Nearly halfway through a crucial decade in the fight against climate change, US utilities and investors are gearing up to introduce 133 new natural gas-fired power plants into the country’s grid, according to a report by S&P Global Market Intelligence. Alongside these plans, there are also developments underway for four oil-fired plants and two coal-fired plants.
Amidst mounting worries about escalating power demand fueled by electrification and industrial expansion, these proposals for new fossil fuel-based power generation have come to the forefront. The surge in Power Demand in the U.S. is evident, with electricity consumption in the United States reaching approximately 4,085 terawatt hours in 2022, as per Statista data. Projections suggest that by 2050, US electricity consumption could soar to 5,178 terawatt hours, marking a 27% increase from 2022 levels. In December 2023, grid regulators issued a caution about potential power demand outstripping supply in the upcoming decade. Notably, consulting firm Grid Strategies emphasized that the era of stagnant power demand is now a thing of the past.
Experts have raised concerns that long-term investments in natural gas infrastructure could jeopardize the nation’s objective of halving economy-wide greenhouse gas emissions by 2030, potentially leading to stranded assets. Lauren Shwisberg, a principal in the carbon-free electricity practice at RMI, stressed the necessity for a significant reduction in gas generation and emissions in the power sector by 2035. However, current utility blueprints indicate a different trajectory. RMI’s latest forecast, based on data from 121 utility resource plans, anticipates an 18% uptick in US natural gas-fueled power generation between 2024 and 2035. This trend underscores the challenges in aligning energy development with climate objectives, underscoring the hurdles in transitioning to a greener grid.
The imperative to Balance Climate Goals with Gas Infrastructure is paramount in limiting global warming to 1.5°C above preindustrial levels, necessitating states to slash emissions across sectors by almost 50% by 2030. Nonetheless, US CO2 emissions from gas plants were 39% higher in 2023 compared to 2017, as reported by the US Energy Information Administration. Notably, 2023 marked the first time that CO2 emissions from gas plants surpassed those from coal. The escalating energy consumption by data centers, propelled by the ascent of AI, has placed the energy industry in a challenging predicament. Estimates project a substantial surge in power demand from data centers, with the International Energy Agency forecasting energy use in data centers to skyrocket to around 1,050 TWh in 2026, up from 200 TWh in 2022 – equivalent to Germany’s energy demand. Ernest Moniz, head of the nonprofit energy research group EFI Foundation, highlighted the pressing power concerns during a recent interview, emphasizing the indispensable role of natural gas in a decarbonized world.
Despite the acknowledgment of natural gas’s relevance, US utilities are forging ahead with new natural gas projects, drawing attention from ratepayer advocates, environmental groups, and climate-conscious corporate clients. Regional Developments and Controversies have also surfaced. Wisconsin Electric Power Co., a part of WEC Energy Group, is seeking state approval for $2.1 billion in rate hikes to finance two new natural gas-fired plants, an LNG storage facility, and 33 miles of pipelines, as part of the transition from four coal units by 2025. In Arizona, the Salt River Project (SRP) is planning to integrate 2 GW of gas-fired generation by 2035 to accommodate 9.5 GW of renewables and storage, replacing over 1.3 GW of retiring coal capacity. SRP cites a projected 40% surge in demand over the next decade.
Critics, including the Sierra Club, have voiced concerns that SRP’s plan could exacerbate water issues, escalate costs, and worsen the climate crisis. SRP’s analysis indicated that non-gas alternatives would not be as reliable or cost-effective. In Texas and the Southeast, utilities are advocating for more natural gas generation. Duke Energy’s updated plans for the Carolinas encompass the addition of 10 new gas-fired units, aiming to boost capacity by nearly 9 GW by 2033. These “hydrogen-capable” plants are intended to aid Duke in achieving carbon neutrality by 2050, despite public apprehensions about rising costs associated with renewables. Georgia Power Co.’s proposal for over 1.4 GW of new gas and oil-fired power by 2027 received approval, despite Microsoft’s allegations of demand over-forecasting. The Southern Environmental Law Center estimates that these investments will cost customers approximately $3 billion.
Critics argue that regulators in states lacking emissions reduction laws are fixated solely on costs, disregarding the climate benefits. According to David Pomerantz, leader of a watchdog utility group, the attempts by utilities to strike a balance between decarbonization goals and the construction of new gas plants appear contradictory. As the US grapples with mounting power demands and endeavors to meet climate targets, the introduction of new fossil fuel plants raises significant concerns. The anticipated surge in natural gas infrastructure may clash with the nation’s commitments to reduce emissions, underscoring the complexities of harmonizing energy needs with environmental obligations.
