Maria Martinez is the director of strategy for the Clean Economy Project and an ex-officio board member of the Forum on Energy Systems Transformation at the National Academies of Sciences, Engineering and Medicine.
In the last few weeks alone, winter storms, record-breaking electricity demand and new federal reliability warnings have all pointed in the same direction: America’s grid is not ready for the future. Regional grid operators from PJM Interconnection to the Electric Reliability Council of Texas may face future capacity shortfalls. The North American Electric Reliability Corp. is warning that the U.S. may not have enough power to meet demand over the next decade. Meanwhile, electricity bills are rising as demand begins to outpace supply.
This moment may feel unprecedented, but the U.S. has faced a similar infrastructure challenge before.
In the mid-19th century, the American economy was expanding rapidly, but the country’s transportation system was fragmented. Railroads were built locally, financed piecemeal, and often failed to connect across regions. Freight moved slowly. Investment was uncertain. The nation’s economic ambitions were colliding with an infrastructure system designed for a different era.
The solution was not to slow economic growth. It was to change the rules that governed how infrastructure was planned and financed.
Today’s electricity system faces a strikingly similar challenge. Electricity demand is rising quickly as artificial intelligence, advanced manufacturing, electrification, and new industries scale across the country. At the same time, older power plants are retiring faster than new ones are being built. Yet the rules governing how new power infrastructure gets financed and deployed were largely designed for a period when electricity demand was flat and energy resources were relatively uniform across the country.
The result is a structural mismatch between how the modern economy grows and how the electricity system expands.
Policymakers increasingly recognize the symptoms. In 2026 alone, the White House has convened governors and technology companies to discuss how large new electricity users should bear the costs of the power they require rather than shifting those costs onto existing ratepayers. Ensuring that new entrants pay their fair share is sensible policy. But it will not solve the deeper problem.
America’s power shortage reflects a failure of market design.
Today’s electricity markets send investment signals only after shortages begin to form. Prices rise once supply is already tight, leaving developers little time to respond. Large power plants take years to build, and by the time new capacity comes online, consumers have already paid the price through higher electricity bills and greater reliability risks. Meanwhile, next-generation technologies that could strengthen the grid — advanced geothermal, nuclear power, and long-duration storage — face a system that was never designed to integrate them.
The structure of today’s electricity markets also discourages long-term investment. A system that depends on three-year forward price signals provides little certainty for developers considering billion-dollar projects with decade-long timelines. Without clearer and earlier revenue guarantees, capital simply stays on the sidelines.
The U.S. faced a comparable investment challenge during the expansion of the railroad network. Railroads required enormous upfront capital and years of construction before any revenue could be earned. Investors needed confidence that freight would move along those tracks once they were built. The solution was long-term contracts, coordinated infrastructure planning, and federal policies that enabled capital to flow toward projects that would expand national connectivity.
Electricity infrastructure today requires similar coordination.
Markets need to reward building ahead of demand rather than reacting after shortages appear. Large electricity users should be required to sign long-term contracts for new power plants before those plants are built, providing the revenue certainty needed to attract investment while protecting existing ratepayers from sudden cost increases. Smaller buyers like cities, universities, and hospitals, should have standardized ways to aggregate demand and do the same. States should have clear authority to secure long-term supply on behalf of their residents.
These kinds of arrangements are common in other types of infrastructure. Airports are financed through long-term airline gate leases. Pipelines are built using long-term contracts with gas buyers. Industrial facilities rely on anchor customers to support construction.
Electricity should work the same way. Rising electricity demand is not a crisis to suppress. It is a signal that America is building new industries, new manufacturing, and new technologies that will define the next century of economic growth. But economic expansion requires infrastructure systems capable of supporting it.
The railroad era taught us that infrastructure rules must evolve alongside the economy they serve. Today’s electricity markets were built for a different era of slow demand growth and incremental expansion. Until those rules change, the U.S. will struggle to build the energy infrastructure needed for the industries of the future.
Power plants do not appear simply because everyone agrees they are needed. They get built when markets support early investment and allocate risk in ways that attract capital.
America’s power shortage is not primarily a failure of technology or demand. It is a failure of market design. The tools to fix it already exist. What remains is the willingness to update the rules so that electricity supply can grow alongside the economy it powers.
