By Mark Jaffe, EUCI energy writer
Electricity consumption in the U.S. is forecast to reach an all-time high by 2026, driven mainly by commercial and industrial demand, according to the federal Energy Information Administration (EIA).
During the same 2025-2026 period, retail electricity prices are set to increase from 13% to 18%, depending on the region, the EIA said. Since 2022, electricity rates have been rising faster than inflation.
Between 2005 and 2020, electricity demand in the U.S. was relatively flat, growing at about 0.1% a year.
“Electricity demand increases generally associated with population growth and economic growth were offset by efficiency improvements and other structural changes in the economy, such as the transition from manufacturing to service sectors that tend to consume less energy,” the EIA said.
However, a surge in data centers, which demand round-the-clock electricity, and new manufacturing facilities are leading an overall projected increase in annual electricity demand of 1.7% a year.
Manufacturing construction spending has tripled between 2020 and 2025 to $235 billion in early 2025, and data centers are expected to double their demand for electricity between 2022 and 2030, according to a Goldman Sachs estimate.
Data centers could absorb as much as 9% of all the country’s generation by 2030.
Commercial demand is set to grow 2.7% a year and industrial demand by 2.1%. Residential will have only grown by 0.7% between 2020 and 2026.
Expected electricity demand growth is spurring expansion in generating capacity and electricity storage,” the EIA said. “Much of this additional capacity is from solar and battery storage facilities.”
Much of the capacity will be concentrated in Texas, California, the upper Midwest, and the Northeast, the EIA said.
Utility-scale solar is set to add around 135 gigawatts (GW) between 2020 and 2026 and provide the largest increases in electricity generation in the EIA forecast, growing by 34% in 2025 and 18% in 2026.
Storage will provide the second-largest capacity addition through that time – around 57.5 GW, which will exceed the projected 50 GW in wind energy resources. About 25 GW of natural gas is projected, and coal capacity is expected to drop by around 50 GW.
While residential demand is growing more slowly, residential rates have risen quickly.
“Overall, U.S. energy prices rapidly increased from 2020 to 2022 as economic activity recovered after the worst of the pandemic and Russia’s invasion of Ukraine interrupted energy supply chains,” the EIA said.
Since 2022, the costs of fuels, such as gasoline and home heating fuel whose prices are tied to oil markets, have declined, but EIA said that electricity prices “have continued a steady increase.”
U.S. consumers spent an average of about $1,760 on electricity in 2023 compared to $2,450 for gasoline. Those are households’ two largest energy expenditures, according to the U.S. Bureau of Labor Statistics.
The size and impact of those electricity rate increases will vary by region, the EIA said.
“Our forecasts for retail electricity price increases differ across the country. Residential electricity prices in the Pacific, Middle Atlantic, and New England … regions where consumers already pay much more per kilowatt-hour for electricity could increase more than the national average,” the agency said.
“By comparison, residential electricity prices in areas with relatively low electricity prices may not increase as much.”
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