Generation by the electric power sector is expected to grow 2.3% this year and 3% in 2026, exceeding a January forecast of 1.5% growth per year, according to the Energy Information Administration.
“Electricity generation has been growing rapidly this year as a result of growing demand for power from data centers and industrial customers,” EIA said in its Short-Term Energy Outlook, released Tuesday. “The higher growth in generation reflects colder-than-expected weather earlier in 2025 along with the incorporation of load growth assessments by grid operators in the Electric Reliability Council of Texas and PJM systems.”
Meeting that increased demand are increases in generation from “most energy sources” this year, EIA said. The agency forecasts that utility-scale solar will grow the most in 2025, “generating 33%, or 72 billion kilowatthours (BkWh), more electricity this year compared with 2024.”
U.S. electricity generation totaled 4,300 BkWh in 2024. EIA expects it to total 4,400 BkWh in 2025 and to rise to 4,530 BkWh in 2026.
“New solar projects account for more than half of the new generating capacity expected to come online this year,” EIA said. “Wind, hydropower, and nuclear all grow this year as well. We expect wind will generate 4% more electricity in 2025 than it did in 2024, while we expect hydropower generation will grow by 2%. Nuclear generation will rise slightly this year and about 2% next year with the restart of the Palisades plant in Michigan.”
Natural gas generation, on the other hand, is not expected to grow this year – despite record consumption. Natural gas fuel prices are about 40% higher this year than last year, “which is encouraging more coal-fired generation but is also reducing the amount of electricity produced by natural gas-fired generators,” EIA said.
Growing international demand and increases in U.S. exports that are outpacing new gas production are in large part driving up natural gas prices. Utilities and hyperscalers looking to meet energy demand from data centers are seeking new gas generation, but the lead time to bring a gas plant online has increased over the last few years.
“We forecast that natural gas-fired power plants will generate 3% less electricity in 2025 than last year,” EIA said. “In some regions, such as Texas and the Midwest, increasing generation from solar is also displacing some natural gas-fired generation.”
