Meeting the (Planned) Moment: TVA, Data Centers and Power Demand in Southeast U.S.

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Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

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Summary

The Tennessee Valley Authority is projecting a significant increase in electric demand across the Southeast U.S., driven by planned data centers and projected population growth. The agency is proposing to significantly expand its electric generation portfolio to meet that expected demand. According to Industrial Info Resources data, TVA is developing about $50 billion of capital projects, mainly for electric generation.

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Data Centers Expected to Proliferate Across U.S. Southeast

According to Industrial Info Resources data, Big Tech firms and data center developers plan to build approximately 1,340 data centers in the seven Southeastern U.S. states where wholesale electricity is provided by the Tennessee Valley Authority (TVA). The value of those projects is roughly US$912 billion.

Highly detailed reports on those projects in the Industrial Info Resources Global Market Intelligence (GMI) Power Project Database can be found here. Not all of those proposed projects are likely to be built according to their current schedules. But low electricity costs and inexpensive land are two critical factors affecting where data centers could be built. The TVA website said its industrial electric prices are lower more than 90% of the top 100 U.S. utilities. A TVA spokesperson told Industrial Info that the agency had no comment on the availability or relative cost of land in its area.

"I can say this: data centers are coming," said spokesman Scott Brooks. "In recent years, data centers have gone from 1-5% of our industrial load to about 18% today, and we expect that percentage to double by 2030." Industrial customers account for about 60% of TVA's electric load, he added.

TVA, a federal government agency, provides wholesale electricity to 153 electric distribution utilities that serve parts of Tennessee, Alabama, Georgia, Kentucky, Mississippi, Virginia and North Carolina. It also provides power directly to 62 industrial customers in its seven-state territory.

TVA Plans for a Data Center-driven Future

The planned proliferation of data centers across the Southeastern U.S. is one of several trends that caused TVA, a government-owned agency, to significantly expand its planned investments in electric generation and transmission & distribution (T&D) infrastructure.

On June 22, TVA released its preliminary final integrated resource plan (IRP), its least-cost, long-term roadmap for meeting future electricity demand. TVA is taking public comment on its plan through July 22. The Board of Directors is scheduled to vote on the plan, and set a one-year capital budget, at its August meeting.

The agency used scenario planning to project top-line need for more generation and T&D to 2040 and 2050. It proposed three electricity demand scenarios and recommended actions to meet demand under its "High Growth" case, which "reflects a technology-driven increase in U.S. productivity growth that stimulates the national and regional economies, resulting in substantially higher demand for electricity across all customer segments."

To meet the electricity demand of the "High Growth" case, the agency's preferred strategy "emphasizes emerging, firm and dispatchable technologies such as advanced nuclear and long-duration storage through innovation, continued research & development and partnerships." Gas-fired generation is expected to soar under TVA's recommended scenario.

To meet the projected future electric demand in that scenario through 2040, including offsetting the effect of plant retirements, TVA said it needed to add between 11,000 megawatts (MW) and 32,000 MW of new generating capacity. In its preferred "High Growth" case, that means:

• Constructing between 7,000 MW and 26,000 MW of gas-fueled simple and combined-cycle combustion turbines.
• Building up to 5,000 MW of new nuclear generation.
• Constructing or contracting for between 3,000 MW and 12,000 MW of nameplate renewable energy generation.
• Implementing 2,000 MW to 3,000 MW of new customer energy efficiency and demand response programs.
• Adding between 1,000 MW and 5,000 MW of energy storage, which could mean batteries or hydroelectric pumped storage.

The exact power supply portfolio will be determined by energy demand, market conditions, policies and regulations, and technology advancements, TVA said. Readers can access IIR's reports of TVA's planned capital projects here.

According to Industrial Info Resources data, TVA plans to invest as much as $27.4 billion to build small modular reactors (SMRs). Brooks, the TVA spokesperson, would only confirm one SMR project, slated to be built at the agency's Oak Ridge, Tennessee, campus.

The TVA did not include cost estimates to construct all of the generation and infrastructure is said it will need to meet future electric demand through 2040 and 2050.

TVA's "High Growth" case said energy demand is expected to grow about 1.5% per year on a compound annual growth rate (CAGR) basis through 2050. Prior to adopting its most recent integrated resource plan in 2019, the agency had been experiencing virtually no load growth for several years, and it predicted that would continue until 2029. But after the COVID pandemic ended in 2021, demand "spiked" and has not slowed down since, Brooks said in an interview.

Along with local population growth, data centers have emerged as a critical driver for TVA's resource planning. Utilities across the country are boosting their capital budgets to meet the electric demand created by these proposed facilities.

In contrast to the current proposed plan, TVA's 2019 integrated resource plan was issued when load growth was expected to be largely flat until 2029.

By the Numbers

• 1.5%: Compound annual growth rate of electric demand to 2050, according to TVA's preliminary final IRP plan.
• US$911 billion: The amount of money slated to be invested in constructing data centers in TVA's seven-state service area.
• 11,000-32,000 MW: The amount of new electric generating capacity TVA projected it will need to build through 2040 to meet electric demand growth and replace the output of retired power plants.
• US$50 billion: The amount of Electric Power capital projects under development at TVA, more than half of which is earmarked for SMRs.

Key Takeaway

• TVA projects a sharp increase in electric demand in its seven-state service area, driven by planned construction of data centers and population growth.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).