In the United States, electricity consumption is growing fastest in Texas, and among the main sources of growing demand for power are large-scale computing facilities such as data centres and cryptocurrency mining projects, reports the US Energy Information Administration (EIA).
According to the EIA’s latest Short-Term Energy Outlook (STEO), electricity demand from customers identified by ERCOT (Electricity Reliability Council of Texas) as large flexible load (LFL) – ie, expected peak demand capacity of 75 MW or more – will total 54 billion kWh in 2025, up almost 60% from 2024. This expected demand from LFL customers would represent about 10% of total forecast electricity consumption on the ERCOT grid in 2025.
These facilities consume large amounts of electricity, both to run their computing equipment and to keep them cool, and some of the larger facilities can consume as much electricity as a medium-sized power plant, notes EIA.
In mid-2022, ERCOT developed a programme for approving proposed LFL customers with the aim of maintaining grid reliability and managing anticipated strong demand growth. By requiring approval of projects and encouraging curtailment of demand when needed, the LFL process intends to minimise the risk of wholesale power prices spiking to levels of $1000/MWh or more.
Certain large-load facilities, primarily cryptocurrency mines but also data centres and some factories, have entered into voluntary curtailment agreements with ERCOT to temporarily reduce their power consumption during periods of particularly high system demand or low generator availability. As part of the programme, LFL facilities can participate in ERCOT’s energy and ancillary service markets. This flexibility in large-load operations can help mitigate some of the effects that strong growth in electricity demand is having on the ERCOT system.
Texas is pursuing other avenues to accommodate the expected increase in power demand from large computing facilities, such as the Texas Energy Fund, which is designed to encourage development of new dispatchable generating capacity.
EIA uses the information from ERCOT about current and future LFL demand in developing its STEO (Short-Term Energy Outlook) forecasts of regional electric load. It estimates that by the end of 2025, ERCOT will have approved operation of 9500 MW of LFL demand capacity, which would be 73% more than is currently approved (5479 MW).
Historically, LFL customers have consumed about 65% of their total approved capacity. In the STEO, EIA assumes that LFL demand is constant throughout the day at this percentage, so the expected 2025 capacity and its utilisation translate to an assumed total LFL of 54 billion kWh in 2025. This new electricity consumption from large computing and industrial facilities contributes to EIA’s forecast that ERCOT’s load across all customers will grow by 5% between 2024 and 2025.
Delays in the large-load approval process or in developers’ plans could reduce new large-load power demand next year. In its low-growth scenario, EIA assumes that no additional LFL capacity comes online in 2025 beyond what it expects to be operational at the end of 2024 (6500 MW). This assumption would translate into about 37 billion kWh of LFL electricity consumption in 2025 (32% lower than the baseline forecast of 54 billion kWh).
Conversely, it’s possible that ERCOT could quickly begin approving projects in the LFL queue at a faster pace. EIA’s high-growth scenario assumes that about 14 200 MW of LFL capacity will be operational by the end of 2025, leading to a forecasted 81 billion kWh of electricity consumption by LFL customers in 2025 (50% higher than the baseline STEO assumption).
In its baseline September STEO, EIA forecasts that ERCOT’s electricity load across all types of customers will grow by 5% from 464 billion kWh in 2024 to 487 billion kWh in 2025.
The largest source of power generation in ERCOT is natural gas, accounting for 45% of that region’s generation in 2023.
In its September STEO, EIA forecasts that annual natural gas fired power generation in ERCOT will fall by 5% between 2024 and 2025 to an annual total of 198 billion kWh in response to increased generation from renewable energy sources, particularly solar. A scenario assuming stronger growth in large-load demand results in 8% more natural gas-fired generation in 2025 than the baseline forecast, at 213 billion kWh.
The fastest-growing source of new power generation capacity in the United States is solar power, with growth concentrated in Texas.
EIA’s base case STEO forecasts that solar generation in ERCOT by the electric power sector will grow by 54% in 2025 to 67 billion kWh. Solar power is generally dispatched as generation whenever it’s available because it does not have operating costs (unlike fossil-fuel generation). It can also be curtailed to avoid grid congestion or if electricity demand is low at a particular time. In 2023, about 3% of solar output in ERCOT was curtailed. In its high-growth scenario, EIA forecasts 2% more solar generation than in the base case in 2025 because less output would need to be curtailed.
The other major source of power generation that could change under different assumptions about electricity demand trends would be coal, which accounted for 14% of ERCOT generation in 2023. Like natural gas, coal has more flexible generation patterns than renewables, and so changes in demand are more likely to raise or lower coal-fired generation. In EIA’s low-growth scenario, it forecasts 5% less ERCOT coal-fired generation in 2025 than the STEO base case forecast of 62 billion kWh and 12% more in the high-growth scenario.
