February 2025 Volume 7

MAJOR POLICY CHANGES REQUIRED TO ENSURE POWER GRID RESILIENCY AND RELIABILITY By Bud Weinstein ENERGY

B etween 2005 and 2020, the demand for electricity in the U.S. remained relatively constant at roughly 4,000 terawatt hours per year Better insulated homes, more efficient appli ances, and energy conservation led some experts to proclaim that power demand in America had reached a permanent plateau. But since 2021, annual consumption of electricity has jumped by almost 8%, and the Energy Information Administration proj ects another 2% increase in 2025 with demand reaching 5,200 terawatt hours by 2050. The growing demand for power is a reflection of the ongoing “elec trification” of America as our economy expands faster than most other countries. As a result of “re-shoring,” hundreds of new facto ries are being constructed across the U.S. Crypto-mining, which is likely to get a boost under President Trump, requires huge amounts of energy. The greater use of electric vehicles and heat pumps for homes and businesses is also boosting power demand. Producing hydrogen fuel, which is just now coming into its own, requires huge amounts of electricity. At the same time companies such as Microsoft, Google and Amazon are scrambling to ensure reliable power sources for data centers and artificial intelligence. According to a recent study by the Department of Energy, data center power demand could nearly triple in the next three years and consume up to 12% of the nation’s electricity. That’s the demand side of the future. What about the supply side? Will we have enough electrons to meet future demand? We sometimes forget that it takes power to make power. Billions of investments in wind and solar farms in recent years have created the perception that huge amounts of new electricity have come on line. In fact, these additions have been largely offset by the closure of coal, nuclear, and some natural gas generating plants. According to the North American Electric Reliability Corporation (NERC), about 50 gigawatts of fossil fuel generation have dropped off the power grid over the past decade while more than 1,000 coal plants have been shuttered. The substitution of intermittent renewable energy for base-load, 24/7 power has made the nation’s electric grids less resilient, less secure, and less reliable. What is more, as Bjorn Lomborg of the Copenhagen Consensus often points out, the argument that wind and solar are now a cheaper power source than fossil fuels is based on the cost of elec tricity only when the wind is blowing and the sun is shining. The costs of backup power, which is usually a gas or coal plant, are not included. Nor do these cost estimates take into account federal

government tax credits that amounted to $20 billion in 2024. Many states offer additional subsidies for renewable generation. Lomborg estimates the total hidden cost of credits and subsidies for renewable energy in the U.S. at $60 billion last year, suggesting the real costs of wind and solar generation are far greater than what its advocates claim. Ensuring America has enough electricity to meet future demand will require some major policy changes that allow existing and future base-load power plants to remain competitive and feed their electrons onto the nation’s transmission grids. In particular, the new Trump Administration and the U.S. Congress should revise or replace the onerous EPA “carbon capture” rules that were adopted last year. If they remain in force, the closure of both coal- and gas-fired power plants will accelerate since capturing up to 90 percent of CO2 emissions is neither economically nor technically feasible. The egregious subsidies for wind and solar farms that have been in place for nearly fifty years have served their purpose, with renew ables now accounting for more than 20% of installed generation capacity. It’s time to put them to the market test to see if they’re truly cost competitive with coal, gas, and nuclear. Coal, in particular, has a critical role to play in assuring adequate power for the ongoing electrification of America. Though oper ating thermal coal plants provide only 16% of America’s power today, these “always on” generators are critical for maintaining grid reliability, especially during extreme weather events which are becoming more common across the nation. As NERC warned several years ago, the accelerated closure of coal and nuclear plants may lead to power outages and transmission problems in many parts of the U.S. For decades, American households and businesses have benefited from an electricity delivery system built upon a mix of generation sources. To ensure this is the case in the future, we need to adopt policies and regulations that will keep base-load power in that mix.

Bernard L. Weinstein is retired associate director of the Maguire Energy Institute at Southern Methodist University, professor emeritus at the University of North Texas, and a fellow of Goodenough College, London. (Reprinted with the permission of Real Clear Energy)

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