Musk urges US power utilities to prepare for higher than expected grid demand

Source: By Brandon Mulder, S&P Global • Posted: Wednesday, June 14, 2023

Elon Musk took the stage at the Edison Electric Institute’s 2023 conference June 13 imploring electric utilities to up their projections for what grid demand will look like in a fully electrified net-zero economy.

“I can’t emphasize enough, we need more electricity,” Musk said. “However much it is you think we need, it’s more than that, I assure you. … And we need it as fast as possible.”

In California, for instance, the state’s plan to reach net-zero emissions by 2045 would require the electrification of a swath of new industries, including electric vehicles, green hydrogen production and, among others, data centers. According to the California Air Resources Board’s latest Scoping Plan, the plan projects that electricity demand would increase by 68% over 2022 levels as the state rapidly deploys clean technologies across various sectors.

But Musk believes these projections are too low.

“I think basically there will be much more load than that, by like a lot,” he said.

“It’s going to be 3x current [load], and I think that 3x number probably happens around 2045ish,” he said. “The one thing about exponential growth is it really is counterintuitive and underestimated.”

Other industry leaders share Musk’s view. On June 12, Bill Gates said he believed that a fully green grid in the US will have a load that’s around 2.5 times the size of today’s capacity – which was about 1.2 million MW in 2022, according to the American Public Power Association. And Gil Quiniones, CEO of the Illinois power utility ComEd, said that his company’s estimations are similar.

“Elon Musk said that the electricity system is going to triple, and our estimates are actually pretty close – it’s going to double to triple the size of our grid,” he said during the conference.

Musk’s EV company Tesla is one of the early drivers behind that rapid load growth, both in California and beyond. The company continues to record rapid sales growth, having delivered around 420,000 vehicles in the first quarter of 2023, a roughly 36% increase over Q1 2022, according to Tesla’s latest shareholder presentation.

And the company recently began manufacturing vehicles at its new gigafactory in Austin, Texas, which several electric utility executives toured on June 11. Included in that tour was Portland General Electric CEO Maria Pope, who was struck by the rate at which the factory was churning out vehicles even before the factory is fully completed.

“Already, as they are still completing construction of the building, they are already producing hundreds of cars every day,” Pope said. “That kind of pace of change around execution is going to really challenge the culture of all of our [utility] companies, and that’s going to be something that we’re going to need to lean in to.”

Although electric vehicles will ultimately be one of the smaller demand sectors in the future clean energy grid, compared to the power industrial sectors are expected to demand, it’s an early signal demonstrating how fast the electric generation sector on the whole will need to scale.

“As we move forward, the ability to execute fast enough is going to test all of us,” Pope said. “And we’re going to have to come together with agility around that uncertainty.”