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Corporate Actions Playbook

The following represents an initial release of the ZEROgrid Playbook, a living document that will be expanded and revised over time to reflect new insights.

Key Challenges to Reliable Grid Decarbonization

There are four interconnected challenges inhibiting the transition to a reliable, carbon-free grid: 

  1. Dramatic Load Growth
  2. Constrained Carbon-Free Electricity Deployment 
  3. Slow Grid Infrastructure Expansion
  4. Lack of Certainty to Catalyze System-Level Planning 

1. Dramatic Load Growth

While electricity usage in the United States has been flat over the last 20 years, several emerging trends are poised to rapidly expand electricity demand in coming years and potentially doubling consumption by 2050. All potential causes of load growth can be mitigated by increased energy efficiency, and the ultimate magnitude of future load growth is unknowable, but an emerging consensus suggests that climate-aligned economic growth will require more, not less, electricity. This will, in turn, strain the ability of electricity providers to meet customer demand with clean energy. Key potential sources of new load growth that are relevant for companies to consider include: 

  • Commercial Building Electrification: In 2022, commercial buildings consumed one-third of all US electricity, over 1300 TWh; fully electrifying these existing buildings alone could eventually double their electricity demand, depending on the level of end-use efficiency achieved. 
  • Datacenter Expansion: Datacenter demand in the United States is estimated to be 22 GW and will jump to over 40 GW in only a few years based on the currently disclosed development plans. Electricity supply is already limiting data center deployment, and the explosion of interest and investment in artificial intelligence is poised to place data center providers and utilities under even more pressure to rapidly expand capacity.  
  • Electric Vehicle Adoption: EVs are poised to grow 22 times by the end of the decade (from 2 million in 2023 to 44 million in 2030 per RMI analysis), adding an annual demand of ~200 TWh to the US electric grid. 
  • Industrial Expansion and Electrification: The industrial sector represents one-third of total US energy consumption. Ongoing efforts to decarbonize industry through direct electrification and the electrolytic production and utilization of green hydrogen as an alternate fuel source — combined with onshoring of manufacturing driven by the Inflation Reduction Act (IRA) and other federal acts — will dramatically increase industrial electricity consumption within the next decade. 

2. Constrained Carbon-Free Electricity Deployment

Although the IRA introduces financial incentives to support clean energy deployment, there remain significant obstacles to integrating the new clean energy resources into existing grids. Most notably, connecting to the grid has become an increasingly expensive and time-consuming process due to a lack of available transmission capacity. Interconnection queues are used by Regional Transmission Operators (RTOs) and Independent System Operators (ISOs) to ensure that the local grid can safely absorb and transmit the energy generated by a new facility. However, the current studies and processes were not designed to manage the volume of projects now being proposed, and as a result, interconnection queues are now creating a severe bottleneck for new clean energy deployment. For projects that secured an interconnection agreement in 2018–2022, the median study duration exceeded three years in PJM, SPP, NYISO and MISO

Other barriers similarly threaten to slow the pace of carbon-free electricity resource investment relative to its economic potential and the level needed to reach climate targets. Challenges around financial incentives and structures for utilities and other asset owners can limit the level of affordable clean energy investment. Challenges around community acceptance, permitting, and other project-specific factors can slow investment even when interconnection and financial hurdles are met.

3. Slow Grid Infrastructure Expansion

In order to deliver the new carbon-free electricity to load, the United States will need to overcome current barriers to rapidly expanding its ability to transmit and distribute electricity. On the transmission side, some studies estimate a need to double or even triple system capacity, but even high-profile attempts to build new multi-state lines have failed to overcome key obstacles. Meanwhile, distribution systems must similarly be upgraded to handle growing electricity consumption and peak loads within communities, which may ultimately require trillions of dollars in investment

  • Transmission: Recent research demonstrates that the United States could cost-effectively achieve climate targets by expanding electricity transmission systems by up to 60% by 2030, and up to 200% by 2050. Without this regional and inter-regional transmission, two critical challenges persist. First, the local grid is less able to absorb the generated electricity, further contributing to the interconnection challenges described above. Second, the local grid is less flexible to react to outages such as those caused by severe weather events that can interrupt local electricity generators (including those powered by fossil fuels) and leave millions without power.
  • Distribution and Charging Infrastructure: In addition to building out the large transmission lines that act as the superhighways of electricity, US utilities are facing the more distributed challenge of upgrading local distribution infrastructure. These processes, which were developed when load growth was modest, are often reactive in nature, and as such are not optimized to anticipate or most cost-effectively address the level of demand growth likely under climate-aligned electrification scenarios. Meanwhile, the relatively slow process of deploying infrastructure to meet large loads, such as heavy-duty EV charging stations, is already proving too slow for logistics companies seeking to electrify their fleets. Failing to expand the distribution and charging infrastructure at a sufficient pace could jeopardize grid reliability and limit customers’ ability to adopt clean technologies.

4. Lack of Certainty to Catalyze System-Level Planning

The three challenges listed above, in combination with other factors, are creating a high degree of uncertainty for energy market planners. These sources of uncertainty make it more challenging for grid operators and utilities to efficiently plan and deploy a reliable, carbon-free grid. Specific, key areas of uncertainty include: 

  • Magnitude and Location of New Load: In light of the potential dramatic load growth described above, grid operators and utilities are challenged to accurately forecast and plan for the location, amount, and pace of load growth. This positions them to be more reactive than proactive in planning the necessary generation and transmission investments required to meet future demand. This uncertainty then impairs companies’ ability to accurately predict where and when interconnection opportunities will emerge, with the result of slowing investment and further adding to the grid operator’s underlying uncertainty. 
  • Magnitude and Location of New Generation: The challenges associated with carbon-free project development discussed above (e.g., interconnection, permitting, etc.) similarly create significant uncertainty for grid operators. For example, in 2021, project developers had 1400 GW of proposed renewable capacity in interconnection queues, but only 20% or less of these projects were likely to ever be completed due to permitting issues or other challenges. This low completion rate creates significant uncertainty for the grid operators as they plan to meet growing electricity demand.  
  • New Technology Performance: Grid planners and utilities are increasingly being presented with new technologies that could enhance grid performance, mitigate the amount and pace of new capacity needed, support reliability and resilience, and reduce emissions. However, these technologies may require additional real-world research and testing to provide the certainty that grid operators need to confidently incorporate them into system planning efforts.