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Horizons Live: US power struggle
How data centre demand is challenging the electricity market model
1 minute read
The June Horizons explores how surging demand from data centres is reshaping the US power market - and what’s at stake for utilities, regulators and grid reliability.
The US power sector is facing an inflection point. A wave of new data centre developments - totalling 140 GW of proposed capacity - is colliding with the limitations of today’s electricity market model. The implications span the entire value chain, from utilities and generators to regulators and investors.
Regulated utilities are structurally better positioned to integrate these large loads, thanks to their vertical integration and land ownership. But this comes with new risks, including customer concentration and a fundamentally different credit and cost recovery dynamic. Meanwhile, deregulated markets are struggling to respond. Their inability to attract new supply and maintain reliability could spur backlash from states looking to reclaim control over energy planning and development.
Despite growing interest in off-grid or behind-the-meter solutions, these remain uncommon and fraught with challenges - from operational complexity to difficult contracting terms. And while policy responses are likely, there’s a high risk of regulatory missteps with wide-ranging effects on prices and asset valuations.
In June's Horizons Live, our panel discussed how data centre demand is challenging the electricity market model. They dove deep into the potential scenarios and consequences as the energy system tries to adapt to this rapid load growth.
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