(Bloomberg) -- The boom in power demand from data centers and artificial intelligence creates a conflict between maintaining a reliable grid and cutting carbon emissions, according to the head of Dominion Energy Inc.
“There’s a little bit of tension there because there’s not a lot of opportunities” in the near term to build zero-emissions generation that can be adjusted to match supply and consumption, Dominion Chief Executive Officer Bob Blue said. “Anything that’s driving demand is going to make it harder to retire existing fossil units. That’s just sort of basic physics.”
Blue also said the big technology firms operating in Dominion’s territory recognize the inherent difficulty of their push for higher amounts of reliable and carbon-free power. “That’s what they’re after,” he said in an interview Wednesday at Bloomberg headquarters in New York. “And we’re all going to have to sort out how this works going forward.”
Virginia, where Dominion is based, is the global center of the rapidly expanding data-center industry. The utility has projected that its power demand will double by 2039. To help meet that increase, Dominion plans to build large amounts of solar, wind — including the biggest offshore wind farm in the US — and gas power, as well as battery storage.
Utilities face tough choices in meeting the surge in demand from AI, new factories and electric vehicles. They can build new natural gas plants or keep old coal and gas plants running longer than previously planned, but both options would make it more challenging to reach climate goals. Dominion recently agreed with Amazon.com Inc. to explore the development of small modular nuclear reactors, though the technology hasn’t yet operated on a commercial scale in the US.
Blue emphasized that Dominion is still transitioning from coal to gas, which among other efforts has allowed the company to cut its carbon emissions by more than half since 2005.
He also said that while Virginia law requires Dominion produce electricity from only renewable sources by 2045, the law doesn’t require state regulators to make decisions that will hurt grid reliability. “We wouldn’t be pursuing natural gas generation if we didn’t think it was critical for the reliability of the grid,” he said.
Clean energy tax credits in the Biden administration’s Inflation Reduction Act are important to keeping Dominion customer costs low, Blue said. As lawmakers and President-elect Donald Trump consider changes to the IRA, they should consider how reduced tax credits would make some Dominion projects more expensive, he said. “There are potential affordability effects that I think it’s important for lawmakers to understand,” Blue said.
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