As the energy landscape across the country changes, the efforts to provide reliable, affordable and clean energy face significance challenges in lengthy permitting processes, industry leaders said during a Loudoun Chamber of Commerce forum Thursday morning.
The demand for power is outpacing its generation growth and the availability of new infrastructure required to transmit it. In January, PJM Interconnection, the regional power coordinator for 13 states including Virginia, released an updated load forecast with its expected demand for 2030 increasing by 16 GW over last year’s 2030 forecast. In addition, Virginia now imports approximately 40% of its power, up from just 18% in 2020. The state is expected to need to double its power generation over the next 10 years, according to Gov. Glenn Youngkin.
Energy Bipartisan Policy Center Executive Vice President David Hill said uncertainty currently surrounds all aspects of the energy market, including technology, environmental policy, affordability and load growth.
“Though we’ve got uncertainty about the future, what are a few things we do know? We know that demand is increasing fast. Data centers, it’s not only data centers—electric vehicles, industrialization, homes. A lot of homes that are now solely electric, they don’t operate on natural gas at all anymore. We know costs are increasing,” he said.
In addition to that, reserve margins, which are critical to providing reliable power to the country, are narrowing.
“And a lot of our generation, transmission and distribution system … is old, incredibly old. A lot of it is really, really old. That doesn’t mean it doesn’t still work well, but like anything else, as things get older, they get they get more brittle. They can be more difficult to maintain,” Hill said.
Despite that, reliability has to be maintained because the power grid is critical to the nation’s economy, he said.
“I’m not even just talking about the businesses that many of you all operate that are hospitals and data centers, where you’ve got to have you got to have 24/7/365, reliability. I’m just talking about reliability for people with their homes. The reliability has to be maintained and to do that. Resource adequacy is paramount,” he said.
In addition to the electricity needed for businesses, hospitals, police departments and fire stations, the grid powers data centers, which now provide critical services across the world.
“Our data centers host critical computing modes, just as critical as electricity is,” Equinix Head of Energy Policy Cy McGeady said. “Think how critical the internet is. Every single business operation runs on these data centers all day long. Every single hospital, critical public function, national security, Department of Defense, intelligence community, all these assets are running through these data centers all day long and they can’t just shut down. Everything would stop, right? That’s not a sort of viable solution for us as a nation.”
To provide resource adequacy, more generation needs to be built, but a significant challenge to that is the existing permitting processes at each level of government, Hill said.
“The permitting system in the United States is way too expensive. It takes way too long. It is way too litigious. Way too many things are decided by the courts and judges who don’t know anything about what they’re talking about when it comes to the issues of environment and energy. The permitting system in the United States has to be working. That is right at the top of the agenda of the Bipartisan Policy Center,” he said.
Permitting reform is necessary, Hill said.
“We need greater transparency about costs and cost allocation and cost causes. This goes right to the issue of affordability,” he said.
For PJM, which is coordinating projects across the region, the process of bringing new generation online is complex and must go through the organization’s interconnection queue, PJM Manager of Regulatory and Legislative Affairs Dave Rardin said.
“Our teams of engineers at PJM are studying to make sure that infrastructure can accept that new power at that spot on the grid and get it to where that power is needed,” Rardin said. “So, it’s a really complex process, and every generator kind of interplays off one another and impacts the grid differently, but what that ultimately means is you need to invest in transmission infrastructure generally, to make sure you can bring on that new demand. So really simplistically, PJM has undergone a lot of reforms in this space to speed up that turnaround time. By April of next year, we’re looking at a two- to one-year time frame for when a project says we want to interconnect to the transmission system to when we’ll give them the greenlight to do so.”
But federal, state and local permitting processes can make it difficult to advance projects through the pipeline. Supply chain issues can also lengthen project timelines.
Existing permitting processes also impact costs.
“Typically, it takes three years to build a power plant,” AWS Eastern U.S. Energy Policy Manager Ray Fakhoury said. “However, if you can’t get it sited, and you can’t get it permitted, you can’t finance it, you can’t go out and put deposits—and all of that is driving time and driving costs. So, when we think are costs going up because of data centers, no, costs are going up because it takes us 10 years to build something. And in that 10-year time period, we’ve seen fuel prices go up. We’ve seen supply chains go up. We’ve seen inflation go up.”
The longer a permitting process takes, the more it costs to complete the project.
“All these great engineers are doing a ton of studies, and every few months we come back and we’ll say, ‘well, hey, this county wants us to move this project over here. Can you rerun a study for us?’ And they’ll say, ‘sure,’ that’s another year and that’s another year,” Fakhoury said.
In Virginia, once a large utility project has been approved by PJM is still needs to go through state and sometimes local governments for approval. Several are ongoing in Loudoun currently including Dominion Energy’s Golden to Mars transmission line that has been opposed by county residents because of its proximity to neighborhoods and schools. The timeline for that project has been delayed by the State Corporation Commission to allow for more public input.
It will take continued partnerships to work through these challenges, speakers said.
“Really the moment is more about innovation in partnerships and models, rather than necessarily innovation in technology, because so much of the technology is so mature,” McGeady said.
Those innovative models can include fuel cells, batteries, smaller gas turbines and solar.
“The way we’re going to do this is by deploying these really innovative models of getting these assets online as fast as we can and frankly, that ends up back right where we started, which is a permitting issue. A lot of the roadblocks that we face for deploying these decisions is not that, are you willing to pay for them? Yes, we love to pay for them. We love to build them. Can we get them permitted at the state, at the local, at the federal level? Can we get the contractual arrangements approved between us and the utility with the regulator … can we get the project studied and through the queue?” McGeady said.
Prologis Global Head of Utility Strategy and Engagement Parag Soni said Prologis is working to provide those innovative solutions across the world. Because the company manages 1.3 billion square feet of warehouses, it is focused on becoming a large player in global energy, Soni said.
“With that square footage, we have a significant amount of rooftop space to put solar, but we’re doing both behind the meter solar, we’re doing storage, we’re doing microgrids, and we’re doing generation, and so we’re becoming a very big energy player and trying to help both the grid and our customers become energy independent,” he said.
“When we think about these challenges, we’ve done this before. We’ve been able to navigate these challenging terrains and do so pretty effectively. We just all have to work together here, and I think we can really get there,” Fakhoury said.
