Key Takeaways

  • Bank of America analysts project that the U.S. will need to add over 230 GW of power generation capacity over the next five years, but regulated utilities are expected to add only about 93 GW of certified supply, leaving a gap of more than 100 GW.
  • The report shows that data centers alone could add approximately 125 GW to U.S. electricity load during this period, driving an overall compound annual growth rate of 4.1% in electricity demand from 2026 to 2030.
  • With large gas turbines largely sold out through 2030, data center developers are increasingly likely to turn to on-site gas engines, while utilities will extend coal plant operations, deploy batteries, and advance transmission upgrades.

Deep Dive

The report's forecasts primarily stem from Bank of America's semiconductor analysis team. These analysts' projections for the rapid deployment of AI computing infrastructure, including specialized chips and servers, underpin the bank's assessment of a widening U.S. power supply gap.

The analysts also note that over the past three years, utilities have repeatedly revised their demand forecasts upward as AI-related electricity demand has materialized faster than expected.

Facing the challenge of new capacity coming online too slowly to match demand growth, Bank of America expects more data center developers to turn to behind-the-meter generation. According to the report, more than 7.5 GW of data center projects with on-site generation are already under construction, with over 60 GW in earlier stages of development. These facilities do not operate entirely off the grid but combine self-generation with traditional grid connections to improve power reliability and shorten project timelines.

AI infrastructure is reshaping the long-term electricity demand landscape—over the previous decade, U.S. electricity consumption was largely flat, influenced by energy efficiency improvements, LED lighting adoption, and distributed solar generation. The analysts point out that planned generation additions may overstate actual available supply, as intermittent sources like wind and solar contribute less certified capacity during peak load periods than their nameplate ratings. Therefore, even as renewables continue to expand, reliable and dispatchable generation resources remain indispensable.

Natural gas is expected to play a central role in meeting new demand, but equipment supply has become a constraint. Large gas turbines remain the preferred technology for flexible peaking, but their manufacturing capacity is largely booked through 2030, and new units often take years from shipment to operation. This has boosted interest in natural gas reciprocating engines—equipment that can be deployed faster and respond quickly to load changes. According to the analysts, manufacturers such as Caterpillar, INNIO, Rolls-Royce, and Wärtsilä have expanded capacity to meet rising demand.

The report also notes that utilities and regulators are increasingly extending the operating lives of existing generation assets to ensure system reliability. It specifically cites coal plants in Maryland, Wisconsin, Indiana, Utah, Kansas, Nebraska, and Mississippi, where retirement dates have been delayed or canceled to preserve dispatchable generation capacity.

Battery storage, transmission expansion, and regulatory reforms to improve utilization of existing generation assets can also help alleviate reliability challenges. However, the analysts caution that transmission projects often take years from permitting to construction. They cite the Champlain Hudson Power Express as an example—a project that took 16 years from planning to energization, reflecting the development timeline realities facing new infrastructure.

The concentrated growth of AI-driven data centers in the U.S. is prompting utilities and regulators to address how to connect large new loads and how to allocate the costs of new infrastructure. Higher electricity prices could dampen demand from some customers and energy-intensive industries, but academic research shows that electricity demand is relatively inelastic in the short to medium term—a 10% increase in real electricity prices typically leads to only a 1% to 2% decline in consumption.

"The market is no longer constrained by demand—it is constrained by where power can actually be delivered," the Bank of America analysts said in their global research report.