Power company Ameren says businesses considering a move to Missouri are seeking a skyrocketing amount of energy capacity compared with even five years ago.
The massive asks are prompting the company, along with other utilities and some regulators, to say Missouri needs to make it easier and speedier to get regulatory approval to build new energy projects, to keep up with possible demand.
That prospect, however, comes amid skepticism about the necessity and costs of new projects and has provoked concern about fast-tracking utility spending.
The average inquiry for potential power has risen 60-fold over five years, according to Ameren. In 2019, companies exploring moves into Ameren鈥檚 local service territory sought 3.2 megawatts of electric capacity, on average. Today, companies are looking for a lot more power: The average request in 2024 stands at a whopping 181.2 megawatts per project.
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鈥淭here are some really enormous projects from an electric perspective that are looking at the entire state,鈥 said Rob Dixon, Ameren Missouri鈥檚 director of economic, community and business development. 鈥淲e really want to find a way to say, 鈥榊es,鈥 to these opportunities.鈥
Businesses, Dixon said, won鈥檛 鈥渨ait for Missouri to figure it out.鈥
Ameren says the inquiries are coming from a mix of industries, from manufacturing to energy-intensive projects such as data centers. The St. Louis-based utility won鈥檛 release individual company names.
The dramatic increase in the size of the requests helps illustrate what many experts warn is a mounting crunch on the electric grid鈥檚 capacity 鈥 an issue made thornier as some forms of old and costly generation, such as coal-fired power plants, are set to retire.
Meanwhile, climate change propelled by greenhouse gases fuels wide temperature swings and severe weather that, in turn, boosts energy demands for cooling and heating, creating a need for more capacity and 鈥渃ushion鈥 on the grid.
The Missouri Public Service Commission hosted a conference of utility officials, regulators and experts in Jefferson City in mid-August to examine 鈥渞esource adequacy鈥 on the electric grid. Support for any measures that could simplify or accelerate the current marathon process of building new energy projects surfaced repeatedly 鈥 as did existing challenges to increasing the amount of power available in the region.
For instance, there are the yearslong, time-consuming hurdles associated with building new generation capacity or transmission lines that can carry electricity from afar. Projects face backlogs and a glacial pace of planning and approval.
鈥淚t鈥檚 a long lead-time game,鈥 said Roger Clark, vice president and chief commercial officer for Associated Electric Cooperative Inc., based in Springfield, Missouri. 鈥淚f you think you need capacity in 2030, you done missed it.鈥
Need it a full decade from now, by 2034?
鈥淏etter get in the queue,鈥 he said.
鈥楥lear hurdles off the track鈥
Electric power capacity is a top consideration, if not the biggest, in the site selection done for industrial projects. It ranked higher than access to talent and the costs of financing or labor, according to information from the Site Selectors Guild鈥檚 annual 鈥淪tate of Site Selection鈥 report cited at the energy conference.
An excerpt said that the nation鈥檚 鈥渟train on electric grids ... has intensified due to U.S. investment in domestic manufacturing鈥 through recent government spending packages, 鈥渨hich have resulted in construction spending on new manufacturing facilities more than doubling from 2022 to 2023 in such industries as data centers, electric vehicles, battery plants and semiconductors.鈥
So far, explosive growth in commercial electric demand has largely been confined to a handful of states, such as Virginia, Texas and North Dakota, throughout recent years.
That could change, however, as companies seek out locations where they can find the best deals or certain types of energy, putting pressure on states and regions to smooth the way.
Ameren is among those who hope to 鈥渃lear hurdles off the track,鈥 when it comes to building new projects.
While there are not yet specific proposals, utility executives and regulatory officials at the conference discussed ways to shorten the road to project completion. One possibility focused on Missouri鈥檚 current practice of having utilities produce long-term generation plans separately from their individual applications for specific projects.
But merging those processes and allowing future projects to be pre-approved, as is done in some states, could speed the process, officials said.
And some state regulators, who are tasked with reviewing and policing investments that utility companies can profit on, have pledged to be agents for change.
鈥淲e鈥檙e going to be proactive and aggressive,鈥 said Kayla Hahn, the chair of the Missouri Public Service Commission. 鈥淲e are going to drive change.鈥
But some advocates for consumers have misgivings about any overhaul that could enable projects to be pre-approved, arguing that it would shift financial risks from utilities to their customers, especially if projects hit any snags or cost overruns.
鈥淭here are downsides to turning it into a pre-approval process,鈥 said John Coffman, an attorney for the Consumers Council of Missouri. 鈥淥ften, things look good in the planning process, and there are problems, going forward.鈥
Some watchdogs also paint energy-intensive projects like data centers as a risky bet that can strain the power grid and require new investments, without bringing some of the same benefits that other large industrial facilities can offer, such as large workforces. That鈥檚 why some hope to establish conditions that would compel companies or developers to cover fixed costs associated with their project, for example.
鈥淚t鈥檚 incumbent that there are protections in place,鈥 said Geoff Marke, an economist for the Missouri Office of Public Counsel, which advocates on behalf of utility customers.
There is likely to be fierce debate over what comes next in Missouri, as decisions are made about what strategies or mixes of power generation to pursue, and how to balance the costs of any project with energy capacity that may or may not be needed.
鈥淭hese really are exercises in uncertainty. ... It鈥檚 important not to take future load forecasts as a given,鈥 said Aaron Schwartz, a manager within the carbon-free electricity program of the Rocky Mountain Institute, an energy-focused nonprofit. 鈥淚t鈥檚 likely that some of these forecasts are overstated.鈥
鈥楢 great problem to have鈥
Ameren, at least, is looking to build new gas power facilities and Hahn, the PSC chair, has issued vocal support for the company to urgently add new gas power, despite Ameren鈥檚 proposal officially hovering in relatively early stages of the regulatory review process 鈥 a stance that has sparked some concerns, and encouragement for officials and regulators to keep an open mind.
鈥淒on鈥檛 have your mind set on a single solution, going into the process,鈥 said Schwartz. 鈥淭here are so many solutions out there.鈥
Experts say options include ramping up energy efficiency and getting the most out of transmission, even by revamping existing lines. And ever-improving batteries and energy storage projects are increasingly able to offer help with electric grid capacity and reliability.
鈥淭here鈥檚 a lot of examples of how batteries are already stepping in,鈥 said Sarah Toth, an associate at RMI focused on markets and grids. That includes recent displays in Texas, where a combination of solar and battery storage is credited with manage extreme heat and hit unprecedented peaks for electric demand and delivery.
PSC officials said that next steps to address capacity issues could be explored at a follow-up meeting in November, before the Missouri Legislature reconvenes in the new year.
Despite challenges at hand, many frame the complications associated with electricity load growth as an opportunity for new investment, jobs and grid upgrades.
鈥淚鈥檓 really excited about where we are,鈥 said Warren Wood, Ameren Missouri鈥檚 vice president of regulatory and legislative affairs. 鈥淭his is a great problem to have, frankly.鈥