A recent study by the Energy + Environmental Economics, also known as E3, found that by 2030 the Northwest could reach a roughly 9-gigawatt gap between energy produced in the region and what its residents need. The study also found that the Northwest will need to rely on natural gas plants and may need to build more infrastructure to support it, but some think this is unnecessary.
The think tank Sightline Institute has a new report arguing that the energy shortfall is misleading and says there are other ways to save power, such as asking data centers to temporarily reduce their use during times when the grid is stressed.
Laura Feinstein is a fellow at Sightline. She joins us to share more.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Back in September, a consulting firm put out a study that was funded by electricity companies that found that by 2030, the Northwest will have a roughly 9-gigawatt energy gap. The study got a lot of regional attention, and some utility companies are now arguing that they need to build new natural gas-powered plants to meet that demand. But some other people say, not so fast. The think tank Sightline Institute has a new report arguing that the 9-gigawatt figure is misleading and that we can meet the region’s energy needs without burning more fossil fuels.
Laura Feinstein is a fellow at Sightline. She joins us now. It’s great to have you on the show.
Laura Feinstein: Thank you. Happy to be here.
Miller: You started your recent report with a short history lesson. Some forecasts were made in the 1970s by the Washington Public Power Supply System. What were those projections?
Feinstein: The Washington Public Power Supply System – which we, in retrospect, call “Whoops” – projected explosive growth across the Northwest region, around 6 or 7 gigawatts of demand growth and they expected sort of a steady rise of electricity demand, going forward. From that, they planned for five nuclear plants. They run a little over a gigawatt each output for power, to get to that total amount. Well, we only got one of those five because that demand never materialized.
Miller: Why not?
Feinstein: Why didn’t the demand materialize?
Miller: Yeah.
Feinstein: There was a bunch of things that contributed. The economics in the area changed dramatically. There was inflation and rising interest rates that sort of throttled industrial demand that was expected to explode. Then also, the Northwest consumers of electricity really bought into the conservation strategies that have carried us forward in more recent times, to pretty flat demand. So that explosive growth just never happened.
Four of the nuclear plants were canceled. Two of them ended up partially constructed. Unfortunately, this organization, which we’re pronouncing “Whoops,” defaulted on its construction loans. They were financed by municipal bonds and they were sold to Wall Street investors, and ratepayers are still paying for it. They’ve spent over $2 billion since the initial bonds were issued. And they still owe more than a half a billion dollars over the next two decades that should be paid off.
Miller: So that’s some important historical context. You say that about four decades later, the Northwest finds itself in a similar situation. What do you see as the parallels, the potential parallels, between then and now?
Feinstein: Before we jump into that, I just want to zoom out a little bit, in the larger moment we’re facing right now. We’ve got this new war in Iran and it’s resulting in soaring gas prices, soaring oil prices. Folks are really feeling it from gasoline, but they’re probably going to start feeling it with natural gas this winter. We’ve got a full out assault on clean energy from our federal administration. So Americans are on this fossil fuel roller coaster. They’re stuck. And we’re basically tied to price swings and political ups and downs. So the situation today isn’t all that much different than it was in the ‘70s during the “Whoops” era. We’ve got utilities who are acting on forecasts that really feel urgent and they could turn out to be wrong.
There’s already indications that these forecasts aren’t on very stable foundations. So today’s debate over the new gas infrastructure for power plants, it has a very similar sound to it. We’ve got highly uncertain demand and we don’t know how many data centers are going to site in the Northwest. We don’t know how quickly consumers are going to transition to electric vehicles and buy heat pumps to transition their fossil fuel heating systems off of gas to electricity. So in that respect, it has some similar features to the debate from the ‘70s. Then at the same time, we’ve got these cheaper, faster alternatives out there that could be brought to bear that utilities are not really focused on.
Miller: I want to focus, for a second, on this utilities-funded analysis that I mentioned briefly at the beginning. It was released in September by this energy consultant group E3. Can you tell us the basics of what that study put forward? Then we can talk about the issues you have with it. But first of all, what did they say?
Feinstein: First off, it’s the first part of a two-part study. The second part is to be released soon, hopefully. But we’re only working with the first part, which was to define the magnitude of the resource adequacy situation in the greater Northwest, which includes Oregon, Washington, Idaho, Montana and some slivers of states adjoining those four states.
Miller: I’ve got to say, just even to just stop you there. It’s a bigger definition of the Northwest region than we often work with or think about. Am I right that it even includes parts of Northern California?
Feinstein: I believe it does. In their materials they definitely have outlined parts of Northern California. I believe it includes the northern part that PacifiCorp serves electricity to.
Miller: It’s helpful just to think about, for background here, we’re not just, for example, talking about Washington and Oregon. It’s a much bigger Northwest/Mountainous region. OK, so that’s the area?
Feinstein: Yes, they defined this area. They looked at it. They said there was going to be a 9-gigawatt shortfall. Just to put 9 gigawatts in context, that’s about the power demand of the state of Oregon today. So it’s not small. And it’s the first part of this two-part study. The first part really focused on how big the problem is, or how big the gap or concerns around resource adequacy are.
Just to be helpful for your listeners, resource adequacy is a fancy industry term for how much power is going to be needed to serve demand during the most extreme times, like when people are demanding the most, like hottest summer days, coldest winter days. And also, when something breaks, like if a power plant goes down, can we serve demand under those conditions. So it’s how much power the region’s going to need to both meet that extreme peak as well as a little extra for a contingency, if something breaks.
Miller: What did the analysis say about how often or how likely that gap would be a problem? In other words, how many days out of the year we would actually be experiencing brownouts or simply not have enough electricity?
Feinstein: It’s a really short period. It’s under a week of days that are affected by this. For the Northwest, generally speaking, it’s in the wintertime. It’s like the coldest winter days. Although with folks adding air conditioning increasingly in Western Washington and Western Oregon, the summer peaks are also starting to grow.
So back to the study. The study projected this 9-gigawatt shortfall, but that was sort of misleading and a function of framing. Because 9 gigawatts didn’t account for any resources that were already planned to be online between now and 2030. If you factor those resources in, that cuts the problem down to closer to 5.5 gigawatts.
And it was just one point estimate. It didn’t account for a range of possibilities for how quickly electric vehicles would be adopted, how quickly consumers would electrify their homes and how much data center would there be. There’d be a range of opportunities for data centers. Not all data centers are going to get built. So they focused on one possible scenario and framed the shortfall of power with their big number, not accounting for resources already under development.
Then they’ve teed up for the second section what types of resources they’re going to be looking at. And they’re omitting one key resource that really has a tremendous impact on resource adequacy, and we’re calling that large load flexibility – the ability for large loads, like data centers, to curtail their electricity use when the grid is stressed.
Miller: Let’s talk about how that worked. That’s something that another study that was funded by a nonprofit called GridLab and done by a group called Sylvan Energy Analytics. That’s one of the things that they focused on, was how this analysis would change if data centers were forced – I guess forced is the right word, correct me if I’m wrong – to turn off a couple of days a year at peak load, say, in winter. What’s the model for how that would work?
Feinstein: Sylvan ran through several scenarios of growth for the region and found that most of the scenarios could be solved, the resources could be built easily enough, if we included a requirement for large industrial loads to provide this flexibility. That would be for a few hours a year, asking data centers to throttle back their electricity use. Data centers are pretty sophisticated. And, as it turns out, even though one policy intervention would be to force them, like Texas has done, to drop their electricity use during times of grid stress. Already PGE, Portland General Electric, has a program that says, “Hey, data center, you can get online, get onto to our system faster if you agree to this.” And they have subscribers.
So, data centers are open minded about this. They are willing to do it. But at the same time, I suppose they don’t want to be forced because, at least in Washington state, there was a bill this year that was killed by the data center lobby that would have allowed utilities to force them to curtail their loads. That was a very unpopular provision, which got axed out of an early version and then the whole bill failed in the end. It’s a tricky policy, but it certainly is one that would allow us to keep the lights on for other consumers and prevent brownouts and blackouts for critical facilities like hospitals and whatnot, and implement a solution that doesn’t tie us to this fossil fuel roller coaster and building more gas plants, in the near term.
Miller: To go back to this question of building more fossil fuel infrastructure and getting more electricity from burning fossil fuels, that’s something that Puget Sound Electric Energy and other utilities are now talking about in the Northwest. But both Washington and Oregon have laws that limit the construction of new fossil fuel power plants. What would it take to get around those laws?
Feinstein: Yes, you’re right. It is tricky to build, in Washington and Oregon, a new natural gas plant, but it’s not impossible. In Washington, the Clean Energy Transition Act, the 100% Clean Energy Act, has some relief valves in it that would allow utilities to build gas plants, if they could prove that resource adequacy, specifically, is impacted. In Oregon, it’s a little trickier to build a gas plant in the state. But the consumer-owned utilities, the public utilities, it’s totally legal for them to import fossil fuel generated electricity from out of state.
That’s a guardrail that Oregon still needs to establish. They have guard rails for the investor-owned utilities like PGE, they are not allowed to do that, but the consumer-owned utilities are. And increasingly, we’re seeing that happen. Some of the public utilities out in the eastern part of the state are doing that.
Miller: Let’s say that a new gas power plant was built – and some of them were built – is there sufficient gas and pipeline capacity currently to feed them?
Feinstein: That’s another part that’s a real head scratcher because the gas infrastructure for the region is fairly subscribed, especially during a peak grid event. The most recent one in 2024 demonstrated that there wasn’t excess gas capacity. So, if we’re going to build new gas plants, we’re going to build new gas pipelines as well. And it just seems like a slippery slope to meeting our clean energy goals and our emissions reduction goals, if we’re going to be investing in these major fossil fuel infrastructure components just 25 years away from when we’re trying to become independent of these types of power solutions.
Miller: I want to go back to what you were saying earlier and the lessons from the 1970s and 1980s when, among other things, conservation strategies and efficiency improvements really did have a big impact on the region’s energy needs. How much is that still the case today? When there have already been a lot of efficiency gains, how much more can be achieved meaningfully simply by improvements in efficiency?
Feinstein: There’s still quite a bit of low-hanging fruit out there, in terms of energy efficiency. Energy efficiency has done most of the heavy lifting in keeping the demand for the Northwest fairly flat over the past several decades. There’s still a lot of opportunities. Then there are some other programs out there for the smaller version of large load flexibility, asking households and smaller businesses to shift their loads to times when the grid isn’t as stressed as well. It’s called demand response. Some utilities in the area are already running programs especially aimed at industrial customers, which have the ability to deliver power when the grid is stressed. There’s also some really common-sense reforms that states can make to permit and get those transmission lines up so we can bring in cleaner generation from other states, from other areas.
The transmission building process is really broken. My colleague Kelly Trumbull has a new piece out about some common-sense reforms that Oregon could make to remove the red tape and sort of fall in line with the other processes. And make it simpler for utilities and others to build transmission lines to bring in power from out of state to address this resource adequacy problem and achieve our clean energy objectives.
Miller: Just finally, we’ve been talking about power plants that would be connected to the grid that would power our homes and businesses, and potentially data centers. But meanwhile, tech companies are also talking about and building their own power plants to power their data centers, bypassing the grid. How does that fit into this story?
Feinstein: That’s a complicated piece. It would be very difficult for a data center to be completely off grid, because they’re going to want to have a lot of redundancy, so that when their power plant goes offline, whether it’s intentional or a contingency, that they have some backup. It’s hugely expensive for them to do that. They still do need to connect to the grid and these policies around the grid connection do impact them.
I think there’s a lot of flurry, there’s a lot of speculation. And sure, some folks are buying airplane engines to power their data centers. But I don’t think that when everything shakes out that’s going to be the conventional way of doing things. It’s probably just a knee-jerk reaction right now to the reality that they can’t get power very quickly. But yes, that certainly is an avenue that data centers could look at, but it’s hugely inefficient and it’s going to cost them a bundle both in capital and in operating costs.
Miller: Laura Feinstein, thanks very much.
Feinstein: You’re welcome.
Miller: Laura Feinstein is a fellow at Sightline Institute.
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