For two decades, the U.S. lived in an era of flat electricity demand. Efficiency gains, offshoring of heavy industry, and slower economic growth kept power consumption steady—even as the population grew.
That world is gone.
According to the latest U.S. Energy Information Administration (EIA) Short-Term Energy Outlook and the International Energy Agency (IEA) World Energy Outlook, the United States is now entering a historic growth cycle in electricity demand, driven by data centers, electrification, reshoring of manufacturing, and AI.
This is not a temporary spike.
It’s a new long-term structural trend that will reshape power markets, natural gas demand, grid investment, and energy policy for decades.
Electricity Demand Is Surging: +2.4% in 2025, +2.6% in 2026
The EIA projects that U.S. electricity sales to end-use customers will rise:
- +2.4% in 2025
- +2.6% in 2026
These are some of the largest annual increases in recent memory—and they break decisively from the flat or declining growth seen in the 2000–2020 period.
Where is the growth coming from?
The West South Central region—especially Texas (ERCOT)—is the leader.
Driving forces include:
- AI compute clusters
- Cloud hyperscale data centers (Microsoft, Amazon, Google, Oracle)
- Crypto mining facilities
- Surging manufacturing growth due to reshoring policies
In Texas alone, projected data center load is already so large that ERCOT expects tens of gigawatts of new demand over the next decade.
Multiple utilities have already warned: the grid was not designed for this pace of load growth.
AI & Data Centers: The New Power Giants
The IEA estimates $580 billion in global data center investment in 2025 alone.
In the U.S., these facilities are becoming some of the largest electricity consumers in the country.
How big is the load?
A single large hyperscale data center can require as much power as:
- A mid-sized city, or
- Up to 1 million homes
The key drivers:
- AI training (GPU clusters) – massive, continuous load
- Inference clusters – multiplying as AI enters enterprise use
- Cloud and storage expansions – driven by video, IoT, and medical data
- Edge computing buildouts – regional redundancy and latency reduction
Together, they’re creating a level of load growth unseen since the rise of air conditioning in the 1950s.
Natural Gas Wins in the Near and Medium Term
While renewable generation continues to scale, the U.S. is increasingly turning to natural gas to meet firm, dispatchable load.
Why?
- Data centers require 24/7 uptime
- Most AI compute clusters cannot tolerate intermittency
- Storage has not reached cost or scale parity
- New nuclear plants take a decade or more to build
- Coal retirements continue, removing baseload capacity
As a result, utilities are accelerating plans for:
- New natural gas combined-cycle plants
- Fast-start gas turbines (peaker plants)
- Grid-scale battery storage (to complement, not replace, gas)
This positions natural gas as the bridge fuel not just for decarbonization—but for digital infrastructure.
Long-Term Outlook: U.S. Electricity Demand Could Rise 20–30% by 2035
The IEA’s long-term modeling shows U.S. electricity demand rising significantly under all major scenarios.
Under Current Policies Scenario (CPS):
- Electricity demand grows steadily through 2035
- Data centers, EVs, and industrial growth anchor long-term load
Under Stated Policies Scenario (STEPS):
- EV adoption exceeds 50% of new vehicle sales by ~2035
- Heat pumps replace gas furnaces in many regions
- Industrial reshoring boosts manufacturing electricity use
- Result: 20–30% increase in U.S. electricity demand vs today
Under Net-Zero Scenario (NZE):
- Electrification accelerates dramatically
- Electricity becomes the dominant end-use energy carrier
- Total demand nearly doubles by 2050
Even the conservative scenario points to massive growth by historical standards.
Grid Strain: The Coming Bottleneck
The U.S. grid faces three major challenges:
1. Transmission constraints
The U.S. has added less than 1% per year in transmission capacity over the past decade—far below what is needed to move new renewable and baseload power.
2. Interconnection backlogs
More than 2,500 GW of generation and storage is stuck in queues—many projects will be cancelled due to permitting bottlenecks.
3. Reliability risks
As weather patterns become more extreme and baseload coal capacity retires, the grid increasingly relies on:
- Gas
- Hydro
- Renewables
- Large-scale batteries
Meeting AI-driven peak load will require new firm capacity, not just more intermittent generation.
The Era of Flat Demand Is Over
Economists and utilities used to refer to U.S. electricity demand as “stagnant.”
That description no longer applies.
The combination of:
- AI
- Data centers
- Crypto
- EVs
- Electrification of heat
- Reshoring of manufacturing
- Population growth in the Sun Belt
- Grid modernization efforts
…means demand is now accelerating across nearly every sector.
Even if EV adoption slows or crypto mining becomes more energy-efficient, AI alone is enough to reshape the U.S. power landscape.
What This Means for the Energy Industry
For utilities
Prepare for the largest buildout of generation and transmission capacity in 50+ years.
For natural gas producers
Power-sector demand will be a major growth engine through 2035.
For renewable developers
Storage, transmission, and interconnection reform are key to scaling.
For investors
The long-term capital cycle in power markets is just beginning.
For policy makers
Energy security, reliability, and affordability must be balanced with decarbonization.
Final Takeaway
The U.S. is entering a new age of electrification, driven not by homes or factories—but by algorithms, data clusters, and AI-driven compute.
Electricity is becoming the backbone of economic competitiveness.
And over the next decade, powering the digital economy will become one of the most important challenges—and opportunities—in the entire energy sector.
