US electricity demand is projected to climb 21% by 2030 and 39% by 2035 compared with 2026 levels, according to a new report from consulting firm ICF. Growth is being driven by data centers, industrial expansion, transportation electrification, and electric heating, with peak demand expected to rise 25% by 2035.
But ICF argues the more pressing issue isn’t total generation capacity, it’s whether transmission networks can move that power to where it’s actually needed. “The central question is no longer just how much electricity demand is forecast, but how much demand can realistically be served, and where,” the report states.
Rob Gramlich, president of Grid Strategies, agreed with the report’s framing, telling Data Center Knowledge that grid delivery is the core issue nationwide. He said expanding transmission capacity would do more to meet demand growth than any other single action, and that the strain is acute in Texas, the Mid-Atlantic, Midwest, Southeast, Great Plains, and much of the West.
Shrinking Reserve Margins
ICF estimates the US currently has about 26 GW of generating capacity above minimum reliability requirements, roughly 3% of installed capacity. That cushion could fall to around 20 GW by 2030, and in the PJM and ERCOT markets it has already largely disappeared as load growth outpaces new resource additions.
The firm projects 445 GW of new generation additions through 2030, including solar, storage, wind, and natural gas, but much of that capacity remains in development, creating a timing mismatch between when power is needed and when it can actually come online.
The Wires Problem
US investor-owned utilities are expected to spend roughly $178 billion on transmission projects between 2025 and 2028, and the Department of Energy has backed plans for about 7,500 miles of new transmission lines by 2030. ICF warns that this spending alone won’t solve near-term constraints without execution that navigates supply chain, siting, permitting, and labor challenges.
Jigar Shah, former director of the DOE’s Loan Programs Office, put it plainly: “We don’t have a generation problem, we have a wires problem.” He argued utilities can unlock additional capacity from existing infrastructure using batteries, demand flexibility, and grid enhancing technologies, ahead of major new transmission builds.
What It Means for Data Center Operators
ICF projects ERCOT demand will rise 53% from 2025 levels by 2035, while PJM faces mounting transmission constraints around Northern Virginia along with emerging load growth in Illinois and Ohio, both expected to exceed 5% annual growth over the next decade.
For data center developers, this means site selection increasingly hinges on transmission availability rather than land, fiber, or capital alone. Developers are widening site searches and negotiating earlier with utilities over energization schedules and interconnection timelines. Utilities and grid operators are also exploring phased energization plans, flexible interconnection agreements, and grid-enhancing technologies to bring large loads online before major transmission upgrades are complete.