Americans use more electricity today than ever, and the trend shows no signs of stopping.
According to data from the IEA, electricity demand was up 2% in 2024. Worse yet, the agency says growth will continue at this pace annually through 2027.
As the world tries to distance itself from fossil fuels, more products have adopted electrification. From cars and hot water heaters to power generation, more products are ditching gas for electricity. But it isn’t as easy as throwing all your gas-powered products away.
While electrification presents a number of opportunities for business and emerging industries, several questions come to mind. Why are Americans using so much electricity? Where is it coming from? Can the current grid support all the additional power?
And, most importantly, how do we meet increasing demand?
We can’t pin one culprit for the county’s rising electricity use.
Electricity demand is growing for many reasons, each with pros and cons. Combined, they strain the grid and leave utilities and consumers scrambling.
Electrification, the art of converting gas-powered things into electrical ones, isn’t new. But the country’s move to electrify everything is.
Electricity adoption is rising, from electric vehicles (EVs) and stoves to hot water heaters, heating systems, and power generation. And while some people might scoff at using an electric car or stove, the early data is encouraging. Electric products are more efficient and less polluting than their gas-fueled counterparts, saving money and reducing pollution.
But powering up a bunch of electrical products has its drawbacks, too. Though we’re reducing pollution, we’re adding stress to the grid. All that extra electricity must come from somewhere. Though renewable energy production has increased dramatically, fossil fuels still do the heavy lifting.
According to EIA data, fossil fuels like natural gas and coal supplied nearly 60% of our electricity in 2024. Meanwhile, green energy sources like solar and wind produced about 5% and 11%, respectively. The EIA predicts natural gas production could slip slightly because of rising prices, allowing renewables to shoulder more work.
Many of us have seen AI’s power firsthand, but it comes at a cost. According to a recent MIT interview, data center electricity demand exploded from 1-2% of total U.S. consumption to 4-5%.
Data centers housing thousands of servers operate around the clock, drawing power for their primary and redundant systems. As more data centers come online across the U.S., each one drives up demand and stress on the grid.
Though some think renewable energy could be the answer, solar and wind aren’t consistent enough to maintain 24/7 power. Even with renewable energy supplying power to data centers, fossil-fuel backups are still around.
American companies are moving operations back to the United States, reversing a decades-long trend.
The race to bring production home helps companies in several ways. Domestic manufacturing shortens critical supply chains, making the entire chain more resilient. It also brings high-paying skilled jobs back to the U.S., supporting the economy.
At the same time, the federal government is encouraging more manufacturing development. Emerging industries like solar panel production are popping up across the U.S., reducing the country’s reliance on overseas products.
Climate change has had an incredible impact on our environment and grid.
Average temperatures in the U.S. are increasing, and nine of the top ten warmest years on record came after 1998. The issue isn’t unique to us – global temperature spikes have sparked concern from scientists worldwide.
Rising temperatures mean hotter summers, forcing people to crank the air conditioning longer. Heat waves supercharge electricity demand, putting intense pressure on the electrical grid.
But summer isn’t the only threat affecting energy use. People use electricity in the winter to heat their homes, and longer cold snaps mean higher peaks and valleys.
Natural gas plants create about 40% of our nation’s electricity, but for how long?
Experts have already predicted natural gas price hikes, which could open the door for other energy types. Renewables are making a charge, thanks to a combination of incentives, better technology, and climate concerns. According to SEIA data, solar grew from 4% of new electric generating capacity in 2010 to 64% in 2024. If you add battery storage and wind, renewables comprised 93% of new capacity last year.
Even nuclear energy is having a renaissance as the country leaves no stone unturned. States like California are investigating new nuclear energy options and halting proposed plant retirements. For example, despite pressure to shut down the Diablo Canyon nuclear plant, the facility will remain open because it produces about eight percent of California’s energy.
One area receiving less interest is coal, which has been on the outside looking in for years. Coal use has fallen drastically since 2015, collapsing from about 35% of the nation’s electricity production to 16%. Natural gas, solar, and wind have filled the void.
While closing coal plants has created an energy gap, renewable projects are putting old mines and power plants to use.
Though it might be hard to believe, today’s grid is largely the same as the one we had 25 and even 50 years ago. About 70% of transmission lines are over 25 years old, and many parts are nearly 50 and even 60 years old.
While age might be a number for some, it’s a threatening sign for the electrical grid. Decades ago, consumers relied on hundreds of baseload power plants fueled by coal, oil, or natural gas for electricity. When use spiked, peaking power plants came online to generate added power to meet demand. All was good.
Today, the landscape is dramatically different. Sure, there are still baseload and peaking power plants, but now we have renewables, VPPs, microgrids, and smart grids to contend with.
Solar, wind, and other renewables are changing the energy landscape but face bureaucratic red tape and interconnection delays. As a result, crucial electricity must wait to reach the grid and consumers.
Meanwhile, distributed energy sources give consumers the power to create, store, and use the power they generate. When these consumers combine, they create virtual power plants (VPPs) capable of powering the grid during emergencies or peak demand.
Grid upgrades are more critical than ever, especially as the infrastructure struggles to adapt to today’s power landscape. Unfortunately, to fully upgrade the grid is a multi-trillion-dollar and multi-year investment.
As the grid ages, it becomes less reliable.
Storms can tear down wires, physical attacks can damage substations, and cyberattacks can take entire regions offline. Even day-to-day energy generation could become troublesome if there’s an issue supplying constant power.
Imagine rolling power outages during a days-long heat wave, cold snap, or natural disaster. If the system can’t deliver or produce electricity, it immediately puts people in danger.
Identifying a problem is one thing – addressing it is another.
In 2021, the Infrastructure Investment and Jobs Act (IIJA) tasked the Department of Energy (DoE) with allotting more than $10 billion to improve the grid. Among the funds are $5 billion for the Grid Innovation Program, $3 billion for Smart Grid Grants, and $2.5 billion for Grid Resilience Utility and Industry Grants.
The DoE’s Grid Resilience and Innovation Partnerships (GRIP) Program aims to improve grid resilience and meet future energy growth. As of December 2024, the program has invested about $7.5 billion into 105 projects across all 50 states. But what are these billions of dollars going to specifically?
Microgrids – These localized power networks connect to the larger electrical grid but can operate independently. Microgrids often use a combination of energy production methods, including combined heat and power (CHP) systems, wind, and solar.
Microgrids provide stable and reliable energy to small communities and critical places like hospitals, where outages can be dangerous.
Smart Grids – Smart grids use modern technology to create two-way communication networks between utilities and consumers.
Comprehensive smart grid technologies limit electricity loss during transmission and distribution and improve load balancing along the grid. They also monitor, optimize, and improve electricity use and delivery.
Renewable Energy Interconnections – As previously mentioned, the current electrical grid is old. Unfortunately, that makes emerging energy production methods like solar and wind harder to connect to current infrastructure.
Improving substations with retrofits creates new connection points, simplifying the interconnection process. But improving the grid is only half of the equation. Renewable energy projects are often mired in red tape, resulting in delays and backlogs.
By removing obstacles and streamlining processes, more power can come online faster.
From the moment we wake up until we go to bed, we’re never more than a few feet from an electronic device. As a result, the amount of electricity we’re using spurs energy demand.
The United States is facing a two-fold problem. On the one hand, it must find ways to add power systems to the grid to meet exploding demand. On the other, there needs to be a plan to improve grid performance while marching toward carbon reduction initiatives. No matter what, the United States must adapt quickly to meet an evolving world. The next step in our future requires investments, time, and innovation.
With enough of all three, we can push through this moment and emerge with a cleaner, more reliable, and well-supported future.