U.S. utilities face surge in electricity demand, must develop own generation

According to Utility Dive, U.S. electricity load growth is expected to increase nearly 2 percent in 2026 and 2.5 percent in 2027, driven by data centers, manufacturing, and electrification of transportation and buildings. This surge represents almost 50 times the annual growth rate seen from 2005 to 2019, which was about 0.1 percent.

The rapid load growth is forcing utilities to rethink their traditional approaches to planning, investment, and customer engagement. Historically, utilities designed and built gas plants infrequently and relied heavily on power purchase agreements (PPAs) for generation needs.

However, as PPAs and build-transfer agreements (BTAs) become insufficient to meet demand, utilities are increasingly compelled to develop their own generation projects internally. This shift requires building expertise in areas such as land acquisition, permitting, financing, regulatory approvals, procurement, and construction.

Developing internal capabilities presents challenges, including the need to expand or create teams capable of managing all phases of project development. Utilities must decide how to start this process to keep pace with customer demand and timelines.

Utility Dive highlights that utilities have not previously operated at this scale and speed in self-developing generation projects, making this a significant transition for the industry.