Wood Mackenzie Says The US Has Entered A New Era Of Soaring Electricity Demand Driven By Data Centres, Electrification And Manufacturing Reshoring

Electricity demand in the United States is entering a completely new phase. After years of little growth, consumption is now rising at a pace that many industry professionals have never experienced in their entire careers. The rapid expansion of data centres, widespread electrification, and the return of manufacturing to the US are all driving this surge.

As a result, the debate has shifted toward what kinds of market structures and regulatory frameworks are needed to keep up with such fast-moving change.In this episode, host Ed Crooks speaks with Drew Maloney, President and CEO of the Edison Electric Institute. The organisation represents America’s investor-owned utilities, which together provide electricity to more than 70% of the US population. Drew explains that today’s challenges are highlighting a deep structural divide in the US power sector.

Vertically integrated regulated utilities can plan far into the future, often on 20-year timelines covering generation, transmission, and distribution. Competitive markets such as PJM Interconnection, however, are struggling to send the long-term investment signals needed to build new power plants.The conversation begins with a major political issue: electricity affordability.

Drew notes that several misunderstandings about household power bills have taken hold among the public. He refers to EEI research showing that 34 US states have kept electricity price increases below overall consumer inflation during the past five years. At the same time, the states that have seen the fastest price rises tend to be in deregulated markets, where capacity costs are rising but new generation is not coming online.

Ed references a study from the Lawrence Berkeley National Laboratory that looks ahead to 2025 electricity bills and analyses the impact of data centre growth. That research found that rising demand alone does not explain higher customer bills. Instead, the causes vary widely by region: wildfire-related costs in California, capacity market issues in PJM and New England, and other local factors.

The discussion then moves to another emerging question: should large electricity users such as data centres move off the grid and rely entirely on their own on-site generation? Drew argues that although this idea receives a lot of attention, it is far from becoming a widespread practice.

Creating on-site power systems that deliver extremely high reliability (“five nines”) is costly and still vulnerable without the grid as a backup. It would also divert investment and labour away from shared infrastructure that benefits everyone. In reality, most data centres still want to be connected to the grid, even if some use hybrid setups while waiting for their grid connections to be completed.

The episode also touches on developments in federal policy, including the emerging market-intervention philosophy of Laura Swett, ongoing discussions in Congress over bipartisan permitting reform, and the ratepayer protection agreement negotiated between the White House and major hyperscale data centre operators.

Drew ends on a positive note: although the current situation requires thoughtful management, it also represents a rare chance to modernise the US grid. With the right frameworks in place, this period of rapid change could ultimately strengthen the entire electricity system for the decades ahead.