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Faster-than-Expected Data Center Load Growth May Cause Increased Regional Short-term Fossil Fuel Generation and Wholesale Electricity Prices

LCG, March 18, 2026--The EIA released a new "In-depth Analysis" of the potential impact of faster-than-expected near-term growth in data center power demand on power generation and wholesale prices on March 12. The analysis models the lower 48 states through 2027 and compares results to its base case scenario. Key takeaway from this sensitivity analysis is the potential increase in fossil fuels in some regions and potentially a significant increase in wholesale prices in ERCOT.

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Faster-than-Expected Data Center Load Growth May Cause Increased Regional Short-term Fossil Fuel Generation and Wholesale Electricity Prices

LCG, March 18, 2026--The EIA released a new "In-depth Analysis" of the potential impact of faster-than-expected near-term growth in data center power demand on power generation and wholesale prices on March 12. The analysis models the lower 48 states through 2027 and compares results to its base case scenario. Key takeaway from this sensitivity analysis is the potential increase in fossil fuels in some regions and potentially a significant increase in wholesale prices in ERCOT.

Read more

Industry News

California DWR May Void Sempra Contract, It Says

LCG, Apr. 4, 2002--The California Department of Water Resources has said it may void a $7 billion contract with Sempra Energy because Sempra has not built a 300-megawatt power plant.

According to the DWR spokesman Oscar Hidalgo, Sempra had promised to build the Elk Hills power plant near Bakersfield as part of its deal with the state signed last year. The contract sets the price at which DWR buys power at $160 per megawatt-hour, whereas spot prices are now typically at $30.

Sempra has said that it is proceeding with construction on a more efficient plant than was originally planned at Elk Hills as well as new plants in Mexico and Arizona, but that the contract had not included a requirement concerning Elk Hills. The new Elk Hills plant should be operational by next year. For the moment, Sempra intends to buy power on the open market as DWR traders do, and resell it to DWR. Sempra cites the cost of building a plant as being greater than simply buying power.

The DWR's energy traders insist that "commercially reasonable" progress must be made on Elk Hills within 60 days if they are to honor the contract. Traders with the DWR have cancelled a much smaller, $35 million contract with Soledad Energy because of deliveries of only 20 to 30 percent of the 13 megawatts purchased.
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