Growing electricity demand creates urgent need for policy action, energy strategy

A report by American Clean Power Association calls for improved energy efficiency, an all-of-the-above strategy and rapid policy reform that will address interconnection and permitting delays.

March 12, 2025 Anne Fischer

Image: Pixabay

Electricity demand is on the rise. According to a 2024 study from Lawrence Berkeley National Lab, demand from data centers could double or triple by 2028. The U.S. National Power Demand Study from American Clean Power Association (ACP) notes that this unprecedented demand signals an opportunity for an all-of-the-above strategy “featuring efficient, economic, reliable, and rapidly deployable energy resources.”

The heightened and growing demand is primarily due to artificial intelligence (AI)-driven data centers and new manufacturing activity in the short term. The report notes that the move to an all-electric scenario along with “broad economic growth” add to increasing demand in the long term.

Due to the fact that data centers can be built in about three years, versus the five or more years it takes for power plants to come online, the report states that there’s an urgent need to speed up permitting and grid connection. Making this change requires faster policy action as well as an all-of-the-above energy strategy.

Demand is expected to grow unevenly across the U.S., depending on population growth, data center siting, manufacturing facilities and zero-emission mandates. The study finds that demand growth will initially be concentrated in the Eastern Interconnection and Texas, while later growth will be spread throughout population centers across the country.

Jason Grumet, CEO of the American Clean Energy Association said a bipartisan approach is necessary. “The necessity to embrace all American resources will only occur if both parties move beyond the idea that hydrocarbons and electrons have political affiliations,” he said.

The report finds that an additional (net) 730 GW to 765 GW of renewables, 160 GW to 175 GW of storage, 60 GW to 100 GW of gas, and 10 GW to 25 GW of nuclear and geothermal energy will be needed by 2040 to maintain grid reliability. Furthermore, the report stresses the need for improved energy efficiency, stating that 8% of the nation’s energy demand can be met through “expected energy efficiency savings over 2024 levels of savings.”

In addition to embracing the all-of-the-above strategy as well as improved energy efficiency, the report notes that some of the remaining challenges include outdated interconnection processes and challenges in building “economic” transmission projects, local opposition, siting/permitting delays and supply chain constraints. Policy recommendations include siting energy supply near the load centers, which may include micro-grids and off-grid solutions.

This study is built around three S&P Global cases: (1) planning case, (2) a case with faster demand growth and increased supply constraints, and (3) and a variation on the second case where more clean firm capacity is added. The report notes that renewables and batteries will be “by far” the main source of supply in all three cases. The caveat, however, is the constraint by siting and permitting barriers.

An all-of-the-above energy strategy is recommended in the report, but it points out the long lead times of some technologies such as advanced nuclear and geothermal, “reducing their relevance to addressing the coming power supply crunch.”

The U.S. National Power Demand Study was commissioned by the ACP, Alliance to Save Energy, American Petroleum Institute (API), Clean Energy Buyers Association (CEBA), National Electrical Manufacturers Association (NEMA), Nuclear Energy Institute (NEI) and the U.S. Chamber of Commerce.

To read the executive summary, click here. ACP said the full report will be released in the coming weeks.

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.