The North American Electric Reliability Corp., the independent regulator charged with overseeing grid reliability, projects that national peak demand for electricity over the next decade will be the equivalent of adding California, Texas and New York to the grid a second time.
That level of demand growth is dwarfing the attempts underway to increase supply.
The result of the expanding gap between supply and demand is, according to some experts, notably Lisa Hansmann, a policy fellow at the Stanford Institute for Economic Policy Research, and Brian Deese, the Institute Innovation fellow at the Massachusetts Institute of Technology, becoming much more than a problem for residential electricity customers. They have termed the growing crisis a threat to national security.
Electricity demand is currently growing at its fastest rate since World War II, producing an energy crisis of “historic proportions,” Deese and Hansmann said in a recent article in Foreign Affairs. A number of new and cutting-edge industries, including but not limited to AI, are set to drive economic growth and competitiveness but require electricity to power them.
All of this translates into the very visible symbol of the crisis, ever higher electricity bills for consumers. Retail electricity prices are climbing at twice the rate of general inflation, with worse still to come. According to Deese and Hansmann, utilities across the country have received approval in 2025 for a record $29 billion in rate increases. Those rate increases have not yet arrived at the consumers’ doorstep, but they are in the queue.
The big problem is that no one seems to see a way for new power generation to keep up with demand. The demand from new industries is coupling with the growing success of electrification policies that have more homes heated and cooled by electricity as well as a larger proportion of the transportation sector moving to electric vehicles.
Supply chain problems and regulatory issues are adding to the difficulty of bringing new supply online. New natural gas powered plants are delayed because of long backlogs for natural gas turbines. Even though the United States leads the world in the use of nuclear plants, two new ones in Georgia and one in Tennessee are the first new nuclear generation sites to come online in 30 years. New nuclear facilities take time. Small-reactor nuclear is being explored but has limited ability to meet the demand.
Renewables are seen as faster to deploy, but securing the permits and meeting the transmission needs also takes time. Renewables have a new problem in that federal incentives for investment in renewables have been curtailed.
At every tun the problems of new supply are being enumerated. A recent panel discussion organized by the New Jersey Board of Public Utilities had its experts say that the soaring prices for electricity that have angered ratepayers and sent politicians scrambling for temporary fixes are not yet high enough to incentivize new investment. Prices need to continue to increase was the consensus.
Many experts say ways to get more out of the existing electrical generation infrastructure is the quickest way to a temporary fix while new facilities are created. That could mean finding new ways to fund rising prices. New Jersey’s rate counsel, Brian Lipman, has suggested that ratepayers cannot continue to carry the proportion of the burden being allocated to them.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
