Demand for electricity is on the rise for the first time in decades, and a new report, Rising current: America’s growing electricity demand, from global consultancy ICF, explores the energy sources that will power that load and the potential impacts on reliability and affordability of electricity in the United States.
The report finds that new generation capacity additions will need to rise to about 80 GW per year from 2025 to 2045, up from about 40 GW per year installed over the past five years. What’s driving this growth is increased use of artificial intelligence (AI), cloud-based services and cryptocurrency development. In addition, the electrification push of everything from homes to transportation to industry is fueling demand.
Peak demand is also growing. The report finds that, compared to 2023, U.S. peak electricity demand is now expected to grow 14% by 2030 and 54% through 2050.
Rising demand will not be felt evenly in all areas of the country, and the report breaks demand down to service territory.
The greatest growth will be seen in the Dominion service territory within PJM on the east coast, Southern Company service territory within Southeastern Electric Reliability Corporation (SERC) within the eastern connection, and ERCOT West zone in West Texas. These territories are forecast to see total electricity demand growth exceeding 7.1% and peak demand growth exceeding 5.6% through 2035 compared to 2025 levels, as shown in Figure 3.
The report notes that growth is driven in different areas by different factors. For example, the IRC analysts find that in California’s CAISO territory, 35% of electricity demand forecast by 2040 is attributable to new data centers, electric vehicles and building electrification. In contrast, one-third of ERCOT’s expected load growth is from cryptocurrency mining operations. The report authors caution that “as America’s economic transformation takes shape, many additional areas of the country could be pulled into dramatic demand growth paradigms.”
Reliability
The spike in demand creates a challenge for utilities, grid operators and regulators because, until now, they used reserve margins of about 15% of generation capacity over forecast peak demand. (Reserve margins are the difference between the available generation capacity and the expected peak demand.) IRC analysts mapped demand growth estimates against generating capacity online today and found that much of the U.S. will experience below target reserve margins as soon as 2030.
“This situation could be exacerbated by supply chain hurdles. In a hypothetical scenario in which no generation is added to the mix and current peak demand growth forecasts hold, capacity would not be able to meet peak demand in the U.S. by 2028.”
The report authors contend that to maintain the needed reserves, grid operators will have to review new generation projects in the queue, increase output of existing generation and extend the life of existing power generation.
Affordability
Rising electricity demand is bad news for ratepayers who will see a rise in electric bills. ICF forecasts an increase in residential electricity rates between 15% and 40% by 2030 compared to 2025, depending on the market. By 2050, electricity rates could double for some of these utilities. The report notes that electric system stakeholders will look to cut cost pressures by using demand-side management programs that promote demand response, energy efficiency and behind-the-meter capacity such as rooftop solar and battery storage. ICF estimates that “broad promotion” of these programs could help meet 10% or more of electricity demand by 2030 compared to 8% in 2025.
Fast tracking resources is one way to ensure that the United states has enough electricity and the ICF report states that the next several years will be especially challenging. “The sudden surge in new demand is happening at a relatively fast pace compared to the time it takes to build new generation, transmission, and distribution.”
Potential solutions
The ICF report states that demand-side management programs, such as programs that promote energy efficient appliances and rooftop solar, as well as other load management strategies like virtual power plants, can help offset costs for several reasons. They offset the need for spending on new generation, transmission and distribution, and they’re quicker to deploy than utility-scale generation. ICF analysts estimate that “well-designed” customer programs and other load management resources could cut peak electricity demand by 10% by 2030 nationwide, compared to 8% in 2025.
The report states that, “in relative terms, customer programs are forecast to outpace new utility-scale generation.” But it adds what it calls the “unavoidable truth,” that new utility-scale electricity generation will still be needed. Like other industry associations, trade groups and politicians, ICF models indicate that an all-of-the-above generation mix is needed to meet demand while ensuring affordability and reliability.
During periods of peak demand, a swing from 8% to 10% is often a difference-maker when it comes to reliable power. Moreover, the last few percentages of peak demand are the most expensive to meet, so shaving that peak by even a few points is very valuable. Additional investment can help ensure customer programs continue to play that critical reliability role in the coming decades.
ICF states that U.S. installed generation needs to grow at 3.3% per year between 2025 and 2050 to adequately meet demand, and it expects that gas, onshore wind, solar, and energy storage will account for most of the installed capacity by 2050. ICF also sees an important role for new nuclear and fossil fuel generation with carbon capture and sequestration. The caveat, however, for the rebirth of nuclear is that it “also faces significant challenges and limitations that will need to be overcome to determine whether it will expand its role in the energy mix.”
A final challenge in meeting increased demand is the need for improved transmission and distribution. ICF states that “solving the transmission and distribution challenge will require building new infrastructure, but utilities will also need to squeeze every last amp out of their existing infrastructure.” It suggests attaching dynamic line rating sensors to transmission lines, which ICF says is “far less expensive” than building new infrastructure.
(Read: These 3 technologies could deliver more solar and wind to the grid.)
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