Summer Forecast: Energy Demand Is Heating Up

By Brendan Boyle, Director, Market Intelligence, Transparent Energy, June 2025

Over the past 20 years, American electricity consumption has proven relatively flat, with total kWh sales increasing by an average of 0.4% annually. That is about to change.

In its 2025 Summer Reliability Assessment, the North American Electric Reliability Corporation (NERC) forecasts U.S. peak electricity demand this summer will rise by10 GW – more than double the year-over-year increase from 2023 to 2024. At the same time, 7.4 GW of baseline generating capacity has been retired or become inactive. These retirements have been offset by additions of solar, wind, and battery resources; however, grid operators have expressed concerns about meeting increased demand with a less flexible resource mix. NERC identified several regions of the country facing risk of electricity supply shortfalls in the event of extreme summer conditions.

As an example, lets look at NERC’s summer forecast for Texas:

In the extreme weather scenario, ERCOT demand reaches 86.7 GW. While expected resources (92.2 GW) exceed requirements, there is a risk of supply shortage during evening hours once solar generation is unavailable, especially in the event of any power plant outages or low-wind conditions. And remember, this forecast only covers the summer of 2025. ERCOT’s forecast calls for peak demand rising from87 GW in 2025 to 145 GW in 2031 with the addition of data centers, cryptocurrency mining, and industrial growth.

The reasons for such a large increase in electric demand are numerous, as we’ve covered recently, but the impact of AI data centers cannot be overstated. The amount of energy required to perform the computations that bring AI and related technologies to life is exponentially greater than anything we’ve ever seen. For decades “large” data centers ranged from 10-25 MW of power capacity. More recently, hyperscalers have grown to over 100 MW. Going forward, tech giants are planning facilities larger than 1,000 MW (or +1 GW!) to manage massive volume of data processing. The Lawrence Berkely National Laboratory forecasts data center energy use to grow from 4.4% of total U.S. electricity consumption to as much as 12% by 2028.

What Does this Load Growth Mean for My Business?

Electricity prices are quick to respond to any tightness in the supply/demand balance, and the massive energy demand growth being forecast is tightness personified. For perspective, here is a look at last summer in terms of peak demand and the impact it had on prices:

Across the country, increased electric consumption is triggering soaring prices, and the next big demand crunch is looming. It is a near certainty that demand-related price volatility forecasted for this summer will impact forward price strips for years to come.

So what can you do to help avoid a massive increase in energy costs?

1. Minimize exposure to index markets during periods of expected high demand when prices can soar (summer and winter, usually late afternoon hours).
2. Structure the product and term of your electricity contract to minimize future risk.
3. Adjust the way your business consumes electricity through load shifting or efficiency measures.

For over a year, we at Transparent Energy have encouraged clients to take advantage of low energy prices while conditions remain favorable. NERC’s 2025 Summer Reliability Assessment is a reminder that that window of opportunity is closing rapidly – now is the time to act.

Energy industry dynamics are in a constant state of flux, and your organization needs a strategy to manage costs and plan for the future. If you’d like to up your company’s energy sourcing game, from better understanding the market to better executing the strategies that will protect your business, contact us today at letstalk@transparentedge.com.