Omaha Area Struggles With Power Capacity Shortage That Threatens Economic Growth

The Omaha Public Power District is running low on available power capacity for its biggest potential users. That could threaten the region’s ability to develop economically, attract companies, add jobs and grow. The constraint comes as data centers spike the demand for power across the country, the electric grid needs significant modernization and communities in Nebraska push back against renewable energy developments that could bolster the grid.

OPPD currently projects it has less than 100 megawatts of available power capacity for new or expanding large customers for the next few years. That figure could vary depending on customer commitments and new energy generation coming online. For reference, a large data center could require 1,000 megawatts of capacity, while manufacturing facilities can range from a few megawatts to sometimes over 100 megawatts, experts said. OPPD said the utility has enough power capacity to support typical residential and commercial growth.

President and CEO Javier Fernandez said the utility also prioritizes growth from the defense and healthcare sectors. Essentially, Fernandez said, any new or expanding development requiring two megawatts or more could be at risk. “To give you an idea, some of the brand new, big, very tall buildings in downtown, those are six to seven megawatts,” he said.

Economic development leaders are concerned that if power capacity in Nebraska’s largest metropolitan area continues to be limited, it could put the Omaha area and the state at a competitive disadvantage. “We are bending over backwards; we’re trying to figure out creative solutions: How do we bridge this?” Fernandez told the Flatwater Free Press. “Can we buy capacity from other utilities? Literally, no one has excess capacity. Everyone is in the same boat as we are, so now the pinch, so to speak, it’s, well, growth has to slow down, maybe?”

At the same time, OPPD, which serves eastern Nebraska, is doing long-term planning to determine what its energy and system needs will be over the next 10 years. To meet the demand through 2036, the utility and its board face a decision whether to grow OPPD’s energy portfolio by about 1,000 megawatts on the low end or more than double the utility’s portfolio on the high end, according to OPPD’s initial planning results.

If the utility builds too small, the Omaha metro could end up back in the same shortage for economic development. If the utility builds too big and the demand from big customers, like data centers or manufacturers, doesn’t materialize, OPPD’s ratepayers will likely have to eat the cost.

Modernizing The Grid Electric grids across the country, including OPPD’s, are in a major transition. Power plants and other infrastructure are aging. Building new and replacing old with today’s high prices is expensive, Fernandez said. It could also take more time as everyone builds at the same time.

Climate change also is straining the grid in real time with more winter storms and longer hot summer days. In 2021, Winter Storm Uri caused utilities to scramble for power. In an effort to preserve the grid, OPPD and others in the Southwest Power Pool rolled blackouts. Afterward, the regional transmission organization required its members to keep more power capacity in reserve. The requirements caught OPPD off guard and ate into the utility’s available capacity, contributing to its current struggles.

And like many other utilities, OPPD underestimated the growth coming to the area, with more data centers and manufacturing being built and industries electrifying.