Source: United States Senator for New Mexico Martin Heinrich
WASHINGTON — During a U.S. Senate Energy and Natural Resources Committee hearing on energy demand growth, U.S. Senator Martin Heinrich (D-N.M.), Ranking Member of the Committee, pressed Jeff Tench, Executive Vice President of Vantage Data Centers and Rob Gramlich, CEO and Founder of Grid Strategies LLC, on Trump Administration actions that are impacting grid reliability and driving up families’ energy costs.
VIDEO: U.S. Senator Martin Heinrich (D-N.M), Ranking Member of the U.S. Energy and Natural Resources Committee questions Jeff Tench, Executive Vice President of Vantage Data Centers and Rob Gramlich, CEO and Founder of Grid Strategies LLC.
On the Trump Administration Adding Burdensome Red Tape to Clean Energy Project Approvals
Senator Heinrich began by asking Jeff Tench, Executive Vice President of Vantage Data Centers, how the Trump Administration adding additional reviews and red tape impacts businesses and grid reliability, “So Mr. Tench, you may be aware, the Department of the Interior recently released a memo that’s going to require the Secretary to review all wind and solar projects on federal lands. It adds just one more layer of red tape. Do you have opinions on what the potential business impacts of energy projects just being delayed in that regulatory process? How that further delays impact the business prospect?”
Tench responded, affirming that new directives from the Trump Administration will negatively impact business and adding new generation to the grid, “Our observation and our requirement is for more electrons, as you called out in your opening remarks, Vantage is relatively agnostic as to the source of those electrons. So, in the case of rule making or regulatory action that slows down the process of approving new generation or new transmission, would definitely be a negative for our business.”
Heinrich followed up, “Should in the, in the sort of five-year window like 2025 to 2030, shouldn’t we be focused on putting as many electrons, agnostic of generation source, on the grid as possible to be able to meet the kind of demand that you represent?”
Tench answered, “Yes, our position is that efforts to move electrons around through enhanced transmission is important, necessary, but insufficient relative to the overall demand. We need more energy, more generation, and more generation, and we need more transmission independent of source. That said, it does need to be a reliable, grid dispatchable source, which I believe, you know, can be accomplished with the right combination of energy source for generation and energy storage.”
Heinrich responded, alluding to the Trump Administration’s recent reckless actions that stall projects despite growing energy demands, “You know, one of my concerns is we have we have an existing pipeline that is the result of decisions that have been made over the course of the last decade. That pipeline is 95% clean energy plus storage. It’s about 5% gas. You know, a year or two ago, we had a couple of nuclear plants come online, which are great. I support that, but that’s kind of a one off. You know, in the next five years, if we start building new nuclear today, whether that’s SMRs or traditional light water reactors, that’s going to take longer than the five-year window. If I order a combined cycle natural gas turbine today, it’s probably going to come on the grid in 2032 2033 if we’re lucky. So, if you don’t allow the existing projects that are in the queue today, that are our renewables plus storage. What does that do to the price pressure on the grid? What’s the impact of that?”
Tench answered, “As it relates to price pressure, I’ll probably defer to Rob on that question as more of a grid expert, but in the broader context, our goals are to encourage speed of change in regulatory process, to bring more electrons on the grid. And again, depending upon the site in which we’re developing, our access to proximate energy sources varies, and we are being very pragmatic about how we approach that and make available to ourselves whatever we can in order to meet the demand.”
Heinrich followed, “Mr. Gramlich, do you want to address the price pressure issue?”
Gramlich, CEO and Founder of Grid Strategies LLC, answered, confirming that the Administration’s actions to limit new generation is raising costs on consumers, “Sure. I mean, basically it’s supply and demand. There’s scarcity of generation. So, anything that is limiting new generation from coming on, whether it’s interconnection queues, permitting hold ups that Interior, or anything else that’s cutting off supply, and that is definitely raising prices. And we are seeing prices go up wholesale power prices are going up. That is required. Those higher costs are required to be incorporated by state public utility commissions into retail bills. So, retail consumers…”
Heinrich intervened, “Are there places where prices have actually come down in recent years that you can point to and what was the reason why those prices came down?”
Gramlich answered, “Sure. Well, I mean, if you just look at, say, the supply stack for some places like Texas. Texas, just over the last couple of days, has had a majority of their peak demands, not just, you know, overnight, not just winter peak, afternoon air conditioning, driven demand served by a majority renewables plus storage.”
Heinrich pressed, “And were there rolling blackouts?”
Gramlich answered, “There were not. Reliability. Reliability is better? Yeah, you probably heard about rolling blackouts in California, like five years ago. Honestly, they got behind on resource adequacy. But what did they do? They built a lot of solar and batteries. So same dynamic there. I’m sure we’re seeing a majority renewable energy. Any hour now it’s going to kick in, and then when the air conditioning load this afternoon is high, there’s going to be solar and then the sun will set, air conditioning load will still be high, but the batteries will then kick in and serve through the evening. So again, they don’t do everything.”
On How the Trump Administration is Raising Families’ Electricity Costs
Heinrich asked Gramlich, “One of the things we have to deal with here is these agencies and the role that they play in permitting new generation and transmission. So Mr. Gramlich, if, if our permitting agencies, for example, the Department of the Interior, which has added this new level of red tape stall or slow walk permits for generation projects, which we’re currently seeing, and those permit projects, as a result, don’t get on the grid, or they get on the grid slower. What’s the impact to people who pay retail electric prices?”
Gramlich replied, testifying to how the Trump Administration is raising energy costs on consumers as a result of recent directives, “Sure. Well, obviously that will raise prices. And what’s happening is, you know, love it or hate it, many utilities with their state regulators have put in place plans for the next few years how they’re going to meet load. There might be retirements. There might be load growth. They routinely go through these plans. And just the reality is, it’s largely wind, solar and storage that are in those plans.”
Heinrich followed, “About 95% in most cases.”
Gramlich agreed, “Right.”
Heinrich continued, “So if you take that 95% out, even some portion of it, say a third, what are you going to replace it with in year one, two or three, nothing.”
Gramlich replied, “Curtailment.”
Heinrich followed, “Curtailment, exactly. Exactly. Why I say capacity factors is because I’m an engineer, and I don’t remember a lot of the terms, the buzzwords that we get thrown at around a lot here now: firm, baseload, dispatchable. What I remember from my education is capacity factors, right? And if you look at generation today, you know, I have wind in my state that has a 40% capacity factor. It’s not perfect, but it’s pretty darn good. You know, what else has a 40% capacity factor, Mr. Gramlich? Coal today in the United States of America. Everybody says it’s firm and base load, and it’s not. It’s not because it’s expensive and it’s unreliable, and when you have a coal fire generating station go down, the whole thing goes down. Doesn’t go down 3%, it doesn’t go down 10% — you lose that generation until that thermal plant is back up and running. So, in your testimony, you talked about the increase in demand over time. DOE also is predicting a similar amount, about 2% a year, but they’re also claiming that there is somehow 100-fold increased risk of outage, and this relates to capacity factor issue. If forecasted retirements occur between now and 2030, as predicted, what were the assumptions that went into that, that were baked into that claim?”
Gramlich answered, “Yeah, I think the Department of Energy, I mean, they provided useful analysis with this, this report, but I think they’ve vastly overstated the retirements of generation. And as I said earlier, we have processes, either through utility planning or market to you know, to discourage or prevent retirements, and that’s happening. But also on the supply addition side, there’s a lot more generation out there that could come onto the grid, and I think the Department of Energy study understated that new supply. So, if you understate supply, overstate retirement, suddenly you have a reliability crisis. But it might just be manufactured by those numbers.”
Heinrich continued, “Yeah, we certainly haven’t seen that in New Mexico, and we haven’t seen that next door in Texas, where they have a totally separate grid from ours, but they’re bringing on lots of new sources of generation, lots of new solar and batteries in particular. You know, transmission lines are such an important piece of all this, because they do help us wield power around the country, and it’s hard to build transmission. It’s why we need to actually do permitting reform, which this Committee did last Congress but hasn’t done this Congress yet. You know, I worked on one transmission line for 17 years of my life, and today it is has facilitated, you know, tens of billions of dollars of economic output. It’s facilitated the largest renewable project in the continent’s history. But it wasn’t easy to get that done if you create a system where the politics can change overnight, where, for example, a loan from the Loan Program Office can be decided by politics rather than by metrics. What is the impact of that on reliability and on price pressure?”
Gramlich answered, “Well, I mean, so many utilities have testified before this Committee over the years about the need for stability. They’re making 60-year investments, six zero, and if the policies change 180 degrees every four years, they simply can’t do that. So the point is well taken. We need some stability. I do think FERC is a great place for a lot of these orders as a bipartisan, non-partisan agency for permitting. They could do more in that regard, and but we need, we need to get that regulatory stability for investment.”