An electricity plug in front of a red lamp.
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In the courtroom of energy supply, data centers and AI make the case that electricity demand will grow strongly between now and 2030. On one side, China argues that solar and wind renewables will fill the gap, and their growth in 2025 is strong evidence for this. On the other side, the U.S. administration is trying to suppress solar and wind while arguing that new fossil gas plants and revitalizing old coal plants, plus a massive leap for nuclear energy, is the way to go. In China, solar and wind are getting cheaper. In the U.S. fossil electricity and new nuclear are getting more expensive. The result? Electricity prices will shoot up in the U.S.
A new analysis by Wood Mackenzie crunches the numbers which clarify the U.S. position, and we will look deeper into this. But first, a previous analysis by Ember clarifies the global position, and reveals how China is the central player. Solar renewables are driving growth in the power sector. Worldwide success of solar and wind will continue to allay the need for fossil power. Wind and solar renewables are growing fast, and they are forecast in 2025 to meet all new demand for electrical power. The generation of fossil electricity will be flat in 2025 compared with 2024—the first time since the Covid pandemic of 2020.
The U.S. Position.
Through 2030, fossil electricity from coal and gas can provide 40-75% of demand growth in the U.S. With the U.S. preparing for roughly 90 gigawatts (GW) of peak demand growth through 2030, gas and coal generation will only be able to meet about 37 GW, or 41%, of this growth, according to Wood Mackenzie. But this could rise to 67 GW, or 75%, if the retirement of some coal/gas power plants (98 GW) are deferred, which has already started.
But coal has big problems, and this adds much uncertainty to the upper limit of 75%. One is air pollution – particulate matter that causes asthma, strokes, heart attacks, and cancer that may contribute worldwide to 10 million deaths every year. Resurrecting coal hardly seems feasible economically: In the U.S. coal electricity is now down to 15% from its peak of 50% supply in 2011, and it’s expensive to recommission power plants that have been closed.
But new gas-fired power plants also have problems. According to Wood Mackenzie, orders are delayed due to supply chain bottlenecks and “the rising cost of gas turbines will make these additions very expensive in comparison to current wholesale electricity prices.” New orders still face at least a five-year wait for delivery. The cost of new-build gas-fired plants has soared from US$1,400/KW four years ago to over US$2,400/KW today.
The Hidden Cost Of Trump Edicts.
President Trump, on his first day in office, declared energy was a national emergency. But it wasn’t energy, it was a predicted shortage of electricity due to expansion of data centers and AI. This has been challenged in court by 15 states, according to Canary Media. Two power plants in May were ordered to stay open, just days before they were due to close: the J.H. Campbell coal plant in Michigan and the Eddystone oil and gas-fired plant in Pennsylvania. These orders were later extended for another three months. This could cost consumers $100 million for the J.H. Campbell extension, according to the Public Service Commission of Michigan. Canary Media stated if all power plants in the attached table were blocked, Trump’s term in office could mean additional electricity costs to consumers of billions of dollars per year.
Scheduled closures of fossil power plants in the U.S.
EIA/Canary Media
From the table, 27 GW of coal and 11 GW of gas-fired plants are scheduled to be retired by 2028. 27 GW is about 15% of the total coal power plants operating now. Three observations from Canary Media: one, the U.S. now gets more electricity from wind and solar than it does from coal. Two, in the past 15 years or so, 140 GW of coal power plants have closed and carbon emissions from the U.S. have dropped in sync.
Three, “The administration’s desire to revive America’s dirtiest form of power will only exacerbate the nation’s brewing utility bill crisis. The price of electricity has been rising for several years, and despite promises of slashing energy costs, Trump’s pro-coal, anti-renewables agenda is making things even worse.” The price surge of new electricity in the next few years, plus general pass-along tariff increases, may seriously curtail Donald Trump’s promise to reduce inflation.
Renewables Can’t Be Shunted Aside.
The WoodMac report concludes fossil electricity in the U.S. cannot supply all of the growth demand, said Patrick Huang, senior research analyst at Wood Mackenzie. “Robust investment in renewables and storage will be required to meet U.S. demand growth in this timeframe. Also, given that solar only shines during the day and economic long-duration energy storage is not widely available, wind generation needs to be a key part of meeting demand growth.”
Renewables are the cheapest and most readily available resources, and variability can be mitigated when paired with energy storage.
Battery energy storage systems (BESS) should not be underestimated. Rystad Energy has reported that global battery systems set a record 200 gigawatt-hours (GWh) last year, implying a growth rate of 80%. Beginning at 0.5 terawatts (TW) in 2024, total BESS capacity will rise by almost ten times to over 4 TW by 2040.
California in 2020 had a few hundreds of MW of grid batteries. By 2025, this had risen to 15,000 MW (15 GW), and is aiming for 52,000 MW (52 GW) by 2045. Viable goals are to offset power shortages in summer heat waves, and to reduce use of fossil electricity costs during evenings.
Nuclear and geothermal can contribute clean baseload power but are longer-term solutions. The Trump administration’s new vision for nuclear energy, including small modular reactors (SMRs), won’t be available commercially until after 2030, when nuclear power will be significantly more expensive.
According to Wood Mackenzie, a new movement has begun for utilities trying to embrace data centers. Called “bring-your-own-capacity”, the data center brings their own or third-party power capacity, including batteries. Google is pushing a model like this that includes Camus Energy, Cloverleaf Infrastructure, Voltus, and Piclo.