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Don’t Miss Out On Incentives That Could Help You Add Megawatts Now
By John Frank, North America Market Development Manager, Cat Electric Power
In March 2024, Mark Christie, commissioner of the Federal Energy Regulatory Commission (FERC), issued a dire warning about grid reliability. Here’s what he had to say about the rapid retirement of coal-fired power plants — and the much slower pace of bringing alternatives online:
“It’s arithmetic. We are subtracting dispatchable resources at a pace that’s not sustainable…. We’re pushing [dispatchable resources] off the grid far too quickly for any replacement resources to take up the slack. That’s why we’re heading for crisis. It’s simple subtraction.” 1
The Math Just Doesn’t Add Up
You can watch FERC’s March meeting to hear all of Christie’s comments about the “basic math” of the energy transition. But the net-net is that we’re facing an urgent shortfall of electricity, and coal plant decommissioning is just one factor. According to FERC filings, electricity demand could rise by 4.7% over the next five years — double what grid planners previously anticipated. Peak demand could climb by 38 gigawatts in the same time period.2
Driving that growth are two key sectors:
- Data centers: FERC expects data center electricity demand to grow from 19 gigawatts in 2023 to 35 gigawatts by 2030. Increased adoption of AI will play a big role in that, with AI searches requiring about 10 times more electricity than traditional internet searches.3
- Electric vehicle and transportation charging: Whether residential or commercial, electric vehicles demand more power and more infrastructure. An energy policy project out of Princeton estimates that light-duty vehicles will use up to 3,360% more electricity by 2035 than they do today.4
Add on extreme weather and natural disasters, and you can see why Christie considers the grid in “crisis” mode.
There Is a Solution…And Dollars to Pay for It
So, what’s a municipality or co-op to do? You’re not in a position to slow down decommissioning, speed up new development, or tell data centers or electricity consumers they need to wait years until you can meet their needs. (They won’t.)
The good news is that there is a way to bring thousands of megawatts of power online in a relatively short timeframe. It’s called distributed generation, and Tom Smith, Director of Energy Development for Caterpillar Power Solutions, does an excellent job of explaining it in this article. There’s even better news. There is funding available now to pay for it.
The Department of Energy has launched the Grid Resilience and Innovation Partnerships Program to improve grid flexibility and power system resiliency. GRIP, as it’s known, allocates $10.5 billion for projects related to utility and industry grid resilience, smart grids and grid innovation6. Many federal dollars are being passed down to the states, which are handing out their own incentives in turn. Here are more options to consider.
The Texas Energy Fund is awarding $5 billion in 2024 in low-interest loans, performance-based grants and other funding to finance the construction, maintenance, modernization and operation of electric facilities. The state legislature has appropriated another $5 billion for fiscal years 2025-2026. 5 The New Jersey Clean Energy Fund also offers capex incentives for various projects.7
Act Now to Get Your Piece of The Incentive Pie
The time to capitalize on incentives is now — the money won’t last forever, and there’s plenty of competition for these dollars. Here are ways to find the funds:
- Grid and Transmission Program Conductor is the national database for federal incentives.
- Database of State Incentives for Renewables & Efficiency searches state, city, county, and utility districts for funds.
- State Energy Fund Commission website (search by state).
- Your state/city/county/utility District Energy Commission sites.
- Helpful search phrases include “grid resilience grants,” “energy funds,” “energy transition project funds,” and “regional/local energy incentives.”
And of course, we are here to help, too — especially when it comes to selecting and connecting the distributed energy resources you need to take advantage of these incentives. Eligibility requirements vary from project to project and location to location, so you want to make sure you review the qualification criteria when getting started. Our team can help you craft a plan and build a system that not only works for your operation but also ensures you get the most out of the available funding. Connect with one of our experts today.
1Federal Energy Commission Website, accessed September 20, 2024, https://www.ferc.gov/news-events/events/march-21-2024-open-meeting-03212024
2The Era of Flat Power Demand Is Over, www.gridstrategiesllc.com/reports/
3Powering Intelligence: Analyzing Artificial Intelligence and Data Center Energy Consumption, https://www.epri.com/research/products/3002028905
4Rapid Energy Policy Evaluation and Analysis Toolkit, https://repeatproject.org/
5Public Utility Commission of Texas, The Texas Energy Fund, https://www.puc.texas.gov/industry/electric/business/texas-energy-fund/
6GRIP, https://www.energy.gov/gdo/grid-resilience-and-innovation-partnerships-grip-program
7New Jersey Clean Energy Program, Find a Program, https://cepfindaprogram.com/
John Frank
Caterpillar Inc.
Senior Account Manager, Energy Transition Commercial Solutions, Electric Power Division
With a career spanning various energy sectors, including gas, power, and industrial energy, John’s extensive knowledge and experience are helping business customers meet the growing demand for foundational power. While the world undergoes the most dramatic change its ever faced in power demand, he embraces the challenge to keep delivering best-in-class advancements to keep businesses operating well into the next century.
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