Tennessee will soon become the No. 1 state for electric vehicle production as part of a power shift that could nearly double electricity demand in the Tennessee Valley over the next three decades, the head of the Tennessee Valley Authority said Thursday.
In a speech to the Chattanooga Rotary Club, TVA CEO Jeff Lyash said low cost and reliable electricity from TVA has helped attract automakers to plan or begin battery-powered vehicle production in Chattanooga by Volkswagen, in Smyrna by Nissan, in Spring Hill by General Motors and, within the next three years, in Stanton just outside Memphis by the Ford Motor Co. Collectively, the carmakers and affiliated battery plants are investing more than $10 billion across the Volunteer State to replace gas-powered cars and trucks with electric vehicles.
Lyash said the shift to EVs, combined with more electrification of home heating and industrial machinery to limit the burning of carbon-producing fossil fuels, should nearly double electricity demand by 2050 in TVA's seven-state service region.
Such growth would reverse the stagnation in power demand TVA has experienced over the past decade after years of growing electricity demand throughout most of TVA's 89-year history by 7% a year or more. Lyash said just as utility officials overestimated power growth a generation ago once energy efficiency measures cut demand, he said it is important that utility officials today not ignore the prospect of renewed electricity demand due to the shift away from other forms of energy.
"If we electrify the economy in transportation and other areas as a way to decarbonize energy, we're likely to double the amount of electricity we need in this region on the economy by 2050," Lyash told Chattanooga Rotarians. "If we are successful in this conversion, this represents a tremendous economic development opportunity for this area of the country."
Lyash said TVA helped attract $8.8 billion of investment and nearly 81,000 jobs in fiscal year 2021 and the utility could top that total this year. Lyash said TVA residential electric rates are below 80% of other U.S. utilities and TVA industrial rates are below 95% of the rest of the country. Even more importantly, Lyash said TVA's power delivery has maintained 99.999% reliability for each of the past 20 years — one of the highest reliability rates of any utility in the country with the third-lowest rate of carbon emissions of any U.S. utility.
TVA has cut its carbon emissions by more than 57% since 2005 and is on pace to reduce its carbon emissions by 80% below the 2005 levels by 2035 when TVA plans to shut down the last of the 59 coal-fired power plants it once operated.
Environmental groups are urging TVA to do more to limit its carbon emissions to meet President Joe Biden's goal of having a carbon-free electricity network by 2035. Lyash said that will probably not be possible without new nuclear power generation or widespread distributed power production and energy conservation because of the shift toward electric power in transportation and industry. To maintain the reliability of electric service when the sun doesn't shine or the wind doesn't blow to power solar and wind generation also will likely require some natural gas generation, Lyash said.
Lyash said TVA's growth in power sales could be curbed if Memphis Light, Gas and Water, the biggest of the 153 local power companies that distribute TVA power, replaces TVA as a wholesale supplier. Memphis Light, Gas and Water has solicited proposals from power producers after earlier studies indicated Memphis could buy power cheaper from other producers rather than TVA and save anywhere from $120 million up to $450 million a year.
Lyash said if Memphis Light, Gas and Water considers all of the benefits of TVA service, including power reliability, recreation and economic development assistance, "I think we remain the best choice for Memphis."
But the TVA president said local power companies are free to choose whether to stay with TVA or not, provided they give the required contract notice. Under its current contract with TVA, Memphis Light, Gas and Water would have to give TVA a five-year advance notice of its intention to leave the TVA fold.