was a constant theme at the conference.

"Our build cycles for data centers are two to three years, and the build cycle and procurement cycle for energy generation and transmission is longer than that," Miller noted.

Teresa Ho Kim, managing director of asset management for JPMorgan Chase & Co., described the issue as "a mismatch of regulatory cycles and building cycles."

"The utility model, right now, isn't set up to meet this load demand," Kim said.

Georgia Power scrambles to update planning

A traditional integrated resource plan (IRP), a regulatory proceeding that guides future investments in power generation and transmission, takes about a year for utilities to complete. Subsequent requests for project proposals require another year on average, Kim noted.

"Two years down the road, those numbers probably have changed dramatically from what was actually put in the IRP in the first place, and are perhaps no longer relevant," Kim said.

Southern Co. subsidiary Georgia Power Co. was forced to undertake an early update to its 2022 IRP due to a rapid increase in demand forecasts, Georgia Power Chairman, President and CEO Kim Greene noted July 17.

The utility's 2023 update, approved in April under a settlement agreement with state regulators, was driven by forecasts of 17 times greater load growth than Georgia Power expected in 2022. The plan calls for three new oil- and gas-burning turbines of up to 1,400 MW by winter 2026-2027 to help meet additional winter capacity needs of more than 8 GW by 2030-2031.

"The company had to take a bit of risk," Greene said. "We believed that we needed to move forward with some gas turbines, and so we had to make some commitments early."

During the July 17 discussion, Kim noted that supply chain considerations are crucial as utilities respond to updated demand forecasts.

"Everywhere I've looked, the order book for gas turbines, which are now what is needed to firm up the renewables that we're adding to the system, is sold out for the next three to four years," Kim said.

Support for nuclear power

Greene added that the federal government could encourage more sources of 24/7 carbon-free generation to meet future demand by providing further support for advanced nuclear reactors.

Georgia Power in April completed a two-unit expansion at its 4,530-MW Alvin W. Vogtle Nuclear Plant, near Waynesboro, Ga. — the first new nuclear reactors in the US in decades. Both units use new AP1000 reactors.

Greene noted that Vogtle Unit 4 cost approximately 40% less than Unit 3. "The next unit should cost less, and so on and so forth," she said.

Microsoft is also looking to speed the development of advanced nuclear generation to power future data center operations.

The company's artificial intelligence unit is already training large language models on the Nuclear Regulatory Commission's (NRC) database, Miller said.

"If we're going to move at the speed and scale needed to develop new nuclear reactors around the country, whether they're AP1000s or smaller advanced reactors or microreactors, they all have to go through the NRC process," Miller said. "And there simply aren't enough people to fill out these forms."