One of the most significant points of contention as the world moves to a more renewable-based energy generation mix is the need for grid modernization, allowing for higher power distribution and generation levels. Grid modernization will only become more critical as electric vehicles enter the market and data centers are built. After more than 15 years of consistent energy demand in the US, we are finally starting to see an increase. While power needs have remained relatively consistent since 2007, the energy demand of data centers, electric vehicle charging infrastructure, and domestic manufacturing will result in a compound annual growth rate for power demand of over 20% until 2030.
A report by McKinsey & Company on the growth of data centers found that the power required by data centers will triple current capacity by 2030. This reflects a rise from 3-4% of US power demand to 11-12%. This report expands on the constraints of data centers placed on them by the power sector. These include limitations on power sources, upstream infrastructure for power access, and power sustainability.
Vic Shao, founder and CEO of DC Grid, spoke about how providing DC (direct current) generation could be an option for such a scenario. He outlined how today’s world may not need to rely on the same AC power grid of the past. Renewable energy is generated in direct current, and many of the large off-takers of the future, whether they be DC fast chargers, data centers, or decarbonization of industries like steel, will require an immense power supply. Vic further outlined the technical benefits of using a DC power grid. By removing the process necessary for converting DC to AC power, generators could save as much as 20% of potentially lost power. This number could be even higher when conductive and heat-related losses are considered.
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As the reliance on the grid continues to grow, large-scale users may not want to be wholly reliant on the power grid for access to energy. In the past, some large users have been asked to limit usage during high demand. Additionally, the delay in getting power connections is increasing in California, Arizona, and Virginia data center hubs. The US Energy Information Administration found that the continued investment by utilities to produce and deliver electricity rose 12% from 2003 to 2023. This was driven by replacing or upgrading aging infrastructure, battery storage projects, renewable energy projects, and new lines to these renewable projects. Interestingly, the rise in total cost can be attributed more to distribution than production. From 2003 to 2023, production spending fell by 24%. By contrast, that same period saw an increase of 160% in investment in distribution infrastructure.
A US Department of Energy Report on the topic spoke about the impact of having a “smart grid” capable of using improved technologies and controls to improve resilience and reduce the effects of outages and weather impacts. The technologies required for smart grid work use two-way communication and sensors, allowing for better grid stability monitoring. A leading company in this field, Buzz Solutions, recognized this need for more information on stability resiliency from the grid and incorporated AI tools to improve grid transmission and distribution. I was fortunate enough to speak with Buzz Solutions founders Kaitlyn Albertoli and Vikhyat Chaudhry on the need for grid infrastructure improvements. Perhaps the most important takeaway from this discussion was the emphasis on just how outdated aspects of the grid have become. Built in the 20th century, there are significant areas that are 45 and 50 years old. Kaitlyn and Vik emphasized the new goals that have been set for renewable generation and strains from off-grid projects and electric vehicles coming online.
Both the incorporation of DC technologies and improved intelligence gathering for grid resiliency are mentioned in the Grid Modernization Strategy published by the Department of Energy. Investment in the grid is not simply building but improving existing infrastructure. In the case of DC Grid, this may mean that certain aspects of the grid that are putting undue strain on transmission, such as EV charging, could incorporate direct current solutions. As for the current grid infrastructure, there needs to be a quick and efficient way to update it. As I constantly find myself saying when writing on issues as significant as the US energy grid, there is no silver bullet.
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