The North American Electric Reliability Corp.’s latest long-term reliability assessment, or LTRA, overstates the risks facing the U.S. electric grid, partly by overestimating how much data center load will connect to the grid, according to Grid Strategies, a consulting firm.
The combination of a high demand forecast with assumptions for low generation additions and low power flows between regions makes the resource margins in NERC’s report appear tighter than they may be, energy consulting firm Grid Strategies said in a report released Monday.
“NERC’s 2025 Long-Term Reliability Assessment is too pessimistic,” Grid Strategies analysts said in the report, which it drafted for Earthjustice, the Natural Resources Defense Council, the Sierra Club and the Environmental Defense Fund.
NERC didn’t respond to a request for comment.
In late January, NERC issued its annual long-term reliability assessment, which found that most of North America is at a high to elevated risk for power outages over the next five years. The analysis was based on conditions and forecasts as of last July.
NERC’s analysis helps guide grid operators and policymakers. Its assessment that the grid is at risk of outages from insufficient power supply has been invoked by Trump administration officials seeking to delay generator retirements or speed approvals for new resources.
“This is not a forecast of failure but a call to action and we are ready to act,” Laura Swett, Federal Energy Regulatory Commission chairman, said Feb. 19 after a presentation on the 2025 LTRA. “Maintaining the status quo guarantees crisis.”
However, the reliability outlook isn’t as dire when using less conservative assumptions, according to Grid Strategies.
In its analysis, NERC only includes generating projects with interconnection agreements as contributing to future resource needs, Grid Strategies noted. The grid watchdog doesn’t consider projects that are in interconnection queues in its analysis.
The reliability outlook improves if projects in interconnection queues continue to progress toward completion at similar rates as they have in the recent past, Grid Strategies said.
“Consideration of likely-to-connect resources currently in the interconnection queues resolves the majority of identified seasonal adequacy shortfalls,” the consulting firm said.
Also, data from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory indicates that there is more accredited capacity with interconnection agreements than the amount included in NERC’s analysis, according to Grid Strategies.
NERC’s analysis only considers interregional electricity flows — which can help regions meet their reliability needs — based on firm contracts, Grid Strategies noted. But “non-firm” power flows between regions can also be a key factor during extreme weather events, Grid Strategies said.
During Winter Storm Uri in 2021, the Midcontinent Independent System Operator imported 13 GW while exporting 5 GW to the Southwest Power Pool, the consulting firm noted.
“Hourly regional import and export data collected by the U.S. Energy Information Administration … confirm regions import significantly more during periods of peak demand than the LTRA assumes,” Grid Strategies said.
While NERC underestimated generation resources, the report said, it likely overestimated load growth.
NERC’s assumption that electric demand will grow by 160 GW by 2030, including 90 GW from data centers, may be overstated, according to Grid Strategies. Besides the potential double counting of data center loads, there have been delays in large load interconnections since NERC collected data for its assessment, the consulting firm said.
Data center development may be limited by supply chain shortages of chips, power transformers and other key inputs, the Grid Strategies analysts said. Also, Wall Street analysts have expressed concerns that expected revenue may not be enough to sustain the AI industry’s data center investment, they said.
“Updating data center load forecasts based on chip-industry forecasts would allow nearly all regions to meet their 2030 target needs,” Grid Strategies said.
Grid Strategies warned that delays in studying, permitting or building resources in interconnection queues — including wind and solar — could make it harder to meet regional seasonal capacity needs.
To address reliability concerns, Grid Strategies called for ensuring that new resources can come online as needed and that more interregional transmission capacity is built. It also said steps should be taken to improve the certainty and transparency in load forecasts.
