Electricity demand growth has returned after two decades of flat consumption, and it is climbing fast. The gap between demand and supply has become an economic development problem as much as an energy one.
The challenge behind electricity demand growth
In its January 2026 Long-Term Reliability Assessment, the North American Electric Reliability Corporation projected sharp growth. Summer peak demand should grow by about 224 gigawatts over the next decade. That is roughly a 24 percent jump — and nearly 70 percent higher than the forecast from just a year earlier.
Three drivers stand out: AI data centers, electrification of vehicles and buildings, and reshored manufacturing. Meanwhile, new resources are not keeping pace. Most additions are solar and storage, even as coal and gas plants retire. As a result, 13 of 23 assessment areas now face adequacy risk this decade. The DOE has even warned that, absent new firm capacity, blackout frequency could rise sharply by 2030.
Why electricity demand growth matters for development
Power availability has become a binding constraint on site selection. Manufacturers, data centers, and other large employers increasingly choose locations based on one question: can reliable, affordable power be delivered on their timeline?
New generation brings construction and operations jobs and expands the tax base. Its larger value, though, is enabling the projects — and the payrolls — that depend on it. Communities that can guarantee power win investment. Those that cannot lose it. Rising rates, now outpacing inflation in many states, only add urgency.
What the federal government is doing
Washington has declared a national energy emergency and moved on several fronts:
- Speed to Power. The DOE initiative aims to accelerate large generation and transmission projects, backed by roughly $1.9 billion for advanced transmission and reconductoring.
- Nuclear expansion. Executive orders set a goal of quadrupling nuclear capacity to 400 gigawatts by 2050. A reactor pilot program is underway, and the NRC issued its first permit for a non-light-water reactor.
- Keeping plants online. Federal policy has moved to keep coal and gas plants running.
- Grid connection reform. FERC has ordered the six regional grid operators to reform how large loads connect to the grid.
What states are doing
States are legislating rapidly. More than 300 data-center bills were filed in early 2026 alone.
Leading state examples
Many states are creating special large-load rate classes and “bring-your-own-generation” tariffs. The goal is simple: big users should fund the infrastructure they require rather than shift costs to households. Texas’s SB 6 and Oregon’s POWER Act are leading examples. States are also expediting siting, deploying advanced transmission and virtual power plants, and standing up funds to speed new generation.
Ohio’s HB 15 in focus
Ohio’s HB 15 is a strong case in point. The law made several changes:
- It clarified that on-site generation may be owned or operated by the customer or a third party under leases or PPAs.
- It confirmed that qualifying behind-the-meter generation is not a “public utility.”
- It eliminated Ohio’s historic “same premises” requirement, so generation no longer needs to sit physically next to the load.
- It dropped the tangible personal property tax on new generation. Energy-conversion equipment falls from 25% to 7% starting in tax year 2027, and the rate on new transmission, distribution, and pipeline infrastructure falls from 88% to 25% to align Ohio with neighboring states.
- It created a new “priority investment area” designation, letting communities exempt a company from the tax on transmission, distribution, and pipeline infrastructure for five years.
- It set new “shot clocks” on the PUCO and OPSB to cut regulatory lag.
- It barred regulated utilities from owning generation and allowed intrastate transmission, opening the door to new independent generation.
What local communities can do
Localities compete on speed and certainty. The strongest move is to inventory and package shovel-ready sites. Retired or retiring coal plants and brownfields are ideal, because they often already have transmission interconnection, water, road access, and a trained workforce.
From there, communities can pre-zone land for generation, streamline permits, build early community support, and coordinate with the utility, grid operator, and state energy office. Familiar Ohio tools — TIDs, JEDDs, TIF, and abatements — can underwrite the access roads and site improvements that make a project pencil out.
The communities that prepare now will be the ones that keep their lights on — and their economies growing.
The Montrose Group is working with government and industry leaders to address the electricity generation challenge. Dave Robinson, Principal, is glad to discuss how the firm can help at drobinson@montrosegroupllc.com.