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Power Hungry: Electricity Demand Doubles in One Year

Posted: Apr 11, 2024

In a recent report, America’s electrical grid planners essentially doubled their projected electricity demand forecast from the year prior. The Washington Post reflected on this trend and observed the U.S. is “running out of power.” At the top of the list for what’s driving this demand is federal policy with “domestic content requirements” – federal dictates on how products are made. 

5-year nationwide growth forecast per Grid Strategies

The grid planners projected that over the next five years, America’s electrical grid will need to bear an additional 38 gigawatts of electrical demand – roughly double what the same projections had expected the year prior. And this is no small upside correction – for context, New York City consumes about 5 gigawatts on a given day. So, in one year, America’s grid planners re-estimated electricity demand by almost 4 Big Apples.

Fundamental to this demand growth is federal policy. The current administration, enabled by Congress, has become enamored of policy approaches that pair federal mandates with taxpayer subsidies. Everything from housing, to education, healthcare, and energy, the administration has seen rising costs as an invitation for more federal dollars. Among the more conspicuous recent examples is the Inflation Reduction Act, which along with other policies, has committed $670 billion in spending and tax credits to subsidize green energy. 

This massive spending is especially striking given that the U.S. Department of Energy projects that the vast majority of U.S. energy production will continue to be generated from fossil fuels. Indeed, the actual share of fossil-fuel production in 2023 was higher than was projected.

While the administration has made clear its antipathy to fossil fuels, an energy grid unprepared to add the equivalent of four New York City’s in the next five years will likely need more, not less, fossil fuel generation.