The North American Electric Reliability Corporation (NERC) warned on Thursday that electricity demand in the United States is outpacing supply, urging policymakers to prioritize reliability. Demand for energy is escalating swiftly, and it’s outstripping the projections set in their recent Long-Term Reliability Evaluation for 2025, which was released on the same day.
NERC noted that the growth of resources and transmission capabilities is not keeping pace with the requirements posed by new data centers and other large energy consumers. The report mentions that most of the upcoming resources are battery storage and solar power, which depend on weather conditions and add more complexity to managing a reliable energy grid. At the same time, an increase in the retirement of fossil fuel generators is expected in the next five years, which will further challenge the system’s capability to handle spikes in demand.
A December report from the Institute for Energy Research (IER) pointed out that several states led by Democrats have set strict green energy targets and mandates that distort the market, diminish reliable energy supplies, and increase costs. Some states are tightening regulations around pipelines and fracking, even while phasing out coal and nuclear power under the pretext of environmental protection.
Democratic leaders seem to back climate policies while claiming that government mandates are crucial for renewable energy, yet they create inconsistencies in supply. NERC’s report indicated that a shift towards weather-dependent resources and reduced fuel diversity raises the risk of shortages during winter, further complicating supply issues and new resource integration. There are growing concerns that the industry may struggle to meet the rising demands from data centers and large energy loads.
According to the report, several regions could experience “high risks” to grid reliability by 2030, including parts of the Midcontinent Independent Operators, PJM Interconnection, the Power Reliability Council of Texas, and the Western Electricity Coordinating Council, among others. The NERC Reliability Report emphasizes that state and federal environmental mandates are significant contributors to the challenges faced by PJM.
These mandates create immediate compliance requirements for energy generations, while simultaneously, the Renewable Portfolio Standards lead to numerous projects that exceed available capacity. NERC’s 2025 Reliability Report suggests that cooperation in planning and operation among jurisdictions is essential for managing electric and natural gas systems.
John Moura, NERC’s Director of Reliability Evaluation and Performance Analysis, indicated that the existing infrastructure isn’t adapting quickly enough to support the current demands. While efforts were made during the previous administration to address energy policies, states ultimately dictate their energy outcomes. IER argues that electricity prices largely reflect state policies, with higher costs often found in Democratic-leaning states that tend to vote for the same party in presidential elections.
NERC’s report anticipates a 24% rise in demand from data centers, with various politicians, spanning both parties, warning about the potential repercussions of rapid data center developments on electricity prices and grid stability. Some experts argue that this demand is simply revealing existing issues rather than causing them, emphasizing the need for adequate investment in grid infrastructure.
