Power market analyst Oliver Kerr has watched the concept of “grid utilization” gain popularity with some skepticism. The market has been flooded with bold findings about how squeezing more out of the existing grid infrastructure could unlock tons of room for new data centers without building so many power plants and poles and wires; one study found that it could save utility customers billions of dollars.
Kerr agreed that utilities should be making the grid more efficient and flexible by deploying distributed energy, virtual power plants, and grid-enhancing technologies. But he doubts that grid utilization — which involves mandating that utilities take advantage of unused headroom — is the right policy tool to achieve those outcomes. He also found it misleading to suggest the policy would inevitably lower bills.
“My concern is that it’s not easy to define and very hard to benchmark across different systems,” Kerr, managing director, North America at Aurora Energy Research, told Latitude Media. “And I’m not sure codifying it into regulatory decision making solves the underlying issue, which is that utilities are paid based on how much capital they deploy. There’s no financial incentive to consider alternatives to building new generation and wires. So I’d rather the focus be on that.”
In July he posted a lengthy criticism on LinkedIn, spurring a debate among energy wonks. They included Amit Narayan, co-founder and CEO of GridCARE, which uses artificial intelligence to unlock underutilized grid capacity, as well as Ian Magruder, founder and executive director of Utilize Coalition that launched earlier this year. Magruder this week issued his own rebuttal that identified common misconceptions about what the coalition is trying to achieve.
Kerr’s criticism comes as Virginia works to implement the country’s first grid utilization law. It directs utilities like Dominion Energy and Appalachian Power to develop “optimal” performance metrics, and then state regulators will determine how to use them in future planning and cost recovery cases. Proponents of law include groups like Deploy Action, Utilize Coalition, and Align Energy Advisors.
The debate boils down to several key questions: Is grid utilization a useful tool to achieve broader goals, like connecting more data centers to the grid we’ve already got? Can it really drive down costs and advance energy affordability? And finally, is the wider conversation simply a distraction from the real problem, which is how utilities earn their profits?
Measuring grid utilization
Grid utilization at its most basic definition measures how much a power line, substation, or the grid as a whole is used over time. Most of the year, the grid sits at about 50% utilization, leaving a lot of headroom for emergencies like heat waves or storms. Proponents of increasing grid utilization argue we could use more of that idle capacity to hook up more data centers and other large loads while still protecting reliability. But first, utilities need to show what’s available on their system.
Kerr argued that coming up with good grid utilization metrics to do this, however, will be too difficult, in part because they’re impacted by so many variables: temperature, wind speed, generation and customer mix, the age of power plants and power lines.
Plus, a higher utilization rate isn’t necessarily better. For example, CAISO has a low utilization rate compared to MISO and PJM, in part because the former has more variable renewables. Lastly, in Virginia, utilities are responsible for defining what “optimal” utilization is: it’s “effectively letting utilities grade their own papers,” Kerr said.
Narayan countered on LinkedIn that the absence of a perfect metric isn’t a reason to avoid measuring it. Engineering is full of metrics that are imperfect but still guide better decisions, he said.
Molly Knoll, senior advisor at Align Energy Advisors, agreed. In an interview with Latitude Media, she said coming up with these metrics is worthwhile because it forces utilities to publicly measure and report what’s going on their systems. That will help identify where to deploy technologies like DERs, GETs, and VPPs in ways that both support reliability and benefit consumers.
“This also isn’t the utilities getting to do whatever they want,” Knoll said about the Virginia law. “This is the utilities bringing forth the information that they have to allow for regulator oversight, stakeholder engagement, and starting the conversation about what utilization actually looks like in their grids.”
She and Magruder both emphasized that there won’t be just one metric, but rather a system that considers the variables Kerr pointed out, as well as the differences between transmission and local distribution networks.
“Utilization metrics will be a complicated conversation, but we can do hard things in this industry,” Knoll said.
Can it save customers money?
Kerr didn’t dispute that more efficient use of existing infrastructure can be better for ratepayers. But he doesn’t think it will necessarily lower utility bills in an era of load growth, because the U.S. grid can’t add gigawatts of new load without building new generation or transmission — and those costs will inevitably get passed on to consumers.
That point is at odds with the findings of a 2025 Duke University study that found the U.S. could add 100 GWs of new load like data centers, assuming they can temporarily be curtailed, without a major infrastructure expansion.
That study, however, didn’t assess the impact on electricity prices or utility bills. That’s where a March Brattle Group study commissioned by GridLab and the Utilize Coalition came in. Researchers found that electricity rates in a mid-size U.S. utility would be 4.8% less if one GW of new load growth was met with a mix of flexible data centers and DERs, as opposed to a status quo scenario of investing in new transmission, distribution, and generation infrastructure. That’s because fixed costs were shared by more customers.
The Brattle Group acknowledged the study’s limitations, however, including that they focused exclusively on how load growth affects electricity rates. Many other factors affect what customers ultimately see on their bill, including transmission congestion. Kerr argued that higher utilization could actually exacerbate that problem, forcing grid operators to dispatch more expensive gas peaker plants that are closer to urban centers than renewable energy.
Ultimately, Kerr wants to make it clear that grid utilization “isn’t a free lunch.”
But proponents told Latitude Media that was never the message. Improving grid utilization can reduce but certainly doesn’t eliminate the need to invest in new poles, wires, and generation, they said. The technologies that improve utilization — including battery storage, GETs, and demand response — also cost money. But they should be evaluated alongside traditional grid infrastructure to make sure the lowest-cost mix of solutions is deployed, Magruder wrote on LinkedIn.
“Better grid utilization can put downward pressure on rates and help keep cost increases lower than they otherwise would have been,” he said.
Is this a distraction?
Kerr suggested moving toward a framework that pays for outcomes rather than assets, which is similar to what the United Kingdom does. If a utility can solve a grid bottleneck by using software instead of building a new substation, for example, it would keep a share of the savings as profit and then pass the rest on to customers.
But Knoll pointed out that even under the U.K. framework, utilities are still financially incentivized to spend more. Even if a utility solves a problem for $2 million instead of $10 million — and then keeps a portion of the $8 million in savings — the total earnings still might not match the profit of a $10 million capital project, she said.
That said, Knoll agreed that the utility business model needs to evolve, arguing that a grid utilization lens provides a faster path forward.
Rather than focusing purely on avoided construction costs, Knoll said, grid utilization focuses on speed-to-revenue.
For example, if a utility uses flexible interconnections that require data centers to curtail load during rare peak hours, those facilities can plug into existing capacity immediately. That allows the utility to collect new revenue years faster than if it waited to build new infrastructure.
“There are a variety of ways to solve these problems, and the current regulatory paradigm doesn’t encourage any of them,” Knoll said. “A utilization lens can do that.”
