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2025 INDUSTRY FORECAST
example, Trump expanded liquefied natural
gas (LNG) export capacity in his first
term and has indicated he supports further
capacity growth in his second term.
Baringa estimates there is about 30 million
tonnes per annum of unmet U.S. LNG
demand in the global market, which could
easily be met with approval of roughly
35% of the LNG capacity that exists in
the current export terminal development
pipeline. However, such action could result
in higher U.S. natural gas prices, potentially
affecting the power industry, at
least in the near term.
Another aspect that could hurt the
power industry involves cost of capital.
" Trump's economic policy is expected
to be inflationary. He is proposing $7.5
trillion of additional deficit spending
pumping domestic demand with an extension
and expansion of tax cuts. Similarly,
proposed trade tariffs will raise
input costs in the U.S. economy. Combined
these push up inflation expectations, "
the report says. Barring some
unusual action by the Federal Reserve,
this would keep the cost of capital elevated
for the foreseeable future.
Meanwhile, there are wheels in motion
that the Trump administration will be
hard-pressed to stop, most notably, the
shift away from fossil fuels and toward
clean energy. " Since 2005, the U.S. has
been reducing CO2
emissions from fossil
fuel usage at a little over 1% per year on
average. This rings true across the Bush,
Obama, Trump 45, and Biden administrations.
Said differently, the train has left
the station and the U.S. will continue
to decarbonize over the coming years, "
Dave Cherney, head of PA Consulting
Group's Energy Policy and Regulatory
Engagement team, told POWER.
" This is not to say federal policy is
not important to new clean energy development;
it is a highly important factor.
However, it is one of many important
factors in the development of new energy
resources. Others include state
policy, market structure, power market
economics, interconnection processes,
and siting, among others. Driven by tight
supply-demand conditions enhancing
the relative economics, state policies,
and corporate ESG [environmental, social,
and governance] demand, we will
continue to see significant clean energy
development over the next four years, "
Cherney said.
Demand from Data Centers
As alluded to earlier, data centers are
expected to dramatically impact the
January 2025 | POWER
power sector and the industry is taking
note. " Globally, electricity demand
for data centers is projected to double
by 2030, according to reports by the
International Energy Agency and other
industry reports. This is primarily driven
by growth in the number of IoT devices,
AI, and cryptocurrency, and is forecasted
to be in key regions around the world,
including the U.S., Mexico, Western Europe,
India, and Southeast Asia, " Mario
Sawaya, vice president and leader of the
Global Technology Market sector at AECOM,
a global infrastructure consulting
firm, told POWER.
" The impacts of increased data center
consumption are being felt today. According
to EPRI, between 2017 and 2021,
electricity used by the major data center
providers more than doubled, " Sawaya
said. In a data center load growth assessment
EPRI released in May 2024, it estimated
data centers will consume up to
9.1% of U.S. electricity annually by 2030
versus an estimated 4% today. " This unprecedented
growth in electricity demand
is forcing the power industry to re-evaluate
business as usual, " Sawaya added.
Yet, some observers believe the load
growth forecasts around data centers
are overblown. Nathan Blom, co-CEO at
Iceotope Technologies and an expert on
advanced liquid cooling technologies,
said unprecedented demand for highperformance
computing will continue,
but the energy needed to support this
may be less than expected. " Sustainability
will command center stage in
data center design and operations, as
a necessity to efficiently utilize limited
energy from the grid, " Blom asserted.
" Liquid cooling will become the new
standard
Lovins said NVIDIA, the dominant
supplier of AI microchips, has achieved
two to four orders of magnitude gains in
system efficiency in each generation of
their chips and firmware. " That's already
happened and a lot more like that on the
way, " he presumed.
Still, many power companies must
deal with data center power demand
today and can't wait for efficiency improvements
to alleviate the problem.
" The challenge for the grid owner is the
ability to construct the facilities to serve
the data center loads in the time frame
that they're requesting it. Utilities generally
have not forecasted these significant
loads coming online in the short time
frame that data centers are requiring, so
the infrastructure and capacity to serve
them is not available, " Sawaya said.
The problem has come to a head in
Central Ohio. Electricity demand in the
region is expected to more than double
by 2030, driven largely by data centers.
In May 2024, AEP Ohio, an American
Electric Power company, filed a proposal
to reconcile the costs of infrastructure
improvements required for Ohio's growing
data center industry. A settlement
agreement was filed in late October.
The agreement, which is subject to
for HPC [high-performance
computing] and AI workloads, reducing
energy use by 40% over current aircooled
environments. "
Amory Lovins, adjunct professor and
adjunct lecturer in Civil and Environmental
Engineering at Stanford University,
and co-founder and chairman emeritus
of RMI (founded as Rocky Mountain Institute),
also believes there is large potential
for efficiency gains. " I think help
is on the way, and there's history behind
this, " Lovins said during a press briefing
hosted by Hastings Group Media
in early October. " [From] 2010 to 2018,
the amount of data center computing
done-in, I believe it's the world-rose
by 550%, and the electricity they used to
do that rose by 6.5%. In other words, the
efficiency gains almost completely offset
the growth in activities. "
www.powermag.com
review and approval by the Public Utilities
Commission of Ohio, requires large
new data center customers to pay for
a minimum of 85% of the energy they
say they need each month-even if they
use less-to cover the cost of infrastructure
needed to bring electricity to
those facilities. It also creates a sliding
scale that allows small- and mid-sized
data centers more flexibility. Additionally,
it requires data centers to provide
proof they are financially viable and able
to meet those requirements, as well as
to pay an exit fee if their project is canceled
or unable to meet the obligations
outlined in the electric service agreement
contract. The requirements would
be in place for up to 12 years, including
a four-year ramp-up period. The agreement
also outlines a process to end the
moratorium on new Central Ohio data
center agreements.
" The issues and challenges are not
unique to Ohio, " said Sawaya. " AEP Ohio
has taken the unique approach of proposing
an industry-specific tariff for data centers.
This could have impacts not only to
data centers, but could also set the precedent
of establishing tariffs by industry
rather than usage characteristics. " ■
-Aaron Larson is POWER's
executive editor.
19
http://www.powermag.com
pwr_january-2025

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