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Faster-than-Expected Data Center Load Growth May Cause Increased Regional Short-term Fossil Fuel Generation and Wholesale Electricity Prices

LCG, March 18, 2026--The EIA released a new "In-depth Analysis" of the potential impact of faster-than-expected near-term growth in data center power demand on power generation and wholesale prices on March 12. The analysis models the lower 48 states through 2027 and compares results to its base case scenario. Key takeaway from this sensitivity analysis is the potential increase in fossil fuels in some regions and potentially a significant increase in wholesale prices in ERCOT.

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Faster-than-Expected Data Center Load Growth May Cause Increased Regional Short-term Fossil Fuel Generation and Wholesale Electricity Prices

LCG, March 18, 2026--The EIA released a new "In-depth Analysis" of the potential impact of faster-than-expected near-term growth in data center power demand on power generation and wholesale prices on March 12. The analysis models the lower 48 states through 2027 and compares results to its base case scenario. Key takeaway from this sensitivity analysis is the potential increase in fossil fuels in some regions and potentially a significant increase in wholesale prices in ERCOT.

Read more

Industry News

EIA Presents Analysis of California's Solar and Wind Power Curtailment Challenges

LCG, May 29, 2025--The U.S. Energy Information Administration (EIA) released an analysis yesterday showing that the California Independent System Operator (CAISO), the grid operator for most of the state, is increasing its curtailment of the rapidly growing solar- and wind-powered generation facilities in order to balance electricity supply and demand, which is necessary to maintain a stable electric system.

Intermittent solar- and wind-powered generation capacity has increased dramatically in California, which in turn has increased the challenge of balancing supply and demand. In 2014, a combined 9.7 GW of wind and solar photovoltaic capacity was installed. At the end of 2024, the installed capacity in California had nearly tripled to 28.2 GW.

In 2024, CAISO curtailed 3.4 million MWh of utility-scale wind and solar output, which is a 29 percent increase from the prior year curtailments. Solar accounted for 93 percent of all the energy curtailed in CAISO in 2024.

According to the EIA analysis, the curtailments of wind and solar output is primarily driven by oversupply, i.e., when generation output exceeds customer electricity demand. The solar curtailments occurred mostly in the spring, when solar output was relatively high and electricity demand was relatively low, given moderate spring temperatures and less demand for space heating or air conditioning.

The EIA's analysis states that solar energy supplies almost half of CAISO's electricity demand between the hours of 8:00 a.m. and 4:00 p.m. However, demand increases in the later evening hours when people come home from work and turn up air conditioners or electric heaters and turn on lights, ovens, computers, and televisions. This increase in demand and need for non-solar power supplies is especially apparent on hot summer evenings after the sun has set and no longer produces solar power overnight.

According to EIA, CAISO is trying to reduce curtailments in several ways: (i) trading with neighboring balancing authorities to try to sell excess solar and wind power, (ii) incorporating battery storage into ancillary services, energy, and capacity markets, and (iii) including curtailment reduction in transmission planning. In addition, this year companies are planning to use excess renewable energy to make hydrogen, some of which will be stored and mixed with natural gas for summer generation at the Intermountain Power Project's new facility that is scheduled to come online in July.

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