America’s electricity demand increase is now a reality, not just a projection.  After nearly 20 years of minimal annual growth of around 0.1 percent, demand surged to about 1.7 percent per year between 2020 and 2025.  In 2025, U.S. electricity generation hit a record 4,430 terawatt-hours.  Meanwhile, data-center electricity consumption increased from roughly 58 terawatt-hours in 2014 to 176 terawatt-hours in 2023, now accounting for approximately 4.4 percent of the country’s total power use.

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The country clearly needs more reliable and affordable electricity.  While artificial intelligence is increasing this demand, it is not the sole factor. Manufacturing, electrification, population shifts, reliability standards, and the decommissioning of old power plants all strain a power system largely designed and built in the 1960s and 1970s.  In fact, over 70 percent of the core electrical grid infrastructure, including major transmission lines and large transformers, is over 50 years old.

The rising demand, combined with aging, capital-heavy infrastructure, poses both engineering and capital-allocation challenges. Markets have faced similar situations before, such as with shale, where resource opportunities drew investment before the economics could be established. This leads to a key question: could power be the next shale?

The answer isn’t straightforward.  Shale was a major technological and geopolitical achievement. U.S. crude production rose from about 5.5 million barrels per day in 2010 to more than 12.2 million in 2019.  Advances in horizontal drilling and hydraulic fracturing enhanced energy security, reshaped global trade dynamics, and lowered costs for American industries, yet many investors still lost money.

The issue was not the resource itself but the capital cycle associated with it.  Companies amassed land, increased leverage, prioritized production growth, and often spent beyond their internal cash flow.  Although technology advanced, it also exposed weaker acreage and outdated assumptions.  Ultimately, commodity prices forced the sector to confront the gap between increasing production and achieving a satisfactory return.

Power could repeat the capital-allocation mistake without facing shale’s synchronized crash.  Today’s acreage encompasses interconnection points, turbine slots, transformers, transmission access, natural gas transport, water supplies, permits, skilled labor, and long-term power contracts, assets that are genuinely scarce.  This scarcity motivates developers and customers to act promptly, yet it also risks investing capital before details about the location, timing, usage, and economics of future loads are fully understood.

Power lacks a straightforward clearing mechanism like shale.  Instead, oil and gas benchmark prices and regional differentials often serve as quick indicators of deteriorating economic conditions.  Losses in power can be absorbed, deferred, renegotiated, or passed on through regulated rate bases, long-term contracts, private-credit deals, utility tariffs, and company balance sheets.  This creates a “non-consensus” risk, meaning that the absence of a crash doesn’t necessarily indicate wise capital allocation.

A physically advantageous power asset can remain financially unprofitable over many years.  The system may appear stable, even as investors, ratepayers, lenders, suppliers, and customers silently absorb the costs of inaccurate forecasts.  These errors can appear in various ways or lead to lower-than-expected utilization. This highlights the need to advance both permitting reform and market discipline simultaneously.

America needs faster, more predictable permitting for generation, transmission, pipelines, and other vital infrastructure. Delays raise financing costs, reduce competition, and raise the value of scarce opportunities.  Energy abundance benefits the country only if projects are approved swiftly, costs are clear, and consumers are protected from unexpected obligations.  Reforms should aim to accelerate financially sound projects, rather than bailing out poorly underwritten ones or assuming all announced megawatts will be built.

The primary policy and commercial issue is straightforward: who is responsible for the cost if the forecast is wrong?  Markets are already developing solutions like minimum bills, customer deposits, take-or-pay clauses, exit obligations, parent guarantees, milestone criteria, and large-load tariffs to protect utilities and existing customers from stranded costs.  These measures do not suggest that the boom is artificial.  Instead, they demonstrate that informed parties understand the risks.

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The strongest projects will not merely secure power.  They will allocate uncertainty.  They will inquire whether demand is real or merely announced.  They will assess whether the asset can be used by another customer or for a different load class.  They will set aside capital against clear milestones.  They will maintain flexibility in fuel choice, location, design, and expansion options.  Additionally, they will identify who assumes risks related to cancellation, underutilization, grid upgrades, and regulations before making a fixed commitment based on a forecast.

America must pragmatically increase its power capacity while keeping in mind the lessons from shale play, most importantly, knowing about the resource doesn’t mean all investments to develop it will succeed.  Announced megawatts are like leased acres, but energized, used, and profitable megawatts are like productive wells.  The boom is genuine, and success will depend on precision, discipline, and pragmatism.