Can Iowa keep up with rising electricity demand?

For the first time in decades, Iowa is seeing a marked increase in electricity demand, spurred in large measure by the continued development of data centers, both in the Corridor and throughout the state.

That growth leads to a natural assumption that the pace of economic development in the state is accelerating — a welcomed and positive trend.

But it also raises a key question: Will the state’s energy resources be sufficient to meet the growing demand for electricity?

Projections differ in scope, but trends are consistent

According to Steve Guyer, energy policy counsel for the Iowa Environmental Council, electricity demand is rising in nearly every U.S. state, and Iowa is no exception to that trend.

“Basically in the 1970s and ‘80s was the last time we really saw some market growth,” said Mr. Guyer, who previously worked in environmental roles for both Alliant Energy and MidAmerican Energy and has owned Altoona-based GWA Solar since 2008.

Mr. Guyer said the Midcontinent Independent System Operator (MISO), the electric grid operator for the central United States, regularly provides a 20-year projection of electricity demand and capacity. For Zone 3, which includes Iowa, projections call for an increased load of “anywhere from 22 to 44 terawatt hours” in the next 20 years, with a majority of that coming by the year 2030.

“To give you a perspective, that’s anywhere from a 30% to a 60% increase from where we are today in overall load, coming rapidly at us,” Mr. Guyer said. “That’s what they see now. Recognize that things might change, and a lot of things are very uncertain at this point. But those are the current projections as we see them right now.”

Anne Kimber, executive director of the Electric Power Research Center at Iowa State University, went even further back, saying Iowa hasn’t seen dramatic growth in electrical energy demand since the 1960s, following decades of flat to slightly increasing year-to-year demand.

She noted that the state’s increased electrical appetite is being driven not only by the sudden increase in data center projects, including the large-scale projects being developed by Google and QTS in southwest Cedar Rapids, but by the state’s ever-expanding industrial and agricultural operations.

The rapid growth can be attributed to the significantly lower cost of energy in Iowa compared with other parts of the country — for one primary reason.

“Iowa has a lot of renewable energy generation thanks to previous investments in wind generation,” Ms. Kimber said. “So Iowa is kind of an amazing and unusual state because we have so much renewable energy generation here, we have very low energy prices, and we’re a very intensive energy user.”

According to the U.S. Energy Information Administration’s profile analysis of Iowa energy use, last updated in September 2024:

• Iowa ranks among the top 10 states in total energy consumption per capita, mainly because of its small population and large industrial sector, which includes agriculture.
• The industrial sector leads Iowa’s end-use energy consumption, accounting for slightly more than half of the state total.
• Iowa is among the 10 states with the most total industrial sector energy use.

John Ketchum, president and chief executive officer of NextEra — the company that purchased the Duane Arnold Energy Center nuclear power plant near Palo in 2005, and is now investigating the possibility of reopening the plant for power generation — took an even wider view of energy demand.

“Energy realism is about embracing all forms of energy solutions and understanding the demand for electricity in the United States is here now, and it’s not slowing down,” Mr. Ketchum said during a conference call with investors April 21. “Frankly, it’s unlike anything we’ve seen since the end of World War II.”

Lane Witten, NextEra’s vice president of business management for the company’s north region, provided a look at both the past and future during a presentation at the CBJ’s Energy Symposium April 22.

“If we look back from 2000 to 2020, for the past 20 years, energy demand has only grown by about 10% in total — relatively flat,” Mr. Witten said. “But we look at projections going into the future, (so) from 2020 out to 2040, we’re projecting to potentially see a 55% growth in energy demand. So where’s that energy management demand coming from? I think most people would say … data centers, and that’s accurate, but that’s only about one-third of the demand. We’re also seeing demand across other sectors such as transportation, commercial, industrial and residential.”

And according to a recent post on Motley Fool, an established company that provides investing advice, “Large companies are increasingly looking for clean energy solutions as they expand, including the technology companies that are powering the AI revolution. And AI-related electricity demand in the United States is projected to increase by 300% over the next decade or so.”

Can utilities meet the energy demand?

Eastern Iowa’s largest electrical utility companies, Alliant Energy and MidAmerican Energy, say they’re well-situated to provide the energy necessary to power the coming demand.

“We’re absolutely seeing an increase in demand that’s happening across the nation, and we feel fortunate to be seeing that in our service territory,” said Mayuri Farlinger, president of Interstate Power and Light Co., Alliant’s Iowa utility company. “Customer growth has been a part of our strategy for a long time, and economic development projects have a tendency to have a longer runway. So this is something that we’ve been preparing for. The demand is increasing, but it is all a part of a strategy that we’ve been executing for years. Customer growth is important to us because it’s the greatest lever that we have for customer affordability. The more electrons we can sell, the more we can spread our fixed costs among those electrons that are being sold. So it’s a win-win for not only the communities, but all of the customers that we’re serving in the state of Iowa.”

While data center projects have grabbed the headlines due to their massive scope, they’re not the only drivers of demand growth, Ms. Farlinger said.

“We are seeing the greatest amount of demand increase coming from the data center sector, and we’re trying, as utilities, to capture as much of that growth in our service territories [as possible],” Ms. Farlinger said. “But that does not mean that our existing customers and the existing industries in this state are not growing as well.”

She cited the May 20 groundbreaking ceremony for Daisy Brand’s 1 million-square-foot, $676 million plant in Boone, which will produce sour cream and cottage cheese and provide more than 250 new jobs when it opens in the third quarter of 2028.

“That’s a customer type that we’re accustomed to, that we already have in our service territory,” Ms. Farlinger said. “You think about ag-related industry, manufacturing, all of the food production that happens in Iowa. We continue to see those businesses be very healthy. They continue to demand energy from us, and we work with all of those customers to make sure that if they’re evaluating expansions or new business lines in their facilities, we’re there to help them meet that energy demand.”

Demand growth is a key part of Alliant’s business growth strategy, Ms. Farlinger said, and Alliant plans to meet that demand through a variety of generation sources.

“We have been thinking about how we invest in this business responsibly and cost-effectively for our customers, with an eye on the future,” she said. “So as I think about how we’re going to serve the demand that is forthcoming or that’s already on our system, we continue to look at it as an ‘all-of-the-above’ energy approach. We’re going to continue to make investments in our existing generation fleet, and we’re going to be adding to that generation fleet.”

The latest iteration of Alliant’s capital investment plan accounts for increased demand, Ms. Farlinger said.

“We’re talking about repowering wind resources, adding generation in terms of natural gas resources to the system,” she said. “So there’s a variety of projects. Battery storage is on the horizon for us as well. In Iowa, we recently executed on 400 megawatts of solar, and so now we think about, what are those next set of resources?”

Some mitigating factors, such as the potential impact of trade tariffs on supply chains, are a consideration, Ms. Farlinger said. 

“Those are all a part of our calculus,” she said. “As we think about what amount of time is needed to execute on these projects, we are continually talking to our stakeholders, not only legislators, but our commissioners, about the necessity to move at the speed that their customers are asking us to move at. Everyone is very well in tune to the requirement of speed to market in this landscape, and I feel like we’re really well-positioned to continue to have those conversations and keep pushing on the things that we need to be able to execute.”

Even with the challenges, Ms. Farlinger said Alliant remains confident in the ability to spin up new generation resources.

“I do not have any concerns from Alliant’s perspective on our ability to meet the growing demand,” she said. “We have multiple levers that we can pull. We have multiple technologies that we can lean on, including market purchases. So we’ll execute all of those options going forward to make sure that those lights stay on for our existing customers, and that we’re able to power any new demand that’s coming onto our system.”

In November 2024, MidAmerican Energy announced a forward-looking electric generation plan designed to ensure long-term reliable power for customers while maintaining its position as one of the lowest-cost electricity providers in the United States.

Like Alliant, the MidAmerican plan, called a resource evaluation study, filed with the Iowa Utilities Commission, also includes an “all-of-the-above” strategy that “combines a strong, continued commitment to renewable energy with proven, on-call power sources to meet the significant projected growth in customers’ electric demand.”

Participants in MidAmerican’s study included the Iowa Utilities Commission members and staff, the Office of Consumer Advocate, Iowa Business Energy Coalition, the Iowa Association of Municipal Utilities, the Environmental Law and Policy Center, Iowa Environmental Council, Sierra Club, Microsoft and Google.

“MidAmerican’s long-term strategy emphasizes a robust, diversified energy portfolio that expands on its current renewable energy investments, primarily in wind and solar, while also integrating the latest technologies for grid reliability,” the study says. “By adding solar, natural gas and nuclear energy, the expanded resources combine renewable generation with power sources that are available on demand, allowing MidAmerican to ensure it can deliver reliable energy, even during peak times and challenging weather conditions.”

Energy experts raise potential concerns

Mr. Guyer and Ms. Kimber agreed that the increase in demand hasn’t taken Iowa’s utilities by surprise.

“Both Alliant and MidAmerican have said that they have committed increases coming onto their system,” Mr. Guyer said, citing the Google and QTS projects as long-anticipated developments.

“They knew those were coming forward even before they were publicly announced,” he said. “So we’ve known we have some additional growth coming. We’ll see where it all plays out.”

However, Mr. Guyer said factors like tariffs could bring unexpected shocks to the supply chain, calling utilities’ ability to meet demand into question.

“I attended a conference (recently), and the word that was used throughout the day was ‘uncertainty,’ because there are just so many elements of uncertainty with all of this right now,” he said.

The conference actually focused on electrical transmission systems, and Mr. Guyer said a recent Supreme Court ruling, declaring “right of first refusal” legislation for electrical transmission projects is unconstitutional, could provide additional obstacles to utilities’ ability to deliver electrical power to the areas where it’s most needed.

“So we have these timing issues, where if (we) can’t get the transmission in place, then it doesn’t matter whether we can fit generation somewhere. That doubles back on the ability of a data center, for example, to actually get the energy it needs,” he said. “These things connect together.”

As a result, Mr. Guyer expressed some doubt as to whether the state’s electrical supply will be available in time to meet the quickly-arriving demand.

“Will we meet this aggressive rate that we’re looking at? I don’t think so,” he said. “I think we’ve got too many elements in the way. We’ll see some of it. But will we see it all? I don’t think we’ll see it all. There’s too much to do.”

Projects that are already “turning shovels” should have enough power to meet their needs, Mr. Guyer said.

“Those are ones that have already been built in, so they’re confident they can meet that load,” he said. “It’s the projections of where they think this may lead that I think will present the issues, because we do not have sufficient sources yet for transmission, so we’ll hit sort of a cap until we can actually get more transmission and/or more generation to facilitate actually meeting increases in load.”

Likewise, Ms. Kimber said there are questions about meeting Iowa’s growing energy demand.

“I think that there’s concern there,” she said. “And the whole problem is timing. It takes a long time to site and to actually build base load generation to serve those needs.”

The current market is meeting base load requirements through an increasing reliance on natural gas, plus a substantial amount of wind and solar generation.

“But you don’t necessarily have backup,” she said. “You don’t have enough battery storage for the wind and solar. I think we could be facing some problems. For example, if we have some sort of weird weather system come through, and the wind regime is not what we anticipated or forecasted, or the solar regime is not what we expected, you can imagine that it’s going to be on the margins where we’re going to have problems with having generation to meet all that data center load, which is going to be pretty constant.”

Ms. Kimber said the growing interest in repowering the Duane Arnold Energy Center could contribute to a solution, as could the advent of small modular reactors, or SMRs — a technology not yet readily available in the U.S.

“But the problem,” she said, “is that it’s going to take years and years to get those things online. So what’s a utility to do in these circumstances? They’ve got siting constraints, they’ve got timing constraints, they’ve got supply chain problems which don’t seem to be going away. What are you going to build to serve that load?

“It seems like we’re entering a time of worry for these utilities,” she added. “The time frame doesn’t seem to match up between demand and generation. I think it’s just very hard to forecast what the actual capacity that’s available is going to be.”

This is the first installment of the Corridor Business Journal’s Energy in Iowa article series, which will extensively examine Iowa’s energy sector and its impact on the region’s economic development.