The electric power industry is deep in debate over “energy abundance.” The term springs from Ezra Klein and Derek Thompson’s book Abundance, which argues that we have too many rules and procedures bogging down the construction of clean energy, housing, and other needed infrastructure.
It’s a message that resonates with power companies frustrated by government and utility approvals that can delay new projects for years. It also appeals to large energy users, such as data centers, that find it increasingly difficult to achieve “speed to power” – the acquisition of power quickly enough to meet their business goals.
And it’s creating unlikely bedfellows. Streamlining government bureaucracy in favor of business might sound like a politically conservative idea, but Klein is a liberal opinion podcaster for the New York Times. Even Bernie Sanders, one of the US Senate’s most left-leaning members, gave a nod to the abundance agenda in an interview with David Leonhardt, a New York Times editorial director.
“Breaking through bureaucracy and creating efficiencies, that’s good government. There’s no question that you have people who, it seems to me, their function in life is to make sure things don’t happen. You know, we should not be paying people to do that,” Sen. Sanders said in the interview.
But the electric supply-and-demand balance is a complex business that belies a simple solution of just reducing bureaucracy and building more.
In a recent Energy Changemakers Podcast, energy economist Mariko Geronimo Aydin talked about what it will take for the electricity industry — and its regulators and policymakers — to achieve energy abundance, which she defines as electricity that is “so freely available to everyone that you don’t have to think twice about using it. It’s always there. It’s reliable, and you actually start expanding your use of it because it’s so available and reliable.”
Who pays for energy abundance?
Today, the electricity industry appears to be heading in the opposite direction. A number of communities are treating electricity as an increasingly scarce and expensive resource that must be protected from energy-hungry data centers.
The simple answer, just build more generation, can lead to other problems, as grid market architect Lorenzo Kristov points out in a LinkedIn post.
“I’m concerned the Ezra Klein program of dismantling the ‘barriers’ to build, build, build rests on allowing greater social and environmental externalities,” Kristov writes.
Power suppliers make money on scarcity. Grid electricity costs rise as the demand threatens to overwhelm supply, such as during extremely hot or cold weather. If that pricing mechanism ceases to exist, how do power suppliers make money? Kristov posits that the answer is already emerging — and it’s not good.
“Energy is cheaper — more abundant — and still profitable the more costs are omitted from prices, keeping prices artificially low for customers while passing on major costs to ‘sacrifice zones’ and future generations,” Kristov writes “We’re already seeing how recent industry euphoria over escalating energy demand for data centers has displaced climate, ecosystem and environmental justice concerns from the public discourse. We need a policy framework for energy abundance that doesn’t just hide real costs by inflicting them on people and regions who have no political voice.”
Setting the right table for the customer
In the podcast, Aydin proposes the industry adopt less siloed and more customer-centric planning. Although the grid operates as a system, it is largely planned in segments — generation, transmission and distribution — which creates “a tangle of conflicting interests and layers upon layers of patchwork markets, policies and procedures,” she says.
Each segment may all be doing a good job, but still, the customer finds that service is too expensive and not reliable enough.
“So imagine you’re at a restaurant, and you order a meal. You sit down and say, I want a meal. But the person who brings you the plate is different from the person who brings you the fork, who’s different from the person who brings you the food. The plate person, fork person bring you the perfect plate and the perfect fork, but you don’t have food,” she says. “And you say, ‘I don’t have food.’ And they say, ‘Well, we brought you the perfect plate and fork. Shouldn’t you be happy?’”
Aydin says it will take “clear leadership and clear and consistent policy” to create a more customer-centric electric system.
The disappearing utility customer
And if this doesn’t happen?
“AI and large loads, they are, putting a fact in front of our faces that we can no longer deny,” she says. “The foundation of the architecture of the grid is changing whether we like it or not.”
In the past, customers secured electricity only through monopoly utilities. No more.
“We have new technologies now. Customers have other options. Customers are making decisions and electrifying in ways we can’t fully see from the traditional grid perspective,” Aydin says. “If we don’t figure out how to provide abundance in grid service, customers, including large loads, can go and figure out their own solution. And I believe what that would do is fragment the industry even further — make it even more difficult to achieve energy abundance with the grid.”
Listen to the full episode of An Energy Economist on the Abundance Agenda. Receive our biweekly podcasts by subscribing to the Energy Changemakers Newsletter.
