Will South Carolina ultimately see the massive boom in data center development some are expecting? A new report could help to provide clarity at a critical time for shaping our state’s energy future and helping to ensure we have reliable electric service that is as affordable as possible.
In November, Applied Economics Clinic, a non-profit consulting group, released a white paper on electric utility load forecasting best practices, with a focus on opportunities for improvement in South Carolina.
In their recent resource plans, South Carolina’s electric utilities have dramatically increased the amount of electric demand growth they are forecasting over the next 15 years. Nearly all of the forecasted growth is associated with potential new large industrial customers, most of which are data centers. This legislative session, the General Assembly will consider a wide array of proposed changes to state energy policy, many of which are intended to ensure that enough power plants and other utility assets are built in time to provide reliable service.
Applied Economics Clinic recommends eight best practices to ensure thorough, transparent, and accurate load forecasts. The recommendations include methodological changes to address new challenges presented by data center load growth, such as the consideration of potential non-energy constraints like water resources and fiber optic capacity. The best practices cover the following topics: model and data transparency; emerging policies and technologies; large industrial loads; non-energy constraints; forecasting innovation; uncertainty analysis and multiple future scenarios; post-modeling adjustments; and stakeholder review.
Planners and legislators are grappling with a tremendous amount of uncertainty surrounding the future of potential large new industrial customers and their electricity needs. Applied Economics Clinic points out that traditional load forecasting techniques rely on extrapolating historical economic trends. However, the forecasted growth in industrial load represents a departure from historical trends, and innovative approaches will be essential to provide accurate forecasts.
There’s a lot at stake for our state’s ratepayers, including billions of dollars’ worth of potentially stranded assets, if the utilities’ load growth forecasts turn out to be significantly overestimated and the utilities build more gas-fired generating capacity than is needed. Dominion customers are still paying the cost of $9 billion spent on the failed V.C. Summer nuclear expansion, which was enabled by the subsequently repealed Base Load Review Act of 2007.
Improving the accuracy and transparency of load forecasts is particularly important and urgent.
Stayed tuned on energy policy being decided in the legislature this year by signing up for our emails.