A Pivotal Year
Every so often, an industry reaches an inflection point — one of those rare moments when change doesn’t just accelerate, it fundamentally redefines the path ahead. For the utility industry, 2026 is that moment.
Across the U.S., utilities are confronting forces unlike any we’ve seen in modern history:
the electrification of everything, reshoring of manufacturing, unprecedented data center and AI-driven load growth, tightening grid constraints, growing resiliency risks and rising pressure to deliver all of it at an affordable cost with equity to all ratepayers. These aren’t distant trends on the horizon. They are here now, reshaping planning assumptions, stretching infrastructure to its limits, and forcing utilities, Regional Transmission Operators (RTOs) and Independent System Operators (ISOs) to rethink long-standing operating models.
Yet within this pressure lies tremendous opportunity. For the first time in decades, utilities have the chance to redesign the grid with intention and build a more flexible, resilient and integrated system that can support economic growth, decarbonization and customer expectations all at once.
Doing so will require new approaches, new thinking and new partnerships. It will demand a shift from incremental upgrades to comprehensive, long-range strategies that bring together the full picture: a truly integrated approach to transmission, distribution, generation, gas infrastructure, resiliency, data and people, all aligned within a refined regulatory environment.
These megatrends show the challenges ahead and the bold steps needed to address them. We don’t have all the answers, and the path forward won’t be easy. But it’s clear that now is the time for action—bringing utilities, regulators, policymakers and industry partners together to rethink how the grid is planned, built and operated for the future.
Megatrend 1: The New Load Curve – Electrification, AI Demand and the Rise of Hyperscale-Users
After a decade of relatively flat load growth when demand only grew 0.43% across that entire period, the utility industry is beginning to face a very different reality in 2026. Today’s demand curve is no longer a flat line. Instead, it resembles a hockey stick, driven upward by a variety of factors that are creating major challenges for the industry. To illustrate how dramatically things have changed, you only need to look at the projections being published by major grid interconnection companies like PJM. They are now projecting growth in demand of 60% over the next 20 years. Other grid operators and utilities are reporting similar spikes in demand that make this the steepest load curve our industry has seen since the first half of the 20th century.
Explosive growth in power demands for data centers and AI factories is a major driver of the fundamental shift in the demand curve. Data center campuses requiring 300–500 MW of power have become increasingly common, comparable to the electricity demand of hundreds of thousands of homes concentrated in a single location.
Headlines increasingly describe facilities expected to use more than 1 GW of power. These projects are being built on tech-company timelines—months, not years—which is far faster than the planning, permitting, and regulatory processes typical of the heavily regulated utility industry.
But data centers are not the only source of demand. The trend toward greater electrification of the economy is pushing baseline load higher as the grid needs to support transportation electrification, residential and office buildings shifting to electrical heating, electrification of industrial plants, digital transformation across every industry and more. To further complicate operations for utilities, this rising demand is leading to increased volatility as well as intense “pressure points” and an imbalanced grid between where electricity is being generated versus where it is being consumed. This is creating unprecedented operational complexity and risk for the industry.
These dramatic changes make it clear that the old operational realities for our industry are a thing of the past. By 2026, it will be clear that the old, stable load curve is truly gone for good, at least for the immediate future. As an industry, this marks a transition into a new era that requires an improved model for integrated capacity planning — planning that integrates generation, transmission and distribution with load location, timing and real-world delivery constraints.
Megatrend 2: Grid Constraints, Interconnection Queues and the “All-of-the-Above” Energy Strategy
In addition to the unprecedented demand pressures I discussed above, our industry will also face intensifying supply-related challenges in 2026. Congestion, capacity constraints, multi-year interconnection delays and rising reliability expectations are creating escalating challenges that simply cannot be solved with traditional approaches to resource planning. Interconnection queues remain at all-time highs – slowing renewable development, other forms of new generation, as well as data center growth and industrial load expansion. And transmission congestion is driving curtailment, market volatility and the need for new long-line investments. In the face of these challenges and the sharp growth in load demand, utilities cannot maintain the status quo of incremental changes to a non-diversified portfolio of energy production resources.
To respond to these constraints and backlogs, 2026 presents a pivotal opportunity for utilities to take significant steps toward building broader, more diversified generation portfolios based on an “all of the above” energy strategy that includes not only the physical grid but all the digital infrastructure as well. This will increase diversification, capacity and flexibility in ways that balance reliability, sustainability and affordability. To increase diversification, utilities should continue to expand renewables that are paired with BESS to firm variable resources. Utilities should also adopt a near-term plan to increase gas-fired generation and repowering of combined cycle units that inherently provide firm capacity. Increasing the use of gas and LNG pipeline networks will enable utilities to expand dispatchable generation in ways that enable them to meet immediate load growth as electrification climbs. The U.S. ranks among the world’s most resource-rich countries for natural gas, with both substantial proven reserves and vast recoverable resource estimates, supporting its role as a key firm capacity source in diversified generation portfolios.
Over the longer term, nuclear power is likely the answer to meet projected demand in ways that are sustainable, but this will take time. Nuclear based solutions should include the use of both Small Modular Reactors (SMRs) to add smaller, flexible baseload and conventional nuclear to add baseload in larger blocks. For some utilities, it may also make sense to extend the life of coal-powered plants with appropriate emissions controls to meet high growth in demand in locations where short-term capacity gaps exist.
Megatrend 3: Infrastructure Buildout vs. Customer Affordability — The Toughest Balancing Act
Another major challenge that utilities will need to face in 2026 is the growing urgency to upgrade aging infrastructure versus the need to ensure affordability for “all” ratepayers. Because a growing portion of the U.S. power grid is at the end of its lifecycle at the exact moment when the load curve is skyrocketing, the utility industry is facing a once-in-a-century infrastructure buildout. This requires large-scale investments for new generation, upgraded/expanded transmission infrastructure, a significant volume of equipment replacement, undergrounding, infrastructure hardening and more. The price tag was always going to be significant for upgrades of this scale, but the costs have been driven even higher by inflation, workforce shortages, supply chain bottlenecks and materials pricing volatility. Ratepayers are already expressing widespread discomfort with growing power bills driven by this critical infrastructure work, and regulators are therefore (appropriately) placing a greater emphasis on affordability to protect customers.
For utilities across the U.S., this creates a very difficult balancing act as they seek to bolster infrastructure while also ensuring energy equity for its customers. To help utilities successfully meet those equally important needs, 2026 needs to be a year when regulatory reform is essential. Regulators can help accelerate progress by fast-tracking initiatives that ensure affordability while also enabling critical infrastructure projects. These initiatives should include more flexible approval processes for new infrastructure, streamlined siting and permitting, reduced procedural delays, and modernized cost-recovery mechanisms. All of these steps will significantly reduce project costs in ways that directly benefit ratepayers.
But the burden is not on regulators alone. Continued emphasis on transparent, defensible and optimized capital planning will be essential for utilities as they work collaboratively with regulators to design reforms that reduce costs and accelerate critical projects for the public benefit.
Megatrend 4: Grid Resiliency Under Pressure — Weather Extremes, Wildfire Risk and Disaster Readiness
Extreme climate conditions continue to pose major challenges to utilities, and 2025 was no different. The year began with massive California wildfires that wreaked havoc in one of our country’s largest urban population centers. And on Independence Day, there was nightmarish flash flooding in Texas. Both disasters led to tragically high death tolls and billions in damage. These disasters also hit utilities hard, requiring large-scale, costly disaster response efforts to restore infrastructure and service. Extreme weather is increasing the frequency and intensity of disasters in ways that make resiliency and disaster readiness more important than ever.
Across the industry, utilities are reevaluating how they approach preparedness as risks grow in scale and complexity. While traditional system-wide hardening remains important, many utilities are complementing those efforts with broader, integrated resilience programs that improve visibility, situational awareness and redundancy. These approaches can also better align depreciation timelines with the long-lived nature of resilience investments, helping to manage long-term customer impacts. Leveraging public-sector funding programs alongside an “all of the above” mix of solutions further supports more resilient outcomes.
At the same time, greater digitization has elevated cybersecurity as a core element of resilience. Protecting operational technology and digital infrastructure is now as critical to system reliability as physical hardening and emergency response.
Most utilities already have strong, coordinated storm response and recovery capabilities and should continue to build on that foundation through faster mobilization, better coordination and scaled logistics. Combined with an integrated resilience program, these proven practices help limit operational impacts when disasters strike and speed recovery in affected communities.
Megatrend 5: Workforce Constraints, Changing Skills & Digitally-Driven Efficiency
The next challenge I will discuss is not about demand curves or regulations or wildfires. It’s about people. The energy transition has a talent bottleneck. Engineering, construction, systems operators, field crews and project management resources are in short supply. And the high average age of the utility industry’s workforce has created retirement cliffs, accelerating these workforce shortages at the exact time we need that expertise to navigate all the major challenges discussed above.
In 2026, these workforce challenges are projected to be even more severe, but there is a major opportunity for utilities to turn that challenge into an opportunity. The goal of these applications is not to replace people. The goal is to make your people even more productive. At a time when utilities need to do much more with a shrinking workforce, digitally-driven applications can be a strategic workforce multiplier.
Addressing this challenge will require more than incremental hiring. It calls for deeper partnerships across the talent ecosystem, particularly with universities, technical schools and research institutions that can help accelerate the development of the next generation of power engineers, system planners and grid operators. Expanding power engineering programs, modernizing curricula to reflect today’s grid complexity and strengthening industry-academic collaboration can help rebuild the talent pipeline while fostering innovation that translates into real-world solutions.
At the same time, utilities are finding value in new workforce models that retain institutional knowledge, from flexible roles for experienced retirees to mentorship and apprenticeship programs that pair emerging talent with seasoned professionals. Together, these approaches help preserve critical expertise while scaling capacity in a constrained labor environment.
Megatrend 6: Artificial Intelligence as Both a Disruptive Force and a Catalyst for Investment
It is impossible to dispute the role artificial intelligence is already playing in transforming nearly every aspect of modern life. What makes AI unique for the utility industry is that it is not only a disruptive force changing how work is done, but also a powerful driver of new demand. Unlike past technology waves, AI does not simply improve efficiency. It actively creates an unprecedented need for energy and infrastructure to power itself.
In 2026, AI-driven growth will be a primary contributor to another year of record-setting energy demand. The rapid expansion of data centers, AI training facilities and high-density compute campuses is driving load growth at a scale and pace the industry has not seen in decades. While this growth does require investment in new generation, it places even greater pressure on an already aging transmission and distribution system. Delivering large blocks of power reliably to highly concentrated, location-specific loads requires significant upgrades to substations, feeders, transmission corridors and system protection schemes. In many regions, the investment required to safely and reliably deliver energy is now far outpacing the investment required to generate it.
The pace of this infrastructure buildout is generational. The scale of investment now underway across U.S. energy infrastructure has not been experienced since the demand surges of the 1960s and 1970s, when widespread adoption of air conditioning reshaped the grid. Compounding this challenge, the workforce needed to plan, design, build and operate this infrastructure is both undersized and underprepared for the volume of work ahead. This widening workforce gap creates material risk to schedules, costs and reliability outcomes.
These pressures have driven a clear shift toward “all of the above” solutions across the industry. Meeting the moment will require new ways of planning, building and operating the grid, and AI-powered tools will be central to that transformation. Artificial intelligence is no longer about incremental efficiency gains. It is becoming a foundational capability for managing complexity, prioritizing investments and scaling execution in an environment defined by rapid change.
For the utility industry, 2026 will mark a shift in how AI is applied. This is not about doing more with less. It is about doing more with more. More data, more complexity, more investment and more responsibility. Utilities that successfully integrate AI into their planning and execution models will be better equipped to manage growth, control costs and maintain reliability in an era defined by transformation.
Charting an Intelligent, Resilient and Affordable Path Forward
As we look ahead to 2026, the path forward for our industry is clear: we can no longer plan or operate as we have in the past. Electrification, data-center growth, system constraints, affordability pressure, resiliency risks and workforce limitations are reshaping the landscape faster than most utilities can respond. But this transformation is also our greatest opportunity.
The utilities that will thrive are those that embrace integrated, systemwide planning, build a truly flexible, all-of-the-above energy strategy, and invest in execution models that scale. This moment requires a shift from incremental solutions to coordinated programs combining transmission, distribution, generation, gas, resiliency and customer priorities into one unified plan.
That is exactly where TRC stands ready to help. Our practitioners bring the integrated expertise, proven discipline and forward-looking insight utilities need to navigate a rapidly changing energy landscape. By simplifying complexity, strengthening infrastructure, modernizing operations and enhancing resilience, we help utilities deliver reliable and affordable service today while preparing the grid for the decades ahead.
The stakes are high. But so is our ability to rise to this moment.
Together, we can build the resilient, reliable and sustainable grid our communities deserve — and power the shift toward a stronger energy future.
