Surging energy demand and increasingly frequent extreme weather events are bringing new challenges to the forefront of electric grid planning, permitting, operations, and resilience. These hurdles are pushing our already fragile grid to the limit, highlighting decades of underinvestment, stagnant growth, and the pressing need to modernize our system. 

While these challenges aren’t new, they are newly urgent. The society-wide emergence of artificial intelligence (AI) is bringing many of these challenges into sharper focus, pushing the already increasing electricity demand to new heights and cementing the need for deployable, scalable, and impactful solutions. Fortunately, many transformational and mature AI tools provide near-term pathways for significant grid modernization.  

This policy memo builds on foundational research from the US Department of Energy’s (DOE) AI for Energy (2024) report to present a new matrix that maps these unique AI applications onto an “impact-readiness” scale. Nearly half of the applications identified by DOE are high impact and ready to deploy today. An additional ~40% have high impact potential but require further investment and research to move up the readiness scale. Only 2 of 14 use cases analyzed here fall into the “low-impact / low-readiness” quadrant.   

Unlike other emerging technologies, AI’s potential in grid modernization is not simply an R&D story, but a deployment one. However, with limited resources, the federal government should invest in use cases that show high-impact potential and demonstrate feasible levels of deployment readiness. The recommendations in this memo target regulatory actions across the Federal Energy Regulatory Commission (FERC) and the Department of Energy (DOE), data modernization programs at the Federal Permitting Improvement Steering Council (FPISC), and funding opportunities and pilot projects at and the DOE and the Federal Emergency Management Agency (FEMA). 

Thoughtful policy coordination, targeted investments, and continued federal support will be needed to realize the potential of these applications and pave the way for further innovation. 

Challenge and Opportunity

Surging Load Growth, Extreme Events, and a Fragmented Federal Response 

Surging energy demand and more frequent extreme weather events are bringing new challenges to the forefront of grid planning and operations. Not only is electric load growing at rates not seen in decades, but extreme weather events and cybersecurity threats are becoming more common and costly. All the while, our grid is becoming more complex to operate as new sources of generation and grid management tools evolve. Underlying these complexities is the fragmented nature of our energy system: a patchwork of regional grids, localized standards, and often conflicting regulations.

The emergence of artificial intelligence (AI) has brought many of these challenges into sharper focus. However, the potential of AI to mitigate, sidestep, or solve these challenges is also vast. From more efficient permitting processes to more reliable grid operations, many unique AI use cases for grid modernization are ready to deploy today and have high-impact potential.  

The federal government has a unique role to play in both meeting these challenges and catalyzing these opportunities by implementing AI solutions. However, the current federal landscape is fragmented, unaligned, and missing critical opportunities for impact. Nearly a dozen federal agencies and offices are engaged across the AI grid modernization ecosystem (see FAQ #2), with few coordinating in the absence of a defined federal strategy. 

To prioritize effective and efficient deployment of resources, recommendations for increased investments (both in time and capital) should be based on a solid understanding of where the gaps and opportunities lie. Historically, program offices across DOE and other agencies have focused efforts on early-stage R&D and foundational science activities for emerging technology. For AI, however, the federal government is well-positioned to support further deployment of the technology into grid modernization efforts, rather than just traditional R&D activities. 

AI Applications for Grid Modernization

AI’s potential in grid modernization is significant, expansive, and deployable. Across four distinct categories—grid planning, siting and permitting, operations and reliability, and resilience—AI can improve existing processes or enable entirely new ones. Indeed, the use of AI in the power sector is not a new phenomenon. Industry and government alike have long utilized machine learning (ML) models across a range of power sector applications, and the recent introduction of “foundation” models (such as large language models, or LLMs) has opened up a new suite of transformational use cases. While LLMs and other foundation models can be used in various use cases, AI’s potential to accelerate grid modernization will span both traditional and novel approaches, with many applications requiring custom-built models tailored to specific operational, regulatory, and data environments. 

The following 14 use cases are drawn from DOE’s AI for Energy (2024) report and form the foundation of this memo’s analytical framework. 

Grid Planning

• Capital Allocations and Planned Upgrades. Use AI to optimize utility investment decisions by forecasting asset risk, load growth, and grid needs to guide substation upgrades, reconductoring, or distributed energy resource (DER)-related capacity expansions.
• Improved Information on Grid Capacity. Use AI to generate more granular and dynamic hosting capacity, load forecast, and congestion data to guide DER siting, interconnection acceleration, and non-wires alternatives.
• Improved Transportation and Energy Planning Alignment. Use AI-enabled joint forecasting tools to align EV infrastructure rollout with utility grid planning by integrating traffic, land use, and load growth data.
• Interconnection Issues and Power Systems Models. Use AI-accelerated power flow models and queue screening tools to reduce delays and improve transparency in interconnection studies.

Siting and Permitting

• Zoning and Local Permitting Analysis. Use AI to analyze zoning ordinances, land use restrictions, and local permitting codes to identify siting barriers or opportunities earlier in the project development process.
• Federal Environmental Review Accelerations. Use AI tools to extract, organize, and summarize unstructured and disparate datasets to support more efficient and consistent reviews.  
• AI Models to Assist Subject Matter Experts in Reviews. Use AI and document analysis tools to support expert reviewers by checking for completeness, inconsistencies, or precedent in technical applications and environmental documents.

Grid Operations and Reliability

• Load and Supply Matching. Use AI to improve short-term load forecasting and optimize generation dispatch, reducing imbalance costs and improving integration of variable resources.
• Predictive and Risk-Informed Maintenance. Use AI to predict asset degradation or failure and inform maintenance schedules based on equipment health, environmental stressors, and historical failure data.
• Operational Safety and Issues Reporting and Analysis. Apply AI to analyze safety incident logs, compliance records, and operator reports to identify patterns of human error, procedural risks, or training needs.

Grid Resilience

• Self-healing Infrastructure for Reliability and Resilience. Use AI to autonomously isolate faults, reconfigure power flows, and restore service in real time through intelligent switching and local control systems.
• Detection and Diagnosis of Anomalous Events. Use AI to identify and localize grid disturbances such as faults, voltage anomalies, or cyber intrusions using high-frequency telemetry and system behavior data.
• AI-enabled Situational Awareness and Actions for Resilience. Leverage AI to synthesize grid, weather, and asset data to support operator awareness and guide event response during extreme weather or grid stress events.
• Resilience with Distributed Energy Resources. Coordinate DERs during grid disruptions using AI for forecasting, dispatch, and microgrid formation, enabling system flexibility and backup power during emergencies.

However, not all applications are created equal. With limited resources, the federal government should prioritize use cases that show high-impact potential and demonstrate feasible levels of deployment readiness. Additional investments should also be allocated to high-impact / low-readiness use cases to help unlock and scale these applications. 

Unlocking the potential of these use cases requires a better understanding of which ones hit specific benchmarks. The matrix below provides a framework for thinking through these questions.

Using the use cases identified above, we’ve mapped AI’s applications in grid modernization onto a “readiness-impact” chart based on six unique scoring scales (see appendix for full methodological and scoring breakdown). 

Readiness Scale Questions

1. Technical Readiness. Is the AI solution mature, validated, and performant?
2. Financial Readiness. Is it cost-effective and fundable (via CapEx, OpEx, or rate recovery)?
3. Regulatory Readiness. Can it be deployed under existing rules, with institutional buy-in?

Impact Scale Questions

1. Value. Does this AI solution reduce costs, outages, emissions, or delays in a measurable way?
2. Leverage. Does it enable or unlock broader grid modernization (e.g., DERs, grid enhancing technologies (GETs), and/or virtual power plant (VPP) integration)?
3. Fit. Is AI the right or necessary tool to solve this compared to conventional tools (i.e., traditional transmission planning, interconnection study, and/or compliance software)?

Each AI application receives a score of 0-5 in each category, which are then averaged to determine its overall readiness and impact scores. To score each application, a detailed rubric was designed with scoring scales for each of the above-mentioned six categories. Industry examples and experience, existing literature, and outside expert consultation was utilized to then assign scores to each application. 

When plotted on a coordinate plane, each application falls into one of four quadrants, helping us easily identify key insights about each use case. 

• High-Impact / High-Readiness use cases →  Deploy now
• High-Impact / Low-Readiness →  Invest, unlock, and scale
• Low-Impact / High-Readiness →  Optional pilots, but deprioritize federal effort
• Low-Impact / Low-Readiness → Monitor private sector action

Once plotted, we can then identify additional insights, such as where the clustering happens, what barriers are holding back the highest impact applications, and if there are recurring challenges (or opportunities) across the four categories of grid modernization efforts.

Plan of Action

Grid Planning

Average Readiness Score: 2.3 | Average Impact Score: 3.8

1. AI use cases in grid planning face the highest financial and regulatory hurdles of any category. Reducing these barriers can unlock high-impact potential. 
2. These tools are high-leverage use cases. Getting these deployed unlocks deeper grid modernization activities system-wide, such as grid-enhancing technology (GETs) integration. 
3. While many of these AI tools are technically mature, adoption is not yet mainstream. 

Recommendation 1. The Federal Energy Regulatory Commission (FERC) should clarify the regulatory pathway for AI use cases in grid planning. 

Regional Transmission Organizations (RTOs), utilities, and Public Utility Commissions (PUCs) require confidence that AI tools are approved and supported before they deploy them at scale. They also need financial clarity on viable pathways to rate-basing significant up-front costs. Building on Commissioner Rosner’s Letters Regarding Interconnection Automation, FERC should establish a FERC-DOE-RTO technical working group on “Next-Gen Planning Tools” that informs FERC-compliant AI-enabled planning, modeling, and reporting standards. Current regulations (and traditional planning approaches) leave uncertainty around the explainability, validation, and auditability of AI-driven tools. 

Thus, the working group should identify where AI tools can be incorporated into planning processes without undermining existing reliability, transparency, or stakeholder-participation standards. The group should develop voluntary technical guidance on model validation standards, transparency requirements, and procedural integration to provide a clear pathway for compliant adoption across FERC-regulated jurisdictions.  

Siting and Permitting

Average Readiness Score: 2.7 | Average Impact Score: 3.8

1. Zoning and local permitting tools are promising, but adoption is fragmented across state, local, and regional jurisdictions.
2. Federal permitting acceleration tools score high on technical readiness but face institutional distrust and a complicated regulatory environment. 
3. In general, tools in this category have high value but limited transferability beyond highly specific scenarios (low leverage). Even if unlocked at scale, they have narrower application potential than other tools analyzed in this memo. 

Recommendation 2. The Federal Permitting Improvement Steering Council (FPISC) should establish a federal siting and permitting data modernization initiative. 

AI tools can increase speed and consistency in siting and permitting processes by automating the review of complex datasets, but without structured data, standardized workflows, and agency buy-in, their adoption will remain fragmented and niche. Furthermore, most grid infrastructure data (including siting and permitting documentation) is confidential and protected, leading to industry skepticism about the ability of AI to maintain important security measures alongside transparent workflows. To address these concerns, FPISC should launch a coordinated initiative that creates structured templates for federal permitting documents, pilots AI integration at select agencies, and develops a public validation database that allows AI developers to test their models (with anonymous data) against real agency workflows. Having launched a $30 million effort in 2024 to improve IT systems across multiple agencies, FPSIC is well-positioned to take those lessons learned and align deeper AI integration across the federal government’s permitting processes. Coordination with the Council on Environmental Quality (CEQ), which was recently called on to develop a Permitting Technology Action Plan, is also encouraged. Additional Congressional appropriations to FPISC can unlock further innovation. 

Operations and Reliability

Average Readiness Score: 3.6 | Average Impact Score: 3.6

1. Overall, this category has the highest average readiness across technical, financial, and regulatory scales. These use cases are clear “ready-now” wins.
2. They also have the highest fit component of impact, representing unique opportunities for AI tools to improve on existing systems and processes in ways that traditional tools cannot.  

Recommendation 3. Launch an AI Deployment Challenge at DOE to scale high-readiness tools across the sector.

From the SunShot Initiative (2011) through the Energy Storage Grand Challenge (2020) to the Energy Earthshots (2021), DOE has a long history of catalyzing the deployment of new technology in the power sector. A dedicated grand challenge – funded with new Congressional appropriations at the Grid Deployment Office – could deploy matching grants or performance-based incentives to utilities, co-ops, and municipal providers to accelerate adoption of proven AI tools.  

Grid Resilience 

Average Readiness Score: 3.4 | Average Impact Score: 4.2

1. As a category, resilience applications have the highest overall impact score, including a perfect value score across all four use cases. There is significant potential in deploying AI tools to solve these challenges. 
2. Alongside operations and reliability use cases, these tools also exhibit the highest technical readiness, demonstrating technical maturity alongside high value potential.
3. Anomalous events detection is the highest-scoring use case across all 14 applications, on both readiness and impact scales. It’s already been deployed and is ready to scale. 

Recommendation 4. DOE, the Federal Emergency Management Agency (FEMA), and FERC should create an AI for Resilience Program that funds and validates AI tools that support cross-jurisdictional grid resilience.   

AI for resilience applications often require coordination across traditional system boundaries, from utilities to DERs, microgrids to emergency managers, as well as high levels of institutional trust. Federal coordination can catalyze system integration by funding demo projects, developing integration playbooks, and clarifying regulatory pathways for AI-automated resilience actions. 

Congress should direct DOE and FEMA, in consultation with FERC, to establish a new program (or carve out existing grid resilience funds) to: (1) support demonstration projects where AI tools are already being deployed during real-world resilience events; (2) develop standardized playbooks for integrating AI into utility and emergency management operations; and (3) clarify regulatory pathways for actions like DER islanding, fault rerouting, and AI-assisted load restoration.

Conclusion

Managing surging electric load growth while improving the grid’s ability to weather more frequent and extreme events is a once-in-a-generation challenge. Fortunately, new technological innovations combined with a thoughtful approach from the federal government can actualize the potential of AI and unlock a new set of solutions, ready for this era. 

Rather than technological limitations, many of the outstanding roadblocks identified here are institutional and operational, highlighting the need for better federal coordination and regulatory clarity. The readiness-impact framework detailed in this memo provides a new way to understand these challenges while laying the groundwork for a timely and topical plan of action.

By identifying which AI use cases are ready to scale today and which require targeted policy support, this framework can help federal agencies, regulators, and legislators prioritize high-impact actions. Strategic investments, regulatory clarity, and collaborative initiatives can accelerate the deployment of proven solutions while innovating and building trust in new ones. By pulling on the right policy levers, AI can improve grid planning, streamline permitting, enhance reliability, and make the grid more resilient, meeting this moment with both urgency and precision.

This memo is part of our AI & Energy Policy Sprint, a policy project to shape U.S. policy at the critical intersection of AI and energy. Read more about the Policy Sprint and check out the other memos here.

The rise of artificial intelligence (AI) and the corresponding hyperscale data centers that support it present a challenge for the United States. Data centers intensify energy demand, strain power grids, and raise environmental concerns. These factors have led developers to search for new siting opportunities outside traditional corridors (i.e., regions with longstanding infrastructure and large clusters of data centers), such as Silicon Valley and Northern Virginia. American communities that have historically relied on coal to power their local economies have an enormous opportunity to repurpose abandoned coal mines and infrastructure to site data centers alongside clean power generation. The decline of the coal industry in the late 20th century led to the abandonment of coal mines, loss of tax revenues, destruction of good-paying jobs, and the dismantling of the economic engine of American coal communities, primarily in the Appalachian, interior, and Western coal regions. The AI boom of the 21st century can reinvigorate these areas if harnessed appropriately. 

The opportunity to repurpose existing coal infrastructure includes Tribal Nations, such as the Navajo, Hopi, and Crow, in the Western Coal regions. These regions hold post-mining land with potential for economic development, but operate under distinct governance structures and regulatory frameworks administered by Tribal governments. A collaborative approach involving Federal, State, and Tribal governments can ensure that both non-tribal and Tribal coal regions share in the economic benefits of data center investments, while also promoting the transition to clean energy generation by collocating data centers with renewable, clean energy-powered microgrids.

This memo recommends four actions for coal communities to fully capitalize on the opportunities presented by the rise of artificial intelligence (AI). 

1. Establish a Federal-State-Tribal Partnership for Site Selection, Utilizing the Department of the Interior’s (DOI) Abandoned Mine Land (AML) Program. 
2. Develop a National Pilot Program to Facilitate a GIS-based Site Selection Tool 
3. Promote collaboration between states and utility companies to enhance grid resilience from data centers by adopting plug-in and flexible load standards.
4. Lay the groundwork for a knowledge economy centered around data centers.

By pursuing these policy actions, states like West Virginia, Pennsylvania, and Kentucky, as well as Tribal Nations, can lead America’s energy production and become tech innovation hubs, while ensuring that the U.S. continues to lead the AI race.

Challenge and Opportunity

Energy demands for AI data centers are expected to rise by between 325 and 580 TWh by 2028, roughly the amount of electricity consumed by 30 to 54 million American households annually. This demand is projected to increase data centers’ share of total U.S. electricity consumption to between 6.7% and 12.0% by 2028, according to the 2024 United States Data Center Energy Usage Report by the Lawrence Berkeley National Lab. According to the same report, AI data centers also consumed around 66 billion liters of water for cooling in 2023. By 2028, that number is expected to be between 60 and 124 billion litres for hyperscale data centers alone. (Hyperscale data centers are massive warehouses of computer servers, powered by at least 40 MW of electricity, and run by major cloud companies like Amazon, Google, or Microsoft. They serve a wide variety of purposes, including Artificial intelligence, automation, data analytics, etc.)

Future emissions are also expected to grow with increasing energy usage. Location has also become important; tech companies with AI investments have increasingly recognized the need for more data centers in different places. Although most digital activities are traditionally centered around tech corridors like Silicon Valley and Northern Virginia, the need for land and considerations of carbon emissions footprints in these places make the case for expansion to other sites.

Coal communities have experienced a severe economic decline over the past decade, as coal severance and tax revenues have plummeted. West Virginia, for example, reported an 83% decline in severance tax collections in fiscal year 2024. Competition from natural gas and renewable energy sources, slow growth in energy demand, and environmental concerns have led to coal often being viewed as a backup option. This has led to low demand for coal locally, and thus a decrease in severance, property, sales, and income taxes. 

The percentage of the coal severance tax collected that is returned to the coal-producing counties varies by state. In West Virginia, the State Tax Commissioner collects coal severance taxes from all producing counties and deposits them in the State Treasurer’s office. Seventy-five percent of the net proceeds from the taxes are returned to the coal-producing counties, while the remaining 25% is distributed to the rest of the state. Historically, these tax revenues have usually funded a significant portion of county budgets. For counties like Boone in West Virginia and Campbell County in Wyoming, once two of America’s highest coal-producing counties, these revenues helped maintain essential services and school districts. Property taxes and severance taxes on coal funded about 24% of Boone’s school budget, while 59% of overall property valuations in Campbell county in 2017 were coal mining related. With those tax bases eroding, these counties have struggled to maintain schools and public services. 

Likewise, the closure of the Kayenta Mine and the Navajo Generating Station resulted in the elimination of hundreds of jobs and significant public revenue losses for the Navajo and Hopi Nations. The Crow Nation, like many other Native American tribes with coal, is reliant on coal leases with miners for revenue. They face urgent infrastructure gaps and declining fiscal capacity since their coal mines were shut down. These tribal communities, with a rich legacy of land and infrastructure, are well-positioned to lead equitable redevelopment efforts if they are supported appropriately by state and federal action.

These communities now have a unique opportunity to attract investments in AI data centers to generate new sources of revenue. Investments in hyperscale data centers will revive these towns through revenue from property taxes, land reclamation, and investments in energy, among other sources. For example, data centers in Northern Virginia, commonly referred to as the “Data Center Alley,” have contributed an estimated  46,000 jobs and up to $10 billion in economic impact to the state’s economy, according to an economic impact report on data centers commissioned by the Northern Virginia Technology Council.  

Coal powered local economies and served as the thread holding together the social fabric of communities in parts of Appalachia for decades. Coal-reliant communities also took pride in how coal powered most of the U.S.’s industrialization in the nineteenth century. However, many coal communities have been hollowed out, with thousands of abandoned coal mines and tens of thousands of lost jobs. By inviting investments in data centers and new clean energy generation, these communities can be economically revived. This time, their economies will be centered on a knowledge base, representing a shift from an extraction-based economy to an information-based one. Data centers attract new AI- and big-data-focused businesses, which reinvigorates the local workforce, inspires research programs at nearby academic institutions, and reverses the brain drain that has long impacted these communities.

The federal government has made targeted efforts to repurpose abandoned coal mines. The Abandoned Mine Land (AML) Reclamation Program, created under the Surface Mining Control and Reclamation Act (SMCRA) of 1977, reclaims lands affected by coal mining and stabilizes them for safe reuse. Building on that, Congress established the Abandoned Mine Land Economic Revitalization (AMLER) Program in 2016 to support the economic redevelopment of reclaimed sites in partnership with state and tribal governments. AMLER  sites are eligible for flexible reuse for siting hyperscale AI data centers. Those with flat terrains and legacy infrastructure are particularly desirable for reuse. The AMLER program is supported by a fee collected from active coal mining operations – a fee that has decreased as coal mining operations have ceased – and has also received appropriated Congressional funding since 2016. Siting data centers on AMLER sites can circumvent any eminent domain concerns that arise with project proposals on private lands.

In addition to the legal and logistical advantages of siting data centers on AMLER sites, many of these locations offer more than just reclaimed land; they retain legacy infrastructure that can be strategically repurposed for other uses. These sites often lie near existing transmission corridors, rail lines, and industrial-grade access roads, which were initially built to support coal operations. This makes them especially attractive for rapid redevelopment, reducing the time and cost associated with building entirely new facilities. By capitalizing on this existing infrastructure, communities and investors can accelerate project timelines and reduce permitting delays, making AMLER sites not only legally feasible but economically and operationally advantageous.

Moreover, since some coal mines are built near power infrastructure, there exist opportunities for federal and state governments to allow companies to collocate data centers with renewable, clean energy-powered microgrids, thereby preventing strain on the power grid. These sites present an opportunity for data centers to:

1. Host local microgrids for energy load balancing and provide an opportunity for net metering;  
2. Develop a model that identifies places across the United States and standardizes data center site selection;
3. Revitalize local economies and communities;
4. Invest in clean energy production; and,
5. Create a knowledge economy outside of tech corridors in the United States.

Precedents for collocating new data centers at existing power plants already exist. In February 2025, the Federal Energy Regulatory Commission (FERC) reviewed potential sites within the PJM Interconnection region to host these pairings. Furthermore, plans to repurpose decommissioned coal power stations as data centers exist in the United States and Europe. However, there remains an opportunity to utilize the reclaimed coal mines themselves. They provide a readily available location with proximity to existing transmission lines, substations, roadways, and water resources. Historically, they also have a power plant ecosystem and supporting infrastructure, meaning minimal additional infrastructure investment is needed to bring them up to par.

Plan of Action

The following recommendations will fast-track America’s investment in data centers and usher it into the next era of innovation. Collaboration among federal agencies, state governments, and tribal governments will enable the rapid construction of data centers in historically coal-reliant communities. Together, they will bring prosperity back to American communities left behind after the decline in the coal industry by investing in their energy capacities, economies, and workforce. 

Recommendation 1. Establish a Federal-State-Tribal Partnership for Site Selection, Utilizing the Department of the Interior’s (DOI) Abandoned Mine Land (AML) Program. 

The first step in investing in data centers in coal communities should be a collaborative effort among federal, state, and tribal governments to identify and develop data center pilot sites on reclaimed mine lands, brownfields, and tribal lands. The Environmental Protection Agency (EPA) and the Department of the Interior (DOI) should jointly identify eligible sites with intact or near-intact infrastructure, nearby energy generation facilities, and broadband corridors, utilizing the Abandoned Mine Land (AML) Reclamation Program and the EPA Brownfields Program. Brownfields with legacy infrastructure should also be prioritized to reduce the need for greenfield development. Where tribal governments have jurisdiction, they should be engaged as co-developers and beneficiaries of data centers, with the right to lead or co-manage the process, including receiving tax benefits from the project. Pre-law AMLs (coal mines that were abandoned before August 3, 1977, when the SMCRA became law) offer the most flexibility in regulations and should be prioritized. Communities will be nominated for site development based on economic need, workforce readiness, and redevelopment plans.

State governments and lawmakers will nominate communities from the federally identified shortlist based on economic need, workforce readiness and mobility, and redevelopment plans.

Recommendation 2. Develop a National Pilot Program to Facilitate a GIS-based Site Selection Tool

In partnership with private sector stakeholders, the DOE National Labs should develop a pilot program for these sites to inform the development of a standardized GIS-based site selection tool. This pilot would identify and evaluate a small set of pre-law AMLs, brownfields, and tribal lands across the Appalachian, Interior, and Western coal regions for data center development.

The pilot program will assess infrastructure readiness, permitting pathways, environmental conditions, and community engagement needs across all reclaimed lands and brownfields and choose those that meet the above standards for the pilot. Insights from these pilots will inform the development of a scalable tool that integrates data on grid access, broadband, water, land use, tax incentives, and workforce capacity.

The GIS tool will equip governments, utilities, and developers with a reliable, replicable framework to identify high-potential data center locations nationwide. For example, the Geospatial Energy Mapper (GEM), developed by Argonne National Laboratory with support from the U.S. Department of Energy, offers a public-facing tool that integrates data on energy resources, infrastructure, land use, and environmental constraints to guide energy infrastructure siting. 

The DOE, working in coordination with agencies such as the Department of the Treasury, the Department of the Interior, the Bureau of Indian Affairs, and state economic development offices, should establish targeted incentives to encourage data center companies to join the coalition. These include streamlined permitting, data confidentiality protections, and early access to pre-qualified sites. Data center developers, AI companies, and operators typically own the majority of the proprietary operational and siting data for data centers. Without incentives, this data will be restricted to private industry, hindering public-sector planning and increasing geographic inequities in digital infrastructure investments.

By leveraging the insights gained from this pilot and expanding access to critical siting data, the federal government can ensure that the benefits of AI infrastructure investments are distributed equitably, reaching communities that have historically powered the nation’s industrial growth but have been left behind in the digital economy. A national site selection tool grounded in real-world conditions, cross-agency coordination, and private-public collaboration will empower coal-impacted communities, including those on Tribal lands and in remote Appalachian and Western regions, to attract transformative investment. In doing so, it will lay the foundation for a more inclusive, resilient, and spatially diverse knowledge economy built on reclaimed land.

Recommendation 3. Promote collaboration between states and utility companies to enhance grid resilience from data centers by adopting plug-in and flexible load standards.

Given the urgency and scale of hyperscale data center investments, state governments, in coordination with Public Utility Commissions (PUCs), should adopt policies that allow temporary, curtailable, and plug-in access to the grid, pending the completion of colocated, preferably renewable, energy microgrids in proposed data centers. This plug-in could involve approving provisional interconnection services for large projects, such as data centers. This short-term access is critical for communities to realize immediate financial benefits from data center construction while long-term infrastructure is still being developed. Renewable-powered on-site microgrids for hyperscale data centers typically exceed 100–400 MW per site and require deployment times of up to three years.

To protect consumers, utilities and data center developers must guarantee that any interim grid usage does not raise electricity rates for households or small businesses. The data center and/or utility should bear responsibility for short-term demand impacts through negotiated agreements.

In exchange for interim grid access, data centers must submit detailed grid resilience plans that include:

• A time-bound schedule (typically 18–36 months) for deploying an on-site microgrid, preferably powered by renewable energy.
• On-site battery storage systems and demand response capabilities to smooth load profiles and enhance reliability.
• Participation in net metering to enable excess microgrid energy to be sold back to the grid, benefiting local communities.

Additionally, these facilities should be treated as large, flexible loads capable of supporting grid stability by curtailing non-critical workloads or shifting demand during peak periods. Studies suggest that up to 126 GW of new data center load could be integrated into the U.S. power system with minimal strain if such facilities allow as little as 1% curtailment time (when data centers reduce or pause their electricity usage by 1% of their annual electricity usage).

States can align near-term economic gains with long-term energy equity and infrastructure sustainability by requiring early commitment to microgrid deployment and positioning data centers as flexible grid assets (see FAQs for ideas on water cooling for the data centers).

Recommendation 4. Lay the groundwork for a knowledge economy centered around data centers.

The DOE Office of Critical and Emerging Technologies (CET), in coordination with the Economic Development Administration (EDA), should conduct an economic impact assessment of data center investments in coal-reliant communities. To ensure timely reporting and oversight, the Senate Committee on Energy and Natural Resources and the House Committee on Energy and Commerce should guide and shape the reports’ outcomes, building on President Donald Trump’s executive order to pass legislation on AI education. Investments in data centers offer knowledge economies as an alternative to extractive economies, which have relied on selling fossil fuels, such as coal, that have failed these communities for generations. 

A workforce trained in high-skilled employment areas such as AI data engineering, data processing, cloud computing, advanced digital infrastructure, and cybersecurity can participate in the knowledge economy. The data center itself, along with new business ecosystems built around it, will provide these jobs.       

Counties will also generate sustainable revenue through increased property taxes, utility taxes, and income taxes from the new businesses. This new revenue will replace the lost revenue from the decline in coal over the past decade. This strategic transformation positions formerly coal-dependent regions to compete in a national economy increasingly shaped by artificial intelligence, big data, and digital services.

This knowledge economy will also benefit nearby universities, colleges, and research institutes by creating research partnership opportunities, developing workforce pipelines through new degree and certificate programs, and fostering stronger innovation ecosystems built around digital infrastructure.

Conclusion

AI is growing rapidly, and data centers are following suit, straining our grid and requiring new infrastructure. Coal-reliant communities possess land and energy assets, and they have a pressing need for economic renewal. With innovative federal-state coordination, we can repurpose abandoned mine lands, boost local tax bases, and build a knowledge economy where coal once dominated. These two pressing challenges—grid strain and post-coal economic decline—can be addressed through a unified strategy: investing in data centers on reclaimed coal lands. 

This memo outlines a four-part action plan. First, federal and state governments must collaborate to prepare abandoned mine lands for data center development. Second, while working with private industry, DOE National Labs should develop a standardized, GIS-based site selection tool to guide smart, sustainable investments. Third, states should partner with utilities to allow temporary grid access to data centers, while requiring detailed microgrid-based resilience plans to reduce long-term strain. Fourth, policymakers must lay the foundation for a knowledge economy by assessing the economic impact of these investments, fostering partnerships with local universities, and training a workforce equipped for high-skilled roles in digital infrastructure.

This is not just an energy strategy but also a sustainable economic revitalization strategy. It will transform coal assets that once fueled America’s innovation in the 19th century into assets that will fuel America’s innovation in the 21st century. The energy demands of data centers will not wait; the economic revitalization of Appalachian communities, heartland coal communities, and the Mountain West coal regions cannot wait. The time to act is now.

This memo is part of our AI & Energy Policy Sprint, a policy project to shape U.S. policy at the critical intersection of AI and energy. Read more about the Policy Sprint and check out the other memos here.

On Monday, July 9, nearly 3 million homes and businesses in Texas were suddenly without power in the aftermath of Hurricane Beryl. Today, four days later, over 1 million Texans are entering a fourth day powerless. The acting governor, Dan Patrick, said in a statement that restoring power will be a “multi-day restoration event.” As people wait for this catastrophic grid failure to be remedied, much of southeast Texas, which includes Houston, is enduring dangerous, extreme heat with no air conditioning amid an ongoing heatwave. 

Extreme Heat is the “Top Weather Killer”

As our team at FAS has explained, prolonged exposure to extreme heat increases the risk of developing potentially fatal heat-related illnesses, such as heat stroke, where the human body reaches dangerously high internal temperatures. If a person cannot cool down, especially when the nights bring no relief from the heat, this high core temperature can result in organ failure, cognitive damage, and death. Extreme heat is often termed the “top weather killer,” as it’s responsible for 2,300 official deaths a year and 10,000 attributed via excess deaths analysis.  With at least 10 lives already lost in Texas amidst this catastrophic tragedy, excess heat and power losses are further compounding vulnerabilities, making the situation more dire. 

Policy Changes Can Save Lives

These losses of life and power outages are preventable, and it is the job of the federal government to ensure this. Our team at FAS has previously called for attention to the soaring energy demands and unprecedented heat waves that have placed the U.S. on the brink of widespread grid failure across multiple states, potentially jeopardizing millions of lives. In the face of widespread blackouts, restoring power across America is a complex, intricate process requiring seamless collaboration among various agencies, levels of government, and power providers amid constraints extending beyond just the loss of electricity. There is also a need for transparent protocols for safeguarding critical medical services and frameworks to prioritize regions for power restoration, ensuring equitable treatment for low-income and socially vulnerable communities affected by grid failure events.

As a proactive federal measure, there needs to be a mandate for the implementation of an Executive Order or an interagency Memorandum of Understanding (MOU) mandating the expansion of public health and emergency response planning for widespread grid failure under extreme heat. This urgently needed action would help mitigate the worst impacts of future grid failures under extreme heat, safeguarding lives, the economy, and national security as the U.S. moves toward a more sustainable, stable, and reliable electric grid system.Therefore, given the gravity of these high-risk, increasingly probable scenarios facing the United States, it is imperative for the federal government to take a leadership role in assessing and directing planning and readiness capabilities to respond to this evolving disaster.

Image via NWS/Donald Sparks

Soaring energy demands and unprecedented heatwaves have placed the U.S. on the brink of a severe threat with the potential to impact millions of lives: widespread grid failure across multiple states. While the North American Electric Reliability Corporation (NERC), tasked with overseeing grid reliability under the Federal Energy Regulatory Commission (FERC), has issued warnings about the heightened risk of grid failures, the prospect of widespread summer blackouts looms large amid the nation’s unpreparedness for such scenarios.

As a proactive measure, there needs to be a mandate for the implementation of an Executive Order or an interagency Memorandum of Understanding (MOU) mandating the expansion of Public Health and Emergency Response Planning for Widespread Grid Failure Under Extreme Heat. This urgently needed action would help mitigate the worst impacts of future grid failures under extreme heat, safeguarding lives, the economy, and national security as the U.S. moves toward a more sustainable, stable, and reliable electric grid system.

When the lights go out, restoring power across America is a complex, intricate process requiring seamless collaboration among various agencies, levels of government, and power providers amid constraints extending beyond just the loss of electricity. In a blackout, access to critical services like telecommunications, transportation, and medical assistance is also compromised, which only intensifies and compounds the urgency for coordinated response efforts. To avert blackouts, operators frequently implement planned and unplanned rolling blackouts, a process for load shedding that eases strain on the grid. However, these actions may lack transparent protocols and criteria for safeguarding critical medical services. Equally crucial and missing are frameworks to prioritize regions for power restoration, ensuring equitable treatment for low-income and socially vulnerable communities affected by grid failure events.

Thus, given the gravity of these high-risk, increasingly probable scenarios facing the United States, it is imperative for the federal government to take a leadership role in assessing and directing planning and readiness capabilities to respond to this evolving disaster.

Challenge

Grids are facing unprecedented strain due to record-high temperatures, which reduce their energy transmission efficiency and spike demand for air conditioning during the summer. On top of this, new industries are pushing grids to their limits. The Washington Post and insights from the utility industry cite the exponential growth of artificial intelligence and data centers for cloud computing and crypto mining as drivers of a nearly twofold increase in electricity consumption over the past decade. 

Projections from NERC paint a dire picture: between 2024 and 2028, an alarming 300 million people across the United States could face power outages. This underscores the pressing need for robust emergency response and public health planning.

The impact of power loss is especially profound for vulnerable populations, including those reliant on electricity-dependent medical equipment and life-saving medications that require refrigeration. Extreme heat significantly increases public health risks by exacerbating mental health, behavioral disorders, and chronic illnesses such as heart and respiratory conditions, and increasing the likelihood of preterm births and developmental issues in infants and children. Excessive temperatures also impose burdens on older adults.

Since 2015, national power outages have surged by over 150% owing to demand and extreme weather amplified by climate change. Increasing temperatures can cause transformers to overheat and explode, sometimes sparking fires and cascading outages. Other types of severe weather events, such as lightning strikes, high winds, and flying debris, further escalate the risk of utility infrastructure damage.

In 2020, 22 extreme weather events – from cyclones to hurricanes, heat, and drought – cost the U.S. a combined $95 billion. The following year, disasters like the Texas winter storm and the Pacific Northwest heatwave vividly illustrated the severe consequences of extreme weather on grid stability. To put this into perspective, 

• The Pacific Northwest heatwave resulted in thousands of heat-related emergency department visits and over 700 deaths. 
• During the Texas winter storm, 4.5 million customers went without power, leading to over 240 deaths and economic damages estimated at $130 billion.

These events led to rolling blackouts, thousands of heat-related emergency room visits, numerous deaths, and substantial economic losses. This remains an actively ongoing paradigm, with the National Oceanic and Atmospheric Administration’s (NOAA) 2023 Billion-dollar disaster report confirming 28 weather and climate disasters in a single year, surpassing the previous record of 22 in 2020, with a price tag of at least $92.9 billion.

Historical disasters, such as Hurricane Maria in 2017 and the Northeastern blackout in 2003, are stark reminders of the devastating impact of prolonged power outages. The aftermath of such events includes loss of life, disruptions to healthcare access, and extensive economic damages. 

• Hurricane Maria affected 1.6 million people, with loss of electricity for 328 days, 4600 direct deaths – 70 times the official toll – and an estimated third more excess deaths attributed to the lack of access to health care, and an estimated $90 billion in damages.
• The Northeastern blackout impacted 30 million customers across the U.S. and Canada, causing at least 11 deaths and estimated economic losses of $6 billion.

A stark 2023 study reported that “If a multi-day blackout in Phoenix coincided with a heat wave, nearly half the population would require emergency department care for heat stroke or other heat-related illnesses.” Under such conditions, the researchers estimate that 12,800 people in Phoenix would die.

During these events, restoring power and providing mass care falls on various entities. Utility and power operators are tasked with repairing grid infrastructure, while the Federal Emergency Management Agency (FEMA) coordinates interagency actions through its National Response Framework and Emergency Support Functions (ESFs).

For example, ESF #6 handles mass care missions like sheltering and feeding, while ESF #8 coordinates public health efforts, overseen by the Department of Health and Human Services (HHS). FEMA’s Power Outage Incident Annex (POIA) enables utility operators to request support through ESF #12.While there is some testing of system responses to blackouts, few states have conducted exercises at scale, which is crucial, given the immense complexity of restarting grid infrastructure and coordinating mass care operations simultaneously.

Opportunity

The Department of Energy’s (DOE) Liberty Eclipse Program exemplifies a successful public-private partnership aimed at bolstering energy sector preparedness against cyberattacks on the grid. Similarly, FEMA conducts numerous Incident Command Systems (ICS) training annually, emphasizing collaboration across governments, nongovernmental organizations (NGOs), and the private sector.

By leveraging interagency mechanisms like MOUs, FEMA, DOE, and HHS can integrate and expand exercises addressing heat-induced grid failure into existing training frameworks. Such collaborative efforts would ensure a comprehensive approach to preparedness. Additionally, funds typically earmarked for state and local agency training could cover their participation costs in these exercises, optimizing resource utilization and ensuring widespread preparedness across all government levels.

There are also several federal policy efforts currently aligned with this proposal’s objectives, demonstrating a concerted effort to address related challenges through legislation, executive branch actions, programs, and precedents. Notable legislative initiatives, such as Rep. Ruben Gallego’s proposal to amend the Stafford Act, underscore a growing recognition of the unique threats posed by extreme heat events and the need for proactive federal measures.

Simultaneously, regulatory initiatives, such as those by FERC, signal a proactive stance in enhancing energy infrastructure resilience against extreme weather events. Building on an established precedent, FERC could direct NERC to create extreme heat reliability standards for power sector operators, akin to those established for extreme cold weather in 2024 (E-1 | RD24-1-000), further ensuring the reliable operation of the Bulk Electric System (BES).A pivotal resource informing our proposal is the 2018 report by the President’s National Infrastructure Advisory Council (NIAC), which emphasizes the significance of addressing catastrophic grid failure and underscores ongoing efforts dedicated to this pressing issue. Tasked with assessing the nation’s preparedness for “catastrophic power outages beyond modern experience,” the report offers invaluable insights and recommendations, particularly relevant to the following recommendation.

Plan of Action

To enhance national resilience, save tens of thousands of lives, and prevent significant economic losses, the National Security Council (NSC) should coordinate collaboration between implicated agencies (DOE, HHS, and FEMA) on grid resilience under extreme heat conditions and work to establish an interagency MOU to fortify the nation’s resilience against extreme heat events, with a specific focus on disaster planning for grid failure. This proposal will have minimal direct impact on the federal budget as it will use existing frameworks within agencies such as FEMA, the DOE, and HHS. These agencies already allocate resources towards preparedness training and testing, as evidenced by their annual budgets. 

Recommendation 1. NSC should initiate a collaboration between DOE, HHS, and FEMA.

The NSC should direct DOE to assess grid resilience under extreme heat and coordinate and prepare for widespread grid failure events in collaboration with FEMA and HHS. This collaboration would involve multi-state, multi-jurisdictional entities, tribal governments, and utilities in scaling planning and preparedness.

Under this coordinated action, federal agencies, with input from partners in the NSC should undertake the following steps:

The DOE Office of Cybersecurity, Energy Security, and Emergency Response (CESER), in collaboration with FERC and NERC, should develop comprehensive extreme heat guidelines for utilities and energy providers. These guidelines should include protocols for monitoring grid performance, implementing proactive maintenance measures, communicating concerns and emerging issues, and establishing transparent and equitable processes for load shedding during extreme heat events. Equitable and transparent load shedding is critical as energy consumption rises, driven in part by new industries like clean tech manufacturing and data centers.

FEMA should:

• Update the National Incident Management System to include extreme heat-induced grid failure in disaster response scenarios.
• Conduct risk assessments and develop a whole community approach to emergency response and preparedness plans to address the scale of widespread, multi-state grid failure events. This is in line with FEMA’s goal to increase resilience in the face of more frequent, far-reaching, and widespread natural and manmade disasters.
• Collaborate with state, tribal, and local governments, utilities, NGOs, and other partners to identify critical infrastructure vulnerabilities and prioritize mitigation and response measures, incorporating an equity mapping component to ensure equitable distribution of resources and assistance.

HHS should strengthen functions under ESF#8 to deliver public health services during extreme heat-induced grid failure events, with enhanced coordination between the Centers for Disease Control and Prevention (CDC) and the Assistant Secretary for Preparedness and Response (ASPR).

Recommendation 2. Establish an interagency MOU

An interagency MOU should streamline coordination and collaboration on extreme heat disaster planning and preparedness for grid failure. Further, these agreements should prepare agencies to facilitate cross-sector collaboration with states and local governments through the establishment of a national task force. 

This MOU should outline the following actions:

• Joint task force: Create a task force comprising lead representatives from relevant agencies and partner organizations to develop, advance, and test extreme heat-induced grid failure disaster planning and preparedness. This task force would lead efforts to formulate planning strategies, conduct disaster training exercises, and facilitate the exchange of critical information among emergency managers, public health emergency preparedness (PHEP) teams, utilities, and medical providers. 
• Information sharing protocols: Develop standardized protocols for sharing data and intelligence on heatwave forecasts, grid stability alerts, and response capabilities across agencies and jurisdictions. 
• Training and exercise programs: Coordinate the development and implementation of training exercises to test and improve response procedures to extreme heat events across sectors.
• Public outreach and education: Collaborate on public outreach campaigns to raise awareness about heat-related risks and preparedness measures. Disseminate existing communication tools and education programs developed for weather disasters through local agencies to enhance family and neighborhood resilience to extreme heat-induced grid failures. Special attention should be given to meeting the needs of vulnerable populations, with a strong emphasis on equity, public health, and social cohesion. Resources such as the HHS emPOWER Program Platform and ArcGIS mapping tools like the National Integrated Heat Health Information System’s (NIHHIS) “Future Heat Events and Social Vulnerability,” FEMA’s Resilience Analysis and Planning Tool (RAPT), or the CDC’s Environmental Justice and Map Dashboard offer data-driven approaches to achieve this objective.
• Community resilience: FEMA, branches of HHS, CDC, and ASPR, in collaboration with branches of the NOAA, including the National Weather Service and the NIHHIS, should work to help communities fortify their resilience against widespread blackouts during extreme heat events. Leveraging existing weather disaster resources for storms, fires, and hurricanes, resilience planning should be expanded and adapted to address the loss of electricity, water, and sanitation systems; communication breakdowns; transportation disruptions; and interruptions in medical services under extreme heat conditions.

Conclusion

This proposal emphasizes planning for blackouts and response readiness when the lights go out across wide swaths of America during extreme heat. Addressing this critical gap in federal disaster response planning would secure the safety of millions of citizens and prevent billions of dollars in potential economic losses. 

An Executive Action or interagency MOU would facilitate coordinated planning and preparedness, leveraging existing frameworks and engaging stakeholders beyond traditional boundaries to effectively manage potential catastrophic, multi-state grid failures during heat waves. Specific steps to advance this initiative include ensuring no ongoing similar exercises, scheduling meetings with pertinent agency leaders, revisiting policy recommendations based on agency feedback, and drafting language to incorporate into interagency MOUs.

Using existing authorities and funding, implementing these recommendations would safeguard lives, protect the economy, and bolster national security, particularly as the U.S. moves toward a more sustainable, stable, and reliable electric grid system.

This idea of merit originated from our Extreme Heat Ideas Challenge. Scientific and technical experts across disciplines worked with FAS to develop potential solutions in various realms: infrastructure and the built environment, workforce safety and development, public health, food security and resilience, emergency planning and response, and data indices. Review ideas to combat extreme heat here.

This policy memo was written by the Federation of American Scientists in collaboration with the Pima County Department of Health (Dr. Theresa Cullen, Dr. Julie Robinson, Kat Davis), which provided research and information support to the authors. The Pima County Department of Health seeks to advance health equity and environmental justice for the citizens of Arizona and beyond.

Achieving energy decarbonization in America will require a power grid supplied by renewable energy and backed by ample energy storage. The challenge is that many types of renewable energy provide power intermittently depending on factors such as the time of day or weather conditions. To maintain grid reliability while working towards a nation powered by 100% renewable energy, the Biden-Harris Administration should accelerate adoption of distributed energy resources and expand transmission capacity to create a more unified national power grid. These efforts will increase equitable access to clean energy, accelerate investment in renewables, and create thousands of long-term, high-skilled jobs in a robust American energy sector.

Challenge and Opportunity

The U.S. power grid was built in—and designed for—a previous energy era: one in which on-demand, regionally located energy supplies (such as coal-fired power plants) are delivered to thousands of customers along one-direction transmission lines and managed by public utilities that operate as local monopolies.

But as our nation pushes to replace fossil fuels with cleaner sources of power, the energy landscape will look quite different. Many types of renewable energy provide power intermittently depending on factors such as the time of day or weather conditions. Supplies of such energy sources cannot be ramped up easily (or at all) during periods of peak demand. Meanwhile, smart-and-distributed-energy technologies—such as smart thermostats, rooftop solar, and electric vehicles—have led to an increasingly dynamic and complex power grid. 

The policy response to these rapid changes in the way we generate power has mostly constituted a patchwork of efforts at the state and regional level. Federal attention to renewables has focused largely on tax incentives and on regulation via orders from the Federal Energy Regulatory Commission (FERC). For instance, FERC’s recent order opening wholesale energy markets to distributed energy resources is an important step towards increasing the share of renewables in the U.S. energy sector. Incentives to increase adoption of renewables and investment in research and development (R&D) to improve performance and utility of renewables are essential as well. But to realize a quick and smooth transition to a clean-energy future, concerted action is needed to tackle the intermittency challenge that renewables pose.

Such action can proceed via two complementary pathways simultaneously. The first pathway is using technology advances like vehicle-to-grid (V2G) integration, demand response, smart thermostats, and energy storage to flexibly shift load demand. These technologies help guide certain discretionary types of energy consumption (e.g., running a load of laundry) to occur during times when renewable-energy supply is high but demand is low, and can even enable consumers to return energy to the grid (e.g., by plugging in a parked electric vehicle so that the vehicle’s battery can be used as a power source) to during periods of peak demand.

Unfortunately, innovative energy-management technologies are markedly underutilized in the U.S. power sector. Distorted market-incentive structures, inadequate control protocols governing relationships between operators and consumers, and reliability concerns have all made utilities reluctant to embrace a more dynamic grid. Moreover, grid users (i.e., residential and commercial customers) cannot currently participate in an open energy market on an equal footing with utilities. This means that our nation is not realizing the full value of services that customers can provide to a power grid.

A smarter grid-operating system would (1) make it easier for operators to integrate distributed energy resources (DER) with more conventional types of power supplies, (2) economically incentivize changes in user behavior to smooth out energy-demand curves, and (3) enable everyday Americans to invest in distributed clean-energy technologies and earn returns for providing various services to the power grid. These steps in turn would greatly facilitate large-scale integration of renewables into the U.S. power mix.

The second pathway for addressing the intermittency problem is to finally create a connected and integrated American power grid. This would enable areas with steady supplies of renewable energy—such as solar in the Southwest, wind in Texas and the Midwest, and off-shore wind in New England—to deliver power to different parts of the country as needed. Preliminary studies done by the National Renewable Energy Laboratory (NREL) have demonstrated the economic and environmental benefits of unifying currently disconnected sections of the American power grid. Examples from California and Texas illustrate the need to and benefits of expanding national transmission capacity.

California’s power grid highlights the problems of building aggressive renewable energy portfolios without sufficient transmission. As renewable-energy capacity in California has increased, so too has curtailment—i.e., deliberate reduction in output—of that capacity (Figure 1). Roughly half of this curtailment has been due to transmission constraints. Transmission constraints have also prevented creation of approximately 72,000 potential American jobs from renewable-energy projects in the Midwest.

Figure 1

Insufficient transmission capacity coupled with increasing renewable-energy production in California is resulting in significant curtailment, or waste, of renewable energy in the state. (Source: California ISO. (2021).

In Texas, the 2021 winter storm Uri recently demonstrated an even more dire consequence of limited interconnection across our nation’s power infrastructure: the disastrous failure modes that can manifest in isolated power grids. When Uri hit, grid operators simultaneously encountered high load demand as residents turned up their heaters and inadequate energy supply as naturalgas power plants began failing in the cold weather. The rolling power failures experienced in Texas during the storm could have been mitigated if Texas had been able to import energy from other grids. Connecting the regional power grids that exist in the United States will improve grid resiliency across the nation by allowing regions to draw from each other as circumstances and local conditions demand.

Strengthening the U.S. power grid through improved use of energy-management technologies and better regional interconnections will have benefits that extend beyond grid flexibility and resilience. Grid modernization will create jobs across America in the construction, manufacturing, and energy sectors. By empowering rate-payers to produce their own energy, sell back surplus energy to the grid, and be rewarded for shifting energy-consumption patterns in response to grid conditions, grid modernization will generate economic value for consumers. By encouraging development of distributed energy resources, grid modernization will allow rural communities to replace expensive and burdensome propane shipments with continuously flowing electricity from local solar and storage installations. By transforming the U.S. power grid from a collection of regional entities into an interconnected, national resource, grid modernization will allow energy developers to tap into a national energy market instead of being limited by regional boundaries. And by creating a more unified energy sector, one in which states and communities rely on each other for power, grid modernization might even result in a more united country.

Plan of Action

The federal government plays a critical role in regulating and maintaining the nation’s grid infrastructure. As such, there is much that the Biden-Harris Administration can do—by using existing executive authority and by working with Congress on legislative actions—to strengthen the resilience of the U.S. power grid and foster integration of distributed energy resources and renewables into the U.S. power sector. Progress on these fronts will help transition the United States towards a 100% clean-energy future while creating industries and jobs centered around clean-energy resources, building up America’s advanced manufacturing base, and generating new economic opportunities for all Americans.

Actions using existing executive authority

Improve coordination between federal and state entities to reduce regulatory barriers to energy development. The federal government can support interstate grid projects (such as regional interconnections) by helping coordinate state legislatures and by reducing regulatory burdens related to such projects. In particular, FERC plays an important role in coordinating regional grid investments and planning across states (such as the Eastern seaboard’s off-shore wind grid). The Biden-Harris Administration should prioritize this function of FERC in order to reduce the bureaucratic hurdles faced by energy developers. The new White House Office of Domestic Climate Policy (Climate Policy Office) can play an additional coordinating role, helping to align technical research conducted at the Department of Energy (DOE)‘s national labs with policy and regulatory work conducted through the White House Office of Science and Technology Policy (OSTP), the Department of Interior, the Department of Defense, and other relevant federal entities. Finally, the Climate Policy Office can work with state legislatures to provide state-specific recommendations (i.e., recommendations tailored to the unique natural resources and electricity market structures of each state) on how to best incentivize investment and job growth in the energy industry.

Actions involving collaboration with Congress

Scale R&D innovations in clean-energy technologies by increasing relevant DOE funding. The federal government can use its federal budget to help scale R&D innovations in clean energy and help advance those innovations towards manufacturing and production. By accelerating commercialization and mass production of clean-energy innovations, federal investment will help make clean energy more affordable for American consumers, while simultaneously fostering job growth in the American energy sector. To that end, the next White House budget proposal should include significant funding increases for DOE, in particular for DOE’s Office of Energy Efficiency & Renewable Energy (EERE)¹, Loan Program Office (LPO), and Advanced Research Project Agency for Energy (ARPA-E). Increasing funding for these offices, which use different financing schemes to invest in technologies at different stages of commercialization, is a direct way for the federal government to scale up American-made energy technologies. These three offices heave a proven ability to identify promising candidates for energy innovation.² Increasing appropriations for these high-impact offices by $500M will represent a more than 10% increase in each offices’ budget: enough to make a difference, but not a dramatic departure from the budget increases already appropriated by Congress from FY 2019– FY 2020.

Broaden the definition of “qualifying facilities” to allow everyday Americans to participate in energy markets. Broadening the definition of “qualifying facility (QF)” in the Power Utility Regulatory Policy Act (PURPA) of 1978 to include energy storage, power quality factors, and demand response would require utilities to compensate energy providers for a wider range of services: i.e., services that go beyond simple energy production. The power grids of today and of the future are more than a collection of relatively fixed energy demands and supplies. Broadening the definition of QF would acknowledge the increasingly dynamic nature of the power grid, where excess supply often needs to be stored for later and where some portion of demand load can be shifted to different times of day. In particular, broadening the definition of QF would require utilities to (1) treat their own customers as first-class suppliers for a diverse set of potential use-cases in the energy marketplace and (2) properly compensate rate-payers for any services they provide to the power grid. Ensuring the market properly rewards customers for adopting novel clean-energy technologies will spur clean-energy market growth, drive innovation, and generate economic value for individual Americans newly able to participate in electricity markets.

Encourage construction of additional transmission capacity via tax incentives and loan programs. Tax credits have historically been a popular way for Congress to incentivize development of renewable energy such as wind and solar.³ By making the construction of additional transmission capacity similarly eligible for tax credits, Congress can support a critical piece of our nation’s grid infrastructure while creating construction jobs across the country.⁴