One of the hottest current topics throughout Ameria is data centers, but the emerging story is much bigger than data centers. The United States is experiencing a sustained period of rapidly escalating electricity-demand growth. And it is happening as the country is trying to modernize aging transmission systems, replace or retain older generating plants, connect enormous amounts of new renewable generation and storage, accommodate new factories, and supply AI and data centers whose individual power requirements can rival those of cities.
Power availability is becoming an economic-development constraint. A company can have financing, property, permits, customers and political support and still discover that the electricity it needs cannot be delivered where and when it will be needed. For some of the nation’s largest projects, reliable power now ranks alongside workforce, land, and incentives as a primary site-selection consideration.
The environment has shifted dramatically. For roughly 15 years, U.S. electricity consumption showed little growth. The U.S. Energy Information Administration (EIA) reports that electricity demand increased only about 0.1 percent annually between 2005 and 2019. Between 2020 and 2025, however, it grew approximately 1.7 percent annually. In an analysis released earlier this year, EIA forecasts U.S. electricity load to increase another 1.9 percent in 2026 and 2.5 percent in 2027.
Growth is particularly striking in Texas and in the PJM power grid region. The PJM grid services all or portions of 13 states and Washington, D.C., and it is the nation’s largest competitive wholesale electricity market.
The North American Electric Reliability Corporation’s latest long-term reliability assessment projects that North American summer peak demand will grow more than 69 percent above the growth projected just one year earlier. New data centers associated with AI and the digital economy account for most of that increase. NERC also warns that uncertainty surrounding both demand and the pace at which new resources can be built is a significant reliability risk.
This is no longer a future problem. The U.S. power system was already under pressure before the latest AI explosion. Aging infrastructure, extreme-weather vulnerabilities, generator retirements, transmission congestion and slow interconnection processes were already concerns. Now, the speed and scale of new demand are creating additional and more immediate risks.
Texas provides an extraordinary example. ERCOT reported in June that it was tracking more than 438,000 MW of requests from large electricity users seeking to connect to the Texas system. Nearly 89 percent of that proposed load would come from data centers. Many proposed projects may never be built, but the enormous size of the queue illustrates the magnitude of the demand developers are contemplating.
Texas responded this summer with something particularly interesting. ERCOT and the Public Utility Commission of Texas created the country’s first batch study process for large electric loads. Instead of reviewing giant projects one at a time, ERCOT will study qualified projects of 75 MW or more together, determine how much load the system can accommodate and where, identify required transmission improvements, and determine which projects can proceed. Some large users may obtain a pathway to connection by accepting operating conditions that allow their consumption to be curtailed when transmission constraints occur, but that option will not work for every facility.
This ensures that a fundamental change in economic development will result. Historically, a community might recruit a major employer and then arrange utility service. Increasingly, available grid capacity itself may determine where a billion-dollar facility can be located.
Texas is also building new dispatchable generation. A 456-MW natural-gas addition station in Houston came online in June with financing through the Texas Energy Fund. Another Texas Energy Fund loan supports 860 MW of new natural-gas generation in West Texas. A 460-MW peaking plant opened in May.
The Texas Energy Fund deserves attention because it illustrates one way government is responding to the power demand problem. The state provides qualifying power-generation projects with long-term financing at a 3 percent interest rate to encourage new dispatchable generation within ERCOT. Rather than government itself building the plants, state financing is being used to accelerate private investment in generating capacity.
The federal government is responding as well. The Department of Energy recently launched its “Speed to Power” initiative and announced that approximately $1.9 billion has been allocated to encourage and increase the capability of existing transmission infrastructure. Rather than relying exclusively on new transmission corridors, DOE is encouraging advanced reconductoring, dynamic transmission technologies and other approaches that can move more electricity through existing infrastructure and rights of way.
In June the Federal Energy Regulatory Commission (FERC) ordered all six regional grid operators under its jurisdiction to justify or reform their rules governing how data centers, manufacturing facilities and other very large electricity users connect to the electric grid.
The PJM region has begun flashing warning signals for months because its 2027–28 capacity auction became the first in the market’s history in which total capacity commitments fell short of PJM’s reliability requirement. Capacity secured through the auction and related arrangements fell 6,517 MW short of forecasted requirement as demand continued to grow faster than new generation resources.
DOE stepped in and authorized PJM to call on backup generators located at data centers and other major facilities for help during periods of elevated electricity demand and generation outages. It was a short-duration emergency order, not a permanent policy, but it illustrates how large private electricity users may increasingly be viewed not simply as consumers but also as potential grid resources during emergencies.
Meanwhile, the United States is adding enormous amounts of renewable generation, and Texas is at the center of that transformation. EIA expects utility-scale solar generation in ERCOT to exceed coal generation for the first time on an annual basis in 2026. Solar’s share of ERCOT generation increased from 4 percent in 2021 to 12 percent in 2025, and further growth is expected. Battery storage capacity is expanding rapidly as well.
Nationally, wind and utility-scale solar generated approximately 17 percent of U.S. electricity in 2025. Renewable generation is expected to continue growing rapidly through 2027.
But adding generating capacity is not the same as solving power availability. A megawatt of installed renewable capacity is not operationally identical to a megawatt of dispatchable gas or nuclear capacity because electricity must be available when consumers need it, not simply when a resource is producing. Wind and solar production vary with weather and time of day, creating a continuing need for some combination of dispatchable generation, storage, transmission and demand flexibility during periods of lower renewable output.
The present debate is becoming less about “renewables versus fossil fuels” and more about how to assemble the right portfolio of resources capable of delivering reliable power at every hour.
For decades, economic development teams competed for new employers by offering land, tax incentives, workforce programs, roads and expedited permitting. Now they may have to answer another question first: How many megawatts can you reliably deliver, and when?
The answers may change site-selection decisions throughout the United States. Power may soon become what interstate access was to an earlier generation of economic development. A city, county, utility or state that can offer dependable electricity, predictable interconnection timelines, adequate transmission capacity and a workable permitting environment could have an enormous competitive advantage.
Over the next several years, economic development and energy infrastructure will likely become increasingly inseparable. Communities will still need roads, water, workers, incentives and available land. Increasingly, however, one of the most valuable assets a community can offer may be something far less visible – reliable power that is available anytime it is needed.
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