Reality Check: Electricity Load Growth Does Not Have to Undermine Climate Goals

We have what we need to power America through the next phase of economic growth with clean energy.

It is no surprise that electricity demand in the United States is projected to grow rapidly. The rise of data centers, reshoring manufacturing, and IRA-stimulated clean energy industry is increasing the amount of electricity we use, and causing dire headlines stating that electricity demand is stalling efforts to retire fossil fuel plants and even pushing our grid to the brink.

To be fair, these and other breathlessly reported stories are supported by several very real challenges facing electric utilities — not only load growth forecasts, but also the delays in getting new energy projects on line and extreme weather events straining the grid. But the coverage often assumes that the potential negative consequences of electricity load growth are inevitable and only manageable using conventional fossil-based technologies. The reality is that we have better solutions at our disposal and the resources to leverage them affordably.

The Myth: Projected electricity load growth is destined to undermine US climate change goals

The foregone conclusion, at least in the media, seems to be that carbon emissions will rise, electricity costs will spiral out of control, and grid reliability will continue falling. But the reality is much more nuanced. In fact, we need to treat load growth forecasts with a grain of salt, pay much more attention to how utilities respond to those forecasts in their investment plans, and make sure we are taking advantage of relevant policies and technologies to minimize costs and pollution impacts.

The Reality: Load growth is a feature, not a bug, of the clean energy transition

While significant coverage has focused on the impact of electricity load growth, the fact that much of this growth in electricity demand is consistent with climate goals needs to be more widely understood.

To meet climate goals, we need to be shifting vehicles, buildings, and industrial processes from fossil fuels to electricity. We need to produce green hydrogen to be an energy carrier for uses, like shipping, that are difficult to power with electricity directly. And we need the manufacturing capacity to produce all of this advanced technology in the first place.

All this will take power, yes, but as a direct consequence of electrification we will also reduce our reliance on fossil fuels and the associated carbon pollution. Using electricity directly is also far more efficient for most energy needs, so electrification often also results in less total energy use for the same economic value.

We need to take electricity forecasts seriously, not literally

Historically, utilities have struggled to accurately predict demand growth; from 2005 to 2015, utilities and grid operators consistently overestimated growth by an average of 12 percentage points. This led to a costly buildout of unnecessary fossil fuel capacity — above and beyond requirements for reliability and reserve margins. Customers paid for this burden, which resulted in tens of gigawatts of infrastructure that’s rapidly losing its place in a cleaner future.

So, while we know load growth is coming, we don’t yet know how much or how fast. We should avoid overreacting to every projection and focus on solutions that are adaptable, efficient, and future proof.

Utilities’ responses to load growth dictate cost and pollution impacts

Many utilities have announced investment plans that rely on new gas-fired power plants and the retention of aging, uneconomic coal-fired power plants to help meet projected load growth. This underscores the point that it is not load growth itself that drives pollution — it is the way that electric utilities choose to invest to meet it that matters.

And, again, utilities have an imperfect track record of forecasting their ability to meet growing load with clean energy resources. For example, looking back at utility forecasts from the early 2010s, we find that many utilities were forecasting only modest gains in renewable energy. Public Service Company of Colorado, an electric utility serving Denver and other areas in the state, announced in a 2011 regulatory filing that it would generate only about 22 percent of its electricity from wind and solar power plants by 2020. In reality, it achieved 38 percent by 2020 and has made impressive progress since, hitting 44 percent renewables in 2023.

Other utilities were even less ambitious — Duke Energy Carolinas nearly tripled their own forecast, reaching 8 percent renewables in 2023. And Florida Power & Light, having forecast as late as 2014 that the Sunshine State would only get 0.3 percent of its electricity from renewables by 2023, achieved a result 450 times higher, reaching 14 percent renewable energy last year.

We’ve done this before, and we can do it again, this time with better technologies and policies

Utilities have shown in the past decade that they can out-do their own forecasts for the share of renewable energy they can economically bring online. And utilities, over the past 50 years, have proven more than capable of responding to load growth much greater than we expect to see in the coming decade.

In the 1950s, electricity demand grew at a staggering 9 percent compound annual growth rate (CAGR). The 60s saw 7 percent, the 70s 5 percent, and even in the 80s, it was still at 3 percent before settling to 2 percent or less in recent decades. Current forecasts from utilities, backed up by Rhodium Group, suggest a more modest growth rate of 1.5–2.5 percent CAGR through 2035 — numbers we routinely surpassed for four straight decades while fueling unprecedented economic expansion.

Today, we have the advantage of rapidly advancing clean technologies — cheap solar and wind, increasingly efficient batteries, and smarter grid solutions that didn’t exist back then. The ability to power this new wave of demand with clean, resilient energy systems is not just within reach; it’s already happening. We’ve risen to this kind of challenge before, and we’re better equipped than ever to do it again.

Many solutions are emerging:

• Grid-enhancing technologies: RMI’s recent analysis shows that a $100 million investment in grid-enhancing technologies across five PJM states could unlock $1 billion per year in consumer savings by letting more low-cost clean energy connect to the grid faster, driving down power prices and reducing carbon pollution.
• Clean repowering: Adding new renewables and storage at existing interconnection points “behind the meter” and co-located with existing fossil generation can let new projects enter a different, faster queue — getting interconnection approval in a year or two. RMI estimates this is a 250 GW opportunity in the United States, worth $21 billion in savings to consumers nationwide.
• Virtual power plants: These collections of small-scale energy resources like EVs, smart thermostats, and home batteries aggregated together can provide at least 60 GW of on-peak capacity by 2030, deploying much faster than traditional infrastructure (in as little as 6–12 months).

We also have stronger policies to support utilities in deploying these clean energy solutions than we have ever had in the United States. The Inflation Reduction Act (IRA) includes many opportunities to address load growth and the cost-effectiveness of clean energy. For example, the “direct pay” mechanism in the IRA allows governments, nonprofits, and rural electric cooperatives to get cash payments from the US Treasury for the full value of federal clean energy tax credits, greatly improving the economics of renewables projects for these entities.

The New ERA program through the USDA recently announced its selections for the first round of awards for 16 rural electric cooperatives, which will use the funding to pump $29 billion worth of projects into rural communities. In some cases this will allow their communities to transition completely to clean energy sources before 2030. And, though time is limited with a September 2026 application deadline, the energy infrastructure reinvestment program through the DOE has the potential to accelerate clean energy investments, which would provide higher shareholder earnings potential and customer savings. Our climate goals have more support than ever, if we can guide utilities to leverage it.

And some regulators around the country are ensuring that happens. For example, the Washington Utilities and Transportation Commission issued a leading-edge policy statement directing utilities to update their plan on how to meet future energy needs to include IRA tax credits. It also encourages utilities to identify and evaluate transmission needs that may qualify for IRA programs (including clean repowering) and provides utilities with resources to guide their efforts to develop a plan. Similar regulatory actions are happening in Oregon, Georgia, and New Jersey.

Taking advantage of the solutions at hand

We can’t let gloomy coverage of the challenges facing the US grid blind us to the steps we can take to achieve a brighter future. We have the technologies we need and critical policy tools to scale their deployment. It is not electricity load growth that is threatening our climate goals, but the business-as-usual responses to potential load growth that both threaten our climate goals and fail to prepare our energy systems for the deeper energy investments that are already on the way. The ultimate cost and pollution impacts of load growth will be determined by the extent to which utilities and state regulators choose to take advantage of the solutions at hand.