Energy Crisis in the U.S.
The nation is currently grappling with an energy crisis, but it’s not due to increasing demands from data centers or artificial intelligence. Instead, it’s largely because power companies across many states are shutting down essential coal resources. At the same time, they’re increasing reliance on somewhat unpredictable power sources due to government-enforced renewable energy mandates, self-regulation, and the push of the so-called “Cut Inflation Act.” That’s a lot of expensive resources, like solar and wind power, along with storage batteries.
Former President Donald Trump recognized this issue early on, declaring an energy emergency on his first day in office. A few months later, he took additional steps, engaging with a trio of initiatives aimed at maintaining coal power generation. His aim was to preserve what he called “beautiful and clean coal” to continue supplying the affordable, dependable energy that Americans have relied on for decades.
These mandates allowed for continued coal generation which was previously set for closure. For instance, in Michigan, two units that were slated to shut down may stay operational. In Colorado, units slated for closure have their futures re-evaluated, yet in Arizona, the Cholla Power Plant was closed shortly after Trump urged companies to save money during a press conference.
Arizona differs from states implementing green mandates. Here, utilities have essentially no constraints. They are pursuing voluntary initiatives to reach “net zero” by 2050. This plan includes phasing out all coal generation by 2032 and focusing on solar, wind, and battery storage in response to what they expect to be a surge in demand—this at the estimated cost of billions. It’s no wonder, then, that Arizona is facing its own energy challenges.
When we examine the major regulated utilities like APS, TEP, and UNS, there’s an unsettling forecast. The combined demand for electricity is anticipated to escalate from 19,200 MW to 28,000 MW over the next 15 years. Just to give you some perspective, 1,000 MW can power around 250,000 homes. However, to meet this growing demand, Arizona would only require a net increase of about 989 MW of reliable energy from sources like coal, natural gas, and nuclear—compared to a staggering need of 22,543 MW from intermittent sources like solar and wind.
What’s intriguing is where all this natural gas is heading. Much of it is simply replacing existing coal resources instead of boosting affordable energy sources on the grid. For example, SRP’s board has approved plans to convert the Springerville coal plant to natural gas by 2030, just after deciding to convert another coal plant to gas too. Unfortunately, this means consumers might not see an overall increase in energy, just a shift in the type of fuel being used.
Looking ahead, Arizona utilities are set to add 4,538 MW of natural gas capacity while simultaneously removing 3,549 MW of coal—the only remaining coal on the grid. There are no current plans to expand nuclear energy either. Instead, it seems that utilities expect ratepayers to cover the costs associated with these green initiatives, which might lead to more power outages.
This situation explains why APS and TEP are pursuing a significant rate hike for next year. But they aren’t the only ones facing this—customers in Colorado and Minnesota are looking at similar increases. Even Rhode Island’s PPL customers might be looking at rate hikes as they transition to 100% renewable energy sources by 2033. Dominion Energy in Virginia recently proposed a 15% hike while regulators already approved a 9% increase. What’s crucial here is that these rate increases appear to be aimed at recouping past costs rather than accommodating new demand from things like AI.
The same narrative plays out across the country—electricity prices are climbing, and confidence is waning. We’ve been providing reliable energy for generations, but the shift in building practices has caused disruptions. We now know that intermittent sources tend to be more costly, something we hadn’t fully recognized before. There’s an absurd ambition of reaching 100% renewable energy, a goal that no utility has successfully achieved without running into issues.
This crisis could be mitigated. Trump proposed a plan aimed at unleashing American energy. There’s a strong need for power companies to drop the costly green experiments and refocus on building reliable and affordable electricity for future generations.
