GRID STRATEGY · ENERGY AFFORDABILITY & UTILIZATION
THE GRID HAS ROOM. THE PROBLEM IS HOW WE ARE USING IT.
By David Swank, CEO, i3 Power & Energy
A report released last month by the Brattle Group put a number on something a lot of people in this industry have known for a long time but rarely said out loud. The American grid is dramatically underutilized. The infrastructure we built to keep the lights on sits largely idle for most of the year, sized to handle a handful of peak demand hours rather than the full shape of load across all 8,760 hours in a year. The Brattle analysis found that improving system utilization by just 10% could reduce customer rates by 3.4% by 2030. Scaled nationally, that translates to between $110 billion and $170 billion in savings over the next decade.
Those are not small numbers. And the gap between what is possible and what is actually happening is not a technical problem. We have the tools. We largely know what to do. The gap is a planning and incentive problem, and it is one that the industry has been slow to confront honestly.
RB Sloan and I sat in that seat. We know what it looks like from the utility side of the table when interconnection requests pile up, when new load arrives faster than the system was built to absorb, and when the pressure to just build more infrastructure feels like the only path forward. It is not the only path. It is just the most familiar one.
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WHAT THE BRATTLE REPORT ACTUALLY FOUND
The core argument in the Brattle study is straightforward. The grid is built for peak. Outside of those peak hours, there is significant headroom in the existing transmission and distribution system that goes unused. When new load, data centers, manufacturing facilities, electrified homes and vehicles, connects in a way that fills that headroom rather than adding to peak, it benefits everyone. The new customer gets access to the grid faster. The utility avoids or defers expensive infrastructure builds. Existing ratepayers see downward pressure on bills rather than upward.
The study modeled a representative mid-sized utility and compared two scenarios. In the status quo, the utility meets a gigawatt of new load growth by building new generation, transmission, and distribution capacity. Rates rise 1.4% by 2030. In the utilization-focused scenario, half that new load connects using self-supply or flexibility during peak hours, and the utility deploys a portfolio of distributed energy resources to free up additional headroom. Rates fall 3.4%. The difference between those two outcomes is not a difference in how much load the grid is serving. It is a difference in how intelligently that load is integrated.
“The gap between $170 billion in savings and the status quo is not a technology gap. It is a planning gap. And planning gaps are exactly what we built i3 to close.”
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THE INCENTIVE PROBLEM NOBODY WANTS TO TALK ABOUT
Buried in the Brattle findings is a tension that deserves more attention than it is getting. Even under optimistic utilization assumptions, the modeled utility earns more revenue in the status quo scenario than it does by focusing on grid utilization. Building new infrastructure grows the rate base. A larger rate base produces more earnings under cost-of-service regulation. The financial incentives, as currently structured in most jurisdictions, point utilities toward building, not toward optimizing what they already have.
I cannot emphasize enough how central this misalignment is to the problem. We are not going to get to $170 billion in consumer savings by hoping utilities voluntarily leave earnings on the table. We will get there by creating structures, whether through regulatory reform, new rate design, or flexible interconnection policy, that make grid utilization financially attractive for the utilities who control the access points. The Brattle report acknowledges this tension. The industry needs to do more than acknowledge it.
WHERE I3 FITS INTO THIS PICTURE
The solution Brattle describes, connecting new load through self-supply and flexibility rather than pure grid dependence, is precisely the model i3 Power & Energy was built to execute. We do not develop data centers and then go looking for power. We develop the power and data infrastructure together, from the first day of planning, as a single integrated system.
When a data center we develop brings its own generation capacity to the site, co-located solar, storage, and flexible dispatchable generation, it is doing exactly what the Brattle report identifies as the highest-value approach for the system as a whole. It connects to the grid as a net contributor to headroom, not a new claim on peak capacity. It can absorb surplus generation when the grid has more supply than demand. It can curtail or shift load during stress periods. And it can do all of this in a way that is visible, dispatchable, and valuable to the system operator.
That is not a coincidence of design. It is the result of starting with grid reality as a constraint rather than treating it as a problem to be solved after the fact. Imagine if you will a data center developer who goes to a utility with 100 megawatts of load request, no on-site generation, and no flexibility commitments. Now imagine one who shows up with 60 megawatts of net load, 40 megawatts of on-site generation, a storage system that provides 20 megawatts of grid services during peak hours, and a contractual commitment to curtail during system emergencies. Those are not the same conversation. The second developer gets to the front of the line. The first one waits.
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BANKABLE PROJECTS IN AN UNDERUTILIZED GRID
There is a capital markets dimension to this that the Brattle report touches on but does not fully develop. Flexible, self-supplied load that integrates intelligently with the grid is not just better for ratepayers. It produces bankable projects.
Lenders and investors have become acutely aware of interconnection risk over the past two years. Projects that depend entirely on a utility interconnection, with no fallback, no flexibility, and no ability to operate through grid stress events, carry a risk profile that is increasingly difficult to finance at reasonable terms. Projects that bring their own generation, manage their own peak exposure, and have contractual relationships with the grid operator are a different asset class. They have more predictable operating costs, lower curtailment risk, and a shorter path from development
to revenue.
When i3 talks about purpose-built energy infrastructure, this is what we mean in practice. Not just co-locating a solar array next to a data center, but designing the full energy system, generation, storage, load management, grid interconnection, as a coherent whole that makes the project more resilient, more valuable to the grid, and more attractive to the capital markets that need to fund it.
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THE BIGGER OPPURTUNITY
The Brattle study focuses on a representative mid-sized vertically integrated utility, which is an appropriate scope for an analysis of this kind. But the opportunity it describes is not limited to that market structure. It applies wherever there is underutilized grid infrastructure and new load that could be integrated more intelligently.
That means rural markets where transmission headroom built for industrial load that has since declined now sits available for the right kind of new demand. It means secondary markets where existing generation assets are underutilized because the load they were built to serve has shifted. It means any location where a developer willing to think carefully about the shape of their load, the flexibility of their operations, and the value they can provide to the system operator can access the grid faster and on better terms than a developer who is simply asking for the maximum capacity they might ever need.
The $110 to $170 billion in savings the Brattle Group identified is not going to be captured all at once. It will be captured project by project, market by market, through the accumulation of better decisions about how new load connects to an existing system that has more room than most people realize. That is the work i3 is doing. And the Brattle report makes clear it is work the industry can no longer afford to leave on the table.