A Whole Lotta Load: The Next Wave of Utility Demand

**Marc Miller** (0:11)
Welcome to The ScottMadden Energy Exchange, conversations with leaders shaping the future of the energy industry. I'm your host, Marc Miller, partner and energy practice leader at ScottMadden. In this podcast, we explore the most important issues facing utilities and energy companies, from infrastructure and regulation to operations and strategy. We focus not just on what's changing, but on what it takes to execute in a complex and evolving environment.
Today's episode is titled, A Whole Lot of Load, The Next Wave of Utility Demand. For years, utilities were planning around relatively stable demand growth, but suddenly that's changing. Data centers, AI infrastructure, advanced manufacturing, and industrial reshoring are driving a new wave of low growth that is larger, faster, and more concentrated than what most utilities have dealt with in decades. And while these projects create major economic development opportunities, they also introduce significant challenges around planning, infrastructure, risk, and execution. So the question becomes, how do utilities prepare for this next era of demand growth? To explore that, I'm joined today by Chris Sturgill, who works closely with utilities on large load strategy planning and customer engagement.
Chris, we like to start with the big picture. Utilities have dealt with load growth before, whether it was air conditioning, industrial expansion, or broader economic growth. What makes this wave fundamentally different?

**Chris Sturgill** (1:54)
Hey, thanks, Marc, and happy to join you today. I think what makes this wave different is the combination of scale, speed, concentration, and uncertainty. So as you mentioned historically, load growth was gradual and broadly distributed across the residential, commercial, and industrial customers. And thinking about that shift to air conditioning, that load was diffuse across an existing customer base, and it took decades to become fully saturated. Today, we're seeing individual projects that request hundreds of megawatts or sometimes even approaching a gigawatt of power from a single site.
At the same time, AI and hyperscale data center developers are looking for power in one to three years while the infrastructure required to serve that tremendous load often takes much longer to build. And so, utilities are being asked to make decisions on unprecedented levels of load with much less certainty than they're accustomed to.

**Marc Miller** (2:50)
Is the biggest challenge the amount of load itself or the pace and uncertainty around that load? Because it feels like utilities are suddenly being asked to make very large infrastructure decisions on much shorter timelines.

**Chris Sturgill** (3:07)
Yeah, I'd say it's the pace and uncertainty coupled with the scale is the biggest challenge. Utilities know how to build infrastructure when that demand is certain. The problem is that many projects are still evolving and utilities have to make these billion-dollar decisions years before the load actually materializes. And managing that uncertainty while moving fast enough to remain competitive is really the balancing act at hand.

**Marc Miller** (3:30)
And that creates a very different economic development conversation. Utilities and states are competing very aggressively for these projects and what we've seen. But what makes the utility service territory attractive to large load customers like data centers?

**Chris Sturgill** (3:49)
Yeah, the first thing customers look for is available power and a credible path to obtaining it quickly.
Beyond that, they look for things like transmission access, reliability, resiliency, and natural disaster considerations, and electricity costs, fiber connectivity, land availability, permitting timelines, and local policy support. So it's a whole gamut of considerations. Some of those factors are within the utility control, while others are not. In the land rush that we've seen for selecting locations, a lot of the low-hanging fruit or areas with existing capacity that check all those boxes are gone, which means putting together compelling offerings where the criteria is met and where there are gaps, plans to close those quickly.

**Marc Miller** (4:35)
Are we starting to see utilities think about economic development differently because of these opportunities?

**Chris Sturgill** (4:42)
Absolutely. I think historically, economic development was viewed as a supplemental activity. And today, for many utilities, large load attraction has become a strategic priority.
Utilities are proactively planning infrastructure, developing specialized tariffs, and coordinating with state and local economic development agencies, and building dedicated teams all focused on this question of serving data centers and large load customers.

**Marc Miller** (5:09)
Utilities have traditionally viewed all load growth as purely positive. Are utilities becoming more selective about the types of large load customers they want to attract, or is all load growth still considered good growth?

**Chris Sturgill** (5:25)
Yeah, that's right. Historically, everyone did view any load growth as positive because growth was relatively predictable and the infrastructure needed to serve it was incremental. Today, a single customer may require hundreds of megawatts of new capacity and billions of dollars of supporting infrastructure, which changes the economics and the risk profile significantly.