by Sally Sedgwick
Great River Energy brought a town hall to Grand Rapids in January to discuss the cooperative’s Integrated Resource Plan with members.
The plan is required by the state every two years and describes GRE’s projected power supply plans for the next 15 years. It’s not a quick summary: this year’s IRP might run 500 pages, explained Kyle Leier, manager of resource strategy and development for GRE.
But this year’s plan might be a little different than previous years. Radical change is coming, and it’s unprecedented. It’s driven by one thing: data centers. Just how the industry will cope is still being worked out. How much power and where, who’s going to build it and who’s going to pay for it are all in the discussion.
GRE starts its planning with forecasting. John Williams III, senior forecaster for GRE explained that his team provides a 20 year forecast on many factors, from weather to demand. That information feeds into modeling software that uses over a thousand variables and one time effects like the loss of wind production tax credits. Emerging technologies are also considered, although small modular nuclear plants are not currently permitted in Minnesota. All the successful models have to meet the state mandate of carbon free by 2040.
Ultimately, the results are tested for compliance, reliability and environmental cleanliness. Senior Portfolio Manager Nicole Kessler said that currently there are 35 scenarios that are under consideration.
All this planning has benefitted GRE’s bottom line. Last year its margin was $25 million, said Leier, which the board of directors can redirect back to member cooperatives.
Part of this success is the ability to lock in pricing through planning ahead, which allows GRE to obtain good pricing for its energy purchases. In fact, it’s a “five minute market” where energy is bought in the marketplace when pricing is favorable, but when prices and demand are high (for instance during a cold snap), GRE’s own resources can kick in and provide electricity to the system cost effectively.
In 2024, renewable power was about 49% of the power mix for GRE. Now wind power is getting congested and sometimes wind farms have to be shut down although the wind is blowing. The Emmons-Logan wind power facility in North Dakota is one underused facility that found a battery solution. Available energy is used to charge large batteries that then can release the power when pricing is right.
GRE is actively investing in battery storage research to try to solve the problem of intermittent supply from wind turbines and solar installations. GRE was an early supporter of Form Energy, which has developed an iron-air battery concept, and which now is in the pilot plant stage. The plant, being built in Cambridge, should be in operation this year. It’s not the only possible solution: there are hundreds of startups that are working on novel battery solutions that are industrial-sized and can deliver over longer times.
There is also another way to manage cost, brought up by an audience member. Energy supply is split into two parts: demand, which is the peak amount of energy needed (like the capacity of a car engine), and energy, which is the ongoing amount of electricity used (like mileage on the car). Shaving off the demand peaks avoids having to spend the money to build enough power plants to meet total energy supply. It’s a small amount – in the GRE models it’s under 5 MW/year or about 33 MW over the 15 year period – but significant, and something members can help with. It’s called demand response, or load management.
North Itasca Electric Cooperative CEO Brad Dolinski said that its members are positive toward load management. Even though each unit is much smaller than a power plant, he said, home heating systems are much more efficient than external plants in their conversion of energy.
The big unknown is still the data centers, powering the new industry of Artificial Intelligence. The use by these facilities are expected to increase overall energy demand by two or three times by 2040 – and they are always on. How will the increased power needed by data centers be paid for? Regulators are looking at two inputs, one from the data center owners and one from electricity providers. Each cooperative is now putting money into a pool to cover the unknown future costs. There is also a possibility that there is an “AI bubble” that has to be considered a risk factor.
It’s an exciting time in the industry. By careful planning, GRE has negotiated market changes successfully, and the IRP is its roadmap to continue this into the future.
