Study: Electricity Demand Could Increase More Than Predicted

U.S. electricity demand could climb by 26% through 2030, more than twice the rate that many utilities have used in their long-term planning, a new study indicates. A projection from global consulting firm ICF, released in May, attributes this sharp increase to several converging trends, such as accelerating electrification, the rapid expansion of AI-driven data centers, and a renewed wave of domestic industrial production. Over the same period, ICF anticipates that retail electricity prices could rise by as much as 40%.

This outlook marks a notable departure from earlier models, which had assumed more gradual load growth and a slower adoption of electrified systems. ICF’s revised estimates account for increased activity across sectors including residential and commercial building electrification, electric vehicle adoption, hydrogen development, and semiconductor manufacturing. Federal policy incentives, particularly those in the Inflation Reduction Act and CHIPS Act, are also shaping a more demand-heavy industrial load profile than previously expected. Those incentives, however, are in jeopardy under the Trump administration.

Among the drivers of increased energy demand are data centers. With the expansion of artificial intelligence applications and cloud infrastructure, electricity consumption from data centers is projected to grow dramatically.

At the same time, the report outlines a series of challenges for regional transmission organizations and utilities facing this new growth trajectory. Many continue to rely on planning built around assumptions of stable or slowly rising demand. Should load growth accelerate beyond those expectations, utilities may encounter capacity shortfalls, grid congestion, and rising system costs. ICF urges a re-evaluation of planning frameworks, calling for updated forecasting methods and a strategic overhaul of generation, transmission, and distribution investment timelines.

Regional transmission organization PJM Interconnection, which manages the electric grid for all or part of 13 Mid-Atlantic states, including Pennsylvania, is seeing potential capacity shortfalls in the coming years, and working with federal regulators to revamp its interconnection regulations to bring more electric generation online quickly.

The outlook for electric prices mirrors these capacity concerns. A projected increase of 15% to 40% in retail electric rates is tied to mounting infrastructure demands, and higher costs for capital expenses. U.S. Energy Information Administration data backs up this projection, noting a 13% to 18% increase in residential electricity costs projected from 2018 to 2026.

For regulators, utilities, and policymakers, the implications are critical. Avoiding reliability gaps and price spikes will require significant coordinated action. ICF emphasizes the need for reforms across interconnection processes, planning protocols, and infrastructure deployment to align the grid with emerging consumption patterns.