Electricity use is expected to increase dramatically over the next few decades as new data centers, artificial intelligence and expanded electrification come online. But speakers at the University of Houston Law Center’s 9th annual North American Environment, Energy, and Natural Resources Conference said the nation’s ability to meet that demand has been complicated by tariffs, the wider threat of a trade war, supply chain constraints and growing unpredictability.
Industry leaders, lawyers, policymakers, and academics came together for the ‘Rewiring the Future: How Technology, Policy, and Investment are Empowering the New Electricity Era’ event held April 17. Keynote speakers offered an overview of the sector from a federal and state perspective, while two panel discussions provided on-the-ground assessments of current conditions. Tariffs levied by the current administration, including taxes of more than 100% on imports from China, were a main topic of discussion.
“There’s an immediate cost concern,” said Jeffrey Dennis, former deputy director for transmission at the Department of Energy’s Grid Deployment Office, in a conversation with Tracy Hester, instructional professor of law and co-director of the Environment, Energy & Natural Resources Center (EENR). “They will have an immediate impact on the supply chain. The supply chain is already constrained.”
Dean Leonard M. Baynes led a wide-ranging discussion with top executives from five energy-focused companies, exploring the impact of the recent executive orders ranging from tariffs to immigration.
“This has been a very wild ride indeed,” said Deonne Cunningham Nauls, general counsel and chief compliance officer of Sylar Capital Management LP. “We perform analyses two, three, five years out. That’s all changed.”
Cody Johnson, CEO of SCS Technologies LLC, said supply prices are up between 20% and 40%, and quoted prices are good for only 72 hours in many cases. Some contracts have been paused or cancelled. “It’s very difficult to plan,” he said. “It’s very difficult to execute.”
But when Baynes asked one of the significant questions hovering over the field – how will the energy transition be affected by the executive orders seeking to bolster fossil fuels and hamstring renewable energy? – most panelists agreed that although the pace of change might slow, the clean energy transition is inevitable.
“No one wants their business to generate emissions when there’s a cheaper alternative,” said Gregory Brown, general counsel at Evolution Well Services LLC. “All of these efforts will slow adoption, but the verdict is already in.”
The Business of Energy panel, moderated by Ryan Purpura, a partner with Blank Rome LLC, addressed power generation, including how to ensure enough generation to meet projected demand. While not all proposed data centers and other electricity-hungry projects will ultimately come online, the challenge is immense.
“The question is, how do we power these things when we’re already struggling to meet demand?” said Will Glover, corporate partner at Gowling WLG. “None of this is a quick fix.”
Still, several speakers said capital remains available for major projects.
Gina Warren, co-director of UH Law’s Environment, Energy & Natural Resources Center with George Buckley, UHLC student who won the Second Annual Environment, Energy & Natural Resources Center Student Scholarship Award, and Susan Bickley(J.D. ’84), president of the UH Law Foundation Board. Buckley presented his winning article at the conference.
Jeff Slotterback, co-founder and partner at PhiCap Advisors LLC, said enthusiasm around AI is so high that investors are still interested. Supply chain constraints and the lengthy time required to bring projects online are bigger concerns.
“We want to be the leader in AI. We need new generation. The tariffs get in the way of that,” said Guarav Sen, market lead at Aurora Energy Research LLC. “Uncertainty, it’s the enemy of investment.”
Demand for electricity is expected to grow even more quickly in Texas, and keynote speaker Richard Scheel, senior vice president, chief financial officer and chief risk officer at ERCOT, offered an overview of efforts to ensure the Texas grid is up to the challenge.
ERCOT oversees the grid that provides 90% of the state’s electricity load, with only limited ties to the Mexican grid and to the eastern grid, which serves a sliver of East Texas and the Panhandle, Scheel said.
A multi-day blackout during Winter Storm Uri in 2021 prompted interest in adding interconnections, but Scheel said it’s not a simple decision. “It’s getting more complicated, especially when we look at the loads that are coming,” he said.
Expanding interconnections could add stability but could also raise costs for Texas consumers and even limit supply if additional generation built outside of Texas becomes stranded, he said.
“We’re trying to educate both students and practitioners about energy sustainability and resiliency,” said Gina Warren, A.L. O’Quinn Chair in Environmental Studies and co-director of EENR. “Electricity is a very hot topic now, the focus is on ensuring we have enough in the future and that the grid remains reliable.”
Second-year UHLC student George Buckley was also recognized for winning the 2nd annual $10,000 EENR scholarship for Excellence in Energy and the Environment.
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