This Week's Energy & Utilities Brief - Week One of January (2025)!

No fluff updates for Energy & Utility professionals

Good morning and welcome to 2025, I love it.

I hope you had a great start to your new year yesterday!

⚡Here are the need-to-knows from our industry this week.⚡

KEY TAKEAWAYS

1. Grid Reliability Crisis: Over 50% of North America faces potential energy shortfalls by 2034 according to NERC’s 2024 long-term reliability assessment

2. Market Scandal: FERC issues $975M penalty in largest-ever market manipulation case from American Efficient's alleged scheme. Sets precedent for capacity market participation rules.

3. Nuclear Innovation: Oklo’s 12 GW reactor deal signals shift in data center power strategy

4. Infrastructure Gap: 122 GW demand increase vs. 52 GW generation retirement by 2029

5. Innovation & Efficiency: Breakthrough HVAC tech driving significant cost reductions in cooling for the upcoming AI data center takeover

Executive Summary

NERC Assessment Impact: The North American Electric Reliability Corporation warns over half of North America faces energy shortfalls within 5-10 years:

• Summer demand increasing by 122 GW through 2034 (15.7% jump)

• 52 GW generation retiring by 2029

• Demand growth 50% higher than last year’s forecast

• AI data centers and electrification driving unprecedented surge ;-) in demand

Regulatory & Policy Updates

• FERC’s Historic Penalty: Federal Energy Regulatory Commission exposes major market scheme:
  

  • $975M penalty against American Efficient for unprecedented market manipulation

  • Company bought retail data (Home Depot, Lowes) on efficient product sales, then claimed these customer purchases as their own energy savings

  • Made more in capacity payments than any single power plant in PJM by bidding these theoretical savings

  • Numbers tell the story:

    • Cleared 4,610 MW annually (equivalent to several large power plants)

    • Collected $473.7M in capacity payments since 2014

    • Was targeting another $1.34B in future capacity auctions

  • Already banned from MISO and ISO-NE markets for similar practices

  • FERC’s penalty breakdown: $722M fine plus $253M payback of profits

• Biden’s Climate Push: Final actions before January transition:

  • New greenhouse gas target: 61-66% reduction by 2035 (from 2005 levels)

  • DOE rushing to close $22B in clean energy loans by Jan. 22nd

  • California gets approval for stricter vehicle pollution standards
    

• Transmission Reform: Coalition including Industrial Energy Consumers files major FERC complaint:

  • Aims to stop utilities from independently planning local projects above 100-kV

  • PJM example: 1,584 projects worth $18.1B planned for 2024-2028

  • Industry group WIRES opposes, citing increased costs and delays

Industry Innovation

• Nuclear’s Data Centers are happening:

  • Oklo (advanced nuclear startup) signs 12 GW reactor deal with Switch (data center operator)

  • Surpasses Microsoft’s recent 10.5 GW renewable commitment

  • First 50-MWe Aurora reactors planned for 2029

  • Marks shift from traditional renewable-only strategies
    

• Efficiency Breakthrough:

  • Verizon tests new carbon nanotechnology HVAC coating:

    • 36 data centers: $1.28M saved yearly

    • Energy reduction: 7.7M kWh annually

    • Carbon impact: 1,700 metric tons cut

  • $30M nationwide expansion planned after 30-month payback success
    

• Battery Supply Chain:

  Novonix receives $755M DOE loan for Tennessee facility
  

  • Targets China’s 95% dominance in battery-grade graphite

  • Will support 325,000 EV batteries annually by 2028

  • Creates 450 jobs with focus on displaced fossil fuel workers

Market Movements

• PG&E’s Strategic Financing: Pacific Gas & Electric secures major DOE backing:

  • $15B loan guarantee for hydropower and battery expansion

  • $100M projected annual customer savings through lower rates

  • Includes virtual power plant development (connecting distributed energy resources)

  • Community benefits targeting underserved areas and tribal lands

• Texas Market Reform:

  • PUCT (Public Utility Commission of Texas) scraps $1B performance credit mechanism

  • Real-time optimization launching end of 2025

  • Follows Winter Storm Uri impacts that caused nearly 250 deaths in 2021

Operations & Maintenance Watch

• Regional Risk Timeline: NERC’s assessment shows cascading concerns:

  • Immediate (2025):

    • MISO (Midcontinent ISO) facing high risk during normal conditions

    • Resource additions lagging retirements

    • Natural gas supply vulnerabilities emerging

  • Mid-Term (2025-2026):

    • SPP (Southwest Power Pool) & New England: Extreme weather risks

    • Winter reliability becoming primary concern

    • Critical gas supply dependencies identified

  • Long-Term (2026+):

    • PJM: Winter risks now exceeding summer concerns

    • ERCOT (Texas grid): Extreme weather threats amid surging demand

    • Infrastructure Gap: 78 GW retiring, potentially reaching 115 GW by 2034

Thanks for reading :)

- Parker

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