What Can Be Done to Strengthen the US Power Grid?

Artificial intelligence, automation, crypto mining, and cloud computing are putting increasing demand on electric utilities—and the power-hungry data centers these technologies rely on continue to expand in size and scope. As our energy needs grow, it’s a pressing question: What will it take to future-proof infrastructure and grid elements to ensure they can carry the charge? Four experts from the Booth community share their insights.

Blake Davis, MBA ’20

The Industry Needs System Thinkers

We tend to take electricity for granted as cheap and reliable. But new sources of load growth, extreme weather events, and cybersecurity concerns all threaten the paradigm and can negatively affect dependability. We’ve got to take a systemic approach to addressing all of these concerns, and that includes developing sound plans for businesses to make the investments required for a smooth transition, and providing them avenues to recover the costs of doing so.

Utilities should be looking closely at virtual power plants, made up of decentralized energy units powered by software. They are more affordable than turbines, transformers, and other infrastructure upgrades—and will be even more so with tariffs. In addition, they can make a difference in grid flexibility within a year’s time. AI will also play an increasingly important role in balancing loads, predicting energy flows, and proactively mitigating issues.

Business leaders need to have an energy strategy, especially if data centers and at-scale AI application are a core part of the business. Look to lock in electricity prices as much as possible to reduce exposure to cost fluctuations. Evaluate emerging battery and storage solutions for always-on power needs. Find ways to more accurately anticipate and forecast future power needs, and plan data-center development with flexibility in mind. Start thinking today about how shifts in regulation and oversight will affect not just your business but your consumers— the National Energy Assistance Directors’ Association estimates that one in six US consumers are behind on their electricity bills, and this is likely to worsen before it improves. Last, given the growing sophistication of cyberattacks, if you’re not thinking about how to boost your digital defenses already, you’re falling behind.

It’s important to understand that the grid is a machine of sorts that was not built with any kind of central planning or vision. It’s the product of incremental additions and improvements, usually based on the immediate needs of a specific moment in time.

Staying flexible and resilient requires us to acknowledge that the old playbook—building more lines, laying more cable—won’t solve the challenges we’re facing today. The industry needs system thinkers. It needs more people looking at the future of energy and thinking hard about how to build a system that will work for future generations.

Blake Davis, MBA ’20, is senior director of US operations for Emulate Energy, a software platform that aggregates everyday devices such as heat pumps and air conditioners into virtual batteries that utilities can dispatch to make the grid more flexible and resilient.

Charles Murray, MBA ’17

AI Will Help, but Beware of Tech Debt

It’s like the old saying: You can have it cheap, fast, or good—but you only get to pick two. Utilities right now are being asked to do all three: accommodate significant load growth due to electrification, maintain reliability of the system at both the transmission and distribution levels, and achieve decarbonization goals—all while keeping rates affordable.

How can they accommodate these needs in ways that don’t saddle ratepayers with decades of infrastructure debt?

Much of the opportunity lies not just in building new capacity but in using advanced technologies to unlock more value from the infrastructure we already have. Improving power flow, balancing loads, and optimizing existing circuits can defer costly upgrades while improving reliability, especially at the distribution level, where most outages occur. Deploying these kinds of grid-enhancing solutions in parallel with generation and storage will be key to meeting rising demand affordably and sustainably.

An assortment of software and hardware smart-grid tools are also helping make the system more flexible and better able to manage peak situations. But they bring their own set of challenges. The majority of outages that people are going to experience, at least in the immediate time frame, will have every bit as much to do with aging physical infrastructure at the distribution level as with resource adequacy for large data centers.

Companies making decisions under pressure have to be careful not to go for the quick, monolithic solutions, which will only buy them tech debt in the long run. As we use increasingly connected and distributed tools, the potential for digital attacks will expand, with each touchpoint presenting a potential cybersecurity threat we have to safeguard against.

Selecting the right tools is only part of the equation. To fully realize the benefits of advanced technologies—especially those that maximize existing infrastructure—utilities must also adapt in how they plan, operate, and train their teams. Change management in this context is an ongoing process that will determine whether these solutions deliver real system value or simply add complexity.

Charles Murray, MBA ’17, is cofounder and president of Switched Source, a grid-optimization startup that was founded in a Booth classroom. The company has won two grants from the US Department of Energy, expanded to a 20,000-square-foot facility, and helped power more than $115 million in electric utility projects.

Professor John R. Birge

Exercise Caution with Clean Energy

As the energy grid works to bring on all sorts of renewable resources, we have to think about the consequences that clean energy sources might have for the stability and the reliability of the system.

As we saw from the blackouts in Spain and Portugal in April, a grid that is reliant on renewable resources also requires that we pay greater attention to risk mitigation and stability. This may mean bringing in new energy resources in conjunction with additional backup solutions, such as batteries and storage options, that can prevent intermittent outages.

But more actively upgrading and maintaining physical systems is also going to be important to ensure that the grid remains reliable in coming years. It’s incumbent on electric-power commissions in each of the states to ensure that the utilities maintaining the transmission network are doing their due diligence.

It could also be helpful to have legislation in place that enables us to develop more transmission capability, particularly between regions of the United States. We have all these regional operators that need to find better ways to coordinate in terms of grid stabilization and load balancing. It’s about businesses building greater capacity for adaptability as a whole, not just energy capacity and transfer. On the bright side, the concept opens up the possibility of creating new markets for security or markets for addressing risk mitigation relating to power sources.

John R. Birge is the Hobart W. Williams Distinguished Service Professor of Operations Management. His research includes inquiries into a two-part pricing model that could increase energy efficiency and decrease traditional energy providers’ market power. Read Chicago Booth Review’s coverage in “How to Make Rooftop Solar Energy a Better Business.”