Unprecedented Precedent
The Essentials Newsletter, Forty-First Edition
For those of you who’ve read previous editions of this newsletter, you know I’m very focused (some may say obsessed) on words and their definitions. That focus comes, in part, from years of working in the electric sector where, like any highly technical and specialized field, industry jargon and the use of acronyms often make it difficult for people outside the sector to understand what’s really being said. Having also worked on numerous other policy issues during my time on Capitol Hill, I’ve also recognized that the same acronym or term could be used in one sector and have an entirely different meaning in another sector. It was up to me and others like me to “translate” those words, constantly clarifying, defining and encouraging the technical experts to explain the practical implications of policy decisions on utility operations. Admittedly, I was also a nerdy child obsessed with reading, keeping a book in hand wherever I went. That obsession has carried into my life now and dovetails with my focus on clarifying language, whether when speaking or writing.
Now, before I turn to the crux of this edition of the newsletter, let’s pause for a public service announcement: “Warning, the following could be perceived as a lecture. Proceed with caution.” With that out of the way, let’s talk about the growth in projected demand for electricity, which has skyrocketed in the last couple of years.
In a report released this week by ICF called “Rising Current: America’s Growing Electricity Demand,” the authors note that:
Electricity demand in the U.S. is projected to grow 25% by 2030 and 78% by 2050— the fastest rate in over 70 years. AI, data centers, electrification, and new manufacturing are driving this surge, creating urgent challenges for grid reliability and long-term planning.
Unless you’ve been living under a rock, this is not news. Some other analysts predict even higher levels in electricity demand than does this ICF report. What I love about this quote, however, is ICF’s reference to the current electricity demand growth trajectory being the fastest rate “in over 70 years.” What this means is that the growth rate we’re experiencing is not “unprecedented” (it’s just been a while). So, can we stop saying that it is, please? I’m begging. My plea is not just to dissuade us from overusing and misusing a word that began to be overused and misused during the pandemic, but also to remind us that this rapid electricity demand has happened before. Which, in turn, means that we can learn from 70 years ago!! Yes, we have the foundation of a playbook, even if that playbook may be a bit yellowed and dusty.
Don’t get me wrong, elements of our current situation are new, of course. The main cause of the increased demand (widespread artificial intelligence (AI) usage) was only being done in labs 70 years ago. The deployment of intermittent renewable energy and battery storage into our grids has ramped up only in the last 20 years. (Hydropower, the first and best renewable, has been around well over 100 years.) “Behind-the-meter” resources, such as rooftop solar and water heaters, and potential resources, such as fully charged electric vehicles (EVs), are increasingly being deployed and even used as grid resources in some cases. Digital technology has enabled much greater visibility into, and management of, electric grids while also introducing cybersecurity as an operational risk. So, there are “unprecedented” or “new” challenges and opportunities in grid operations. But the foundational matter of rapid load growth is not new. Just like we’ve had pandemics before, just like we’ve had political unrest in our country before (the Civil War being the most tragic example). If we think we’re the only generation in history to experience hardship or challenge by labeling everything “unprecedented,” we are doomed to martyrdom, fear, and anxiety. We’re also going to miss things that previous generations have already figured out for us.
So, let’s look at the first time that electricity demand skyrocketed in this country – after World War II (WWII), 70-plus years ago. The following link depicts that trajectory (and has a few other interesting graphs).
United States electricity history in four charts - Visualizing Energy
As you can imagine, energy was in high demand during WWII, causing the U.S. to accelerate deployment of critical manufacturing facilities and build out additional power plants to support the war effort. Even with additional capacity, it wasn’t enough without rationing. According to the Gilder-Lehrman Institute, posters like "Fuel Fights! SAVE YOUR SHARE," urges Americans to practice energy conservation at home and lists ways to reduce heating costs. It reminds Americans that: “Saving fuel also saves manpower, material, equipment CONSERVE COAL, OIL, GAS . . . FOR WAR.”
Despite the end of the war in 1945, electricity demand began to increase at a rapid rate, with massive investments in infrastructure, such as the build-out of the interstate highway system in the 1950s, home construction for veterans and their families (often taking advantage of federally backed low-interest loans), electrical appliances to fill those homes, etc. The demand during the 1950s and into the ‘60s is similar to the uptick we are seeing today and that’s projected by ICF and others to climb over the next 10-15 years.
Seventy years ago, utilities, manufacturers of electrical equipment, and EPCs (companies that engineer, procure, and construct power plants) increasingly took advantage of economies of scale, building larger and larger centralized power plants, and higher voltage transmission lines. Smaller, regional interconnections amongst utilities – known as “power pools” – grew into larger interconnections. Eventually, efficiencies topped out in terms of the size of equipment and power plants, at least at that time, but the manufacturing and technological innovations that enabled such “sizing up,” greatly helped the U.S., and our Canadian-utility brethren, meet the elevated demand.
These innovations – larger power plants, interconnected grids, electrical efficiency gains – had a downside that was revealed in the great New York blackout of 1965. Each interconnected utility was only as good as its fellow interconnected utilities. If one utility didn’t undertake appropriate operation and maintenance or vegetation management (etc.) and had an avoidable outage, that outage could “cascade” to its interconnected neighbors. Large-scale, longer duration outages could result, given the difficulty in restarting massive regions from an electrical standpoint.
It turns out that customers accustomed to the modern conveniences provided by electricity – subways, lights, restaurants, refrigerators, air conditioning – don’t like it when it’s shut off. For some, it’s even a matter of life and death. To respond to these risks, the electric sector came together around a voluntary set of “reliability” standards to elevate the expectations of interconnected utilities to maintain their systems at certain levels and to collaborate with each other on reliability matters. Such standards were eventually statutorily mandated at the request of the industry itself.
Past Is Precedent
The few examples I’ve just discussed from 70 years ago apply directly to today’s situation. After a 25-year period of flat to little load growth, such as prior to WWII, we are now in significant growth mode. The innovations we used back then – economies of scale, building out capacity, using interconnectedness to our advantage, increasing electrical efficiencies – are still viable strategies today. For example, the higher the voltage at the bulk power system transmission system level, the greater the efficiency. ERCOT, the market overseer in Texas, is considering building out a 765-kV transmission system because of the efficiencies to be gained by doing so. According to an article in Utility Dive from February 3, 2025:
Construction of a new 765-kV transmission “backbone” in Texas will cost only 4% more than expanding the existing 345-kV system to enable anticipated load growth, according to a January analysis by the Electric Reliability Council of Texas. The higher voltage system would lower congestion costs and energy losses, boost transfer capabilities and improve electric reliability, the grid operator found.
Grid operators and large power pools continue to be under pressure not only to maintain reliability but also to keep electricity affordable, the latter a tenet that seemed to have fallen by the wayside until recently. The 1965 blackout and the subsequent major outages since then continue to be stark reminders that the public cares about electricity and will make their views known to regulators and policy makers overseeing the industry if they are unhappy with their electric service.
New Developments
With these lessons-learned and others I haven’t mentioned here, new challenges and developments add to the complexity of producing and delivering electricity, to be sure. As I mentioned above, widespread electrification of vehicles and heating, behind-the-meter resources such as solar rooftop and home battery systems, changing customer expectations about real-time information and grid flexibility are just a few of the elements that didn’t exist 70 years ago.
These variables provide a counterpoint to the “build-things-bigger, create massive transmission superhighways, and interconnect everything” mindset that existed 70 years ago and still does today, even if for different reasons. That counterpoint is to enable more dispersed, flexible grids that rely on their edges as much as their centers. In this scenario, we would utilize both the distribution grids and the bulk power system (enjoying economies of scale, large transmission lines, and central power stations) to interplay with each other in a much more seamless and robust manner.
Optimizing these two disparate parts of our electric system to meet new data center loads and other customer demands is our current, uncharted, challenge. Part of that challenge is to more heavily invest in automating and hardening distributions grids, an investment that, like the 765 kV build-out being contemplated for Texas’s bulk transmission system, will pay for itself via greater efficiencies and, at the distribution level, greater opportunities for economic development. Incorporating lessons from the past will, somewhat counterintuitively, allow us to meet this challenge more quickly and innovatively now and into the future.