Originally published on The Washington Indepenent
After nearly two decades of decline, load growth, the increase in electricity demand over time, has started trending upward again. Energy strategist and policy expert Emily Sanford Fisher explained, “There have always been periods of fluctuation, historically tied to economic cycles and industrial activity. Since 2023, however, despite continued efficiency gains, electricity consumption has been growing again.”
Recent U.S. electricity demand data confirms a shift after years of stagnation.
So, what’s driving this new pattern of load growth?
How will rising demand affect electricity prices and reliability?
And what does this shift mean for households, businesses, and the future of the grid?
What’s Driving The Renewed Growth In Electricity Demand?
When the economy grew after World War II, electricity demand increased as business and industrial activity boomed. But, more recently, electricity demand has been decoupled from economic growth, and flat or declining load was seen as evidence that efforts to use electricity more efficiently were working. “We were doing more with less electricity for many years,” Sanford Fisher explained.
- Data Centers
Much of the increase in electricity consumption is being driven by the rapid expansion of power-hungry data centers, especially centers designed for supporting artificial intelligence, since they require extremely high and constant processing power.
- Electrification
There are also electric vehicles, heat pumps, and industrial electrification that are adding incremental demand. Electrification converts things that used to run on fossil fuels, like gasoline or natural gas, to run on electricity instead. The most notable examples are electric vehicles replacing gas cars and heat pumps that are replacing natural gas or oil heating systems.
Electricity is now used far more in daily life and tasks than even 20 years ago, which has shifted the seasons when it is most in demand.
In many parts of the country, the days when electricity demand was the greatest were the hottest because that’s when people used their air conditioners most. Heating was dominated by the use of natural gas, so electricity demand did not necessarily increase to those same high levels in the winter.
“Now, with greater electrification, we are seeing parts of the country that used to be ‘summer peaking’ flip to ‘winter peaking. This not only increases electricity use but also creates new challenges for running the electric grid,” said Emily Sanford Fisher.
Why Did Load Growth Slow Down For So Long?
Beginning in the 1990s, load growth slowed, and from around 2005 to 2020, it flattened. The introduction of energy efficiency standards improved the performance of appliances, lighting, and industrial processes, and economic activity shifted toward less energy-intensive sectors like services and technology.
“Efficiency gains in the last 30 years were truly amazing,” noted Emily Sanford Fisher. “More efficient washing machines, refrigerators, and light bulbs really made a difference. Even as American homes grew in size, energy intensity – how much electricity households needed – decreased. And, there were similar improvements in efficiency in the industrial sector,” she continued.
“After the market crash in 2008, it really seemed that electricity demand growth had been decoupled from GDP growth,” said Sanford Fisher. “We could do – and were doing – more with less electricity."
Will Load Growth Continue In The Long Term?
Current indicators suggest that demand growth will persist, though the pace may vary by region and sector. The trajectory depends on policy decisions, technology adoption rates, and economic conditions.
Continued electrification and digitalization point toward sustained increases, while efficiency improvements may offset some of that growth. The interplay between these factors will shape long-term forecasts and investment strategies.
“Some parts of the country are seeing rapid electricity growth, thanks to data centers and re-industrialization,” said Sanford Fisher. “This growth is different from that we’d seen in the past, even in the post-War era.”
Single customers are seeking huge amounts of power, like data center customers that need as much power as an entire town.
For utilities, it can be hard to know if this demand is real and will last, as developers often make the same request for power in multiple locations. But, even if some of this demand is inflated, we expect that continued electrification – industrial, transportation, and heating – will continue to drive demand up over the next decade.
Policies can speed this up or slow this down, but the trend is toward continued electricity demand growth.
Emily Sanford Fisher Explains The Impact On Electricity Prices
Electricity prices are rising due to increasing demand and the need for significant investment in new energy infrastructure.
The electric system is designed to meet peak load, which is the maximum amount of electricity that could be demanded on any one day.
“When demand grows, this often requires investment in new generation resources to provide extra power and new transmission and distribution lines to deliver that power to new customers,” said Sanford Fisher.
These investments are large, sometimes in the hundreds of millions or billions of dollars. Electricity rates typically spread these costs over time, allowing utilities to recover expenses gradually while limiting sudden increases in customer bills.
Some increases are inevitable as demand grows. Over time, however, fixed system costs can be distributed across a larger customer base, which may help reduce individual bills.
Retail electricity rates are overseen by state regulators, who are working with utilities and data centers to ensure that large new users contribute to the infrastructure required to serve them.
In the near term, wholesale market prices for electricity are increasing, and these increases are already being felt by customers in some regions.
It can take years, if not decades, for new generating facilities and transmission lines to be built, and current supply constraints are driving up wholesale energy and capacity prices.
In some regions, these wholesale costs significantly influence the prices paid by retail customers.
Governors, consumer advocates, and system operators are exploring ways to accelerate infrastructure development and reform markets to address rising costs, though these solutions will take time to implement.
Balancing Reliability, Affordability, And Growth
The return of load growth introduces both opportunities and challenges. A growing customer base can support investment and innovation, but also requires careful planning to maintain reliability and affordability.
Policymakers and regulators must balance the need for infrastructure expansion with the goal of keeping electricity affordable. The general consensus is that demand growth should be a good thing for the economy and for customers, but the benefits it can provide won’t happen by accident.
In closing, Sanford Fisher emphasized that “Ultimately, all stakeholders will have to work together to manage demand growth.”