With energy demand surging, utilities fall back on their old standby: Fossil fuels.

This coverage is made possible through a partnership with WABE and Grist, a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future.

Georgia is enjoying an economic boom. Lured by tax breaks, high-tech data centers and manufacturers are flooding the state. It’s a trend state leaders are celebrating at every opportunity.

“We have seen over 171,000 new jobs come to our communities, we brought in over $74.5 billion of investment to the state,” Governor Brian Kemp told a gathering of lawmakers, business leaders, and other Georgia bigwigs earlier this year.  

But that growth has created a problem: all the new businesses need lots of electricity. 

The state’s largest electric utility, Georgia Power, now says it needs significantly more energy, significantly sooner than planned to meet the spike in demand. So the company is asking to buy and generate that electricity. Their plan calls for solar power coupled with battery storage, but it relies heavily on fossil fuels, including three brand new turbines to be powered with oil and natural gas.

Customers and clean energy advocates alike are decrying this plan. Large groups of students and medical professionals have dominated the public comment sections of hearings over Georgia Power’s request, pleading with the state’s Public Service Commission to reject it.

“Fossil fuels kill. They kill our ecosystems, they kill our people, and more importantly, fossil fuels will kill our future generations,” Emory University student Dakota Tauteeq told the commissioners.

A version of this is playing out all over the country, because for the first time in years, power demand is growing. Electricity-hungry data centers are popping up to serve everything from email and digital medical records to artificial intelligence and cryptocurrency. Federal policies that favor US-made versions of electric vehicles, solar panels, and other technology are bringing manufacturing back stateside. The fight against fossil fuels is driving people to electrify previously gas-powered cars and appliances.

All that is testing the heart of the Biden administration’s climate policy: making it cheaper and more attractive for utilities to use renewable energy instead of climate-warming fossil fuels.

The Inflation Reduction Act, passed in 2022, includes $125 billion in tax credits for electric companies that choose wind, solar, and battery storage. The idea is that incentive will tip the scales, so when a utility needs to make energy it will choose renewables over fossil fuels.

“It’s this great big pool of money, this game changing piece of legislation for them, with millions and millions of dollars that they can take advantage of,” said Sierra Club analyst Noah Ver Beek.

But it’s not clear that utilities are taking full advantage of that giant pool of money. Like Georgia Power, many utilities still want to expand fossil fuel plants, or build new ones. 

Ver Beek and his colleagues studied the energy plans of 50 utilities that have been submitted or updated since the law passed. They found that about a third failed to include the new clean energy provisions in their models at all, while many that did failed to account for the full potential of the incentives. For instance, many didn’t consider the bonuses that the IRA offers for locating projects in communities affected by the fossil fuel industry, offering competitive wages, or using U.S.-made technology.

“That, for one, is just a lack of ambition on the utilities,” Ver Beek said. “If you can get an extra 10 percent off the cost of your project, that’s a lot of money that is being left on the table.”

Even when utilities pursue tax credits for their clean energy projects, as Georgia Power said it will, many are still turning to fossil fuels as well.

That’s because the tax credits are running up against the nationwide jump in energy demand. Faced with so much demand, Bank of America utilities analyst Julian Dumoulin Smith said that utilities are falling back on their old standby: fossil fuels.

“What we’re seeing is a growing trend to go back to gas plants, mostly to effectively backstop the grid,” he said.

The idea, he said, is not to run new gas plants all the time, but to turn them on for limited periods when demand for energy is highest — think, when it’s very hot or very cold, so people start cranking their air conditioning or heaters.

This concept is known as a “peaker plant,” and it reflects how utilities plan. They base their plans not on the typical amount of power being used most of the time, but on those highest peak hours. That way, the utilities can guarantee they’ll have enough power without resorting to blackouts. Many utilities consider fossil fuel plants to be the only reliable way to meet demand peaks, because they can be turned on quickly to immediately meet the need. 

But that’s not true anymore, said Shelley Robbins, who works on the Phase Out Peakers project for the nonprofit Clean Energy Group.

“The good news is there are now alternatives,” she said.

Those other options are a bit more complicated than flipping the on/off switch at a power plant. They require utilities to run the grid more creatively, instead of solely making power and sending it out to meet demand.

Electric companies can reward people for using less energy during those hours of peak demand, an approach known as demand response. They can improve power lines so they can carry more electricity, called reconductoring. Utilities can even help a lot of homes and businesses install solar panels with battery backup, then draw on all those batteries when they need extra power, a concept known as a virtual power plant.

Various utilities around the country have tried all these methods and proven they can work. 

But, Robbins said, the regulators who approve utility plans and the lawmakers who set state energy policies, are used to turning to experts when they make decisions about complex issues like this — and the experts they trust are still in the fossil fuel industry.

“That voice is still there, that is still speaking to legislators and to utility regulators, and you know, whispering in their ear, that fossil is the only solution and it simply is not true,” she said.

Robbins says regulators, lawmakers, and utilities need education about these alternatives — and the fact that they’re now reliable solutions for climbing energy demand. The fate of U.S. climate policy and planet-warming emissions depends on making this shift.

Andy Posner, CEO of the climate-focused nonprofit Capital Good Fund, testified in the Georgia hearings:

“The commission should direct Georgia Power to develop and file a plan for expediting interconnection and witness testing of customer-sited solar energy and storage systems…”

That’s energy nerd speak for “more solar on homes and businesses, and batteries to go with it.” 

The idea here is that rooftop solar can be more than a way for an individual homeowner to save a little money and go green. It can also back up the energy grid. When demand for power peaks – say, on a hot day when everyone is maxing out their air conditioning – the utility could draw some power from a whole lot of individual customers’ batteries to cover any gaps.

That’s just one alternative to adding fossil fuels. Others have suggested beefing up transmission lines so they can carry more electricity at once, and incentive programs to lower the all-important energy demand peaks.

This story was originally published by Grist with the headline With energy demand surging, utilities fall back on their old standby: Fossil fuels. on Mar 29, 2024.