Shocking Reality
The U.S. power grid wasn't built for today's level of energy consumption and tech is making it worse
The U.S. power grid is being pushed to the max. Here’s what you need to know about energy investments and innovations and how to reduce your reliance on the electric grid.
WASHINGTON, D.C. — The lust for electricity is real. It powers almost everything in our lives today, from the coffee makers in our kitchens to the mobile phones in our pockets and the automobiles in our garages.
Electricity demand is skyrocketing due to increased reliance on air conditioning, thanks to rising temperatures caused by climate change. It’s also spiking due to the expansion of data centers nationwide, which run for everything from Bitcoin mining to artificial intelligence (AI).
Much of the U.S. electric grid that we count on today was built in the 1960s and 1970s, well before the advent of our modern, power-dependent age. While there have been some improvements over time, our aging and outdated infrastructure is struggling to meet our modern electricity demands.
The Natural Resource Defence Council believes the U.S. power grid can handle increased electricity demand through smart planning and energy-efficient technologies. However, the grid is already under immense pressure, so innovation and investment, including in our homes, are needed fast to ensure we’re not left in the dark.
Service Disruptions Nationwide
According to the IEA, electricity demand in the United States is expected to increase from 2024 to 2026. The IEA forecasts a 2.5% increase in 2024, followed by 1% growth on average from 2025 through 2026. This growth is expected to be driven by electrification and the expansion of data centers, which could account for more than one-third of the additional demand by 2026.
A YouGov poll from March 2024 found that 44% of Americans use AI tools frequently, while 20% are unsure how often they use them. The reality is that AI drives many things in our lives that we’re unaware of, from the GPS in our navigation systems that give us the best routing to the smart thermostats on our walls that regulate energy use. Those annoying chatbots that triage our customer service requests on the phone or online are driven by some form of AI, too.
When extreme weather events—tornadoes, wildfires, flooding, and hurricanes—are added into the mix, it’s a recipe for disaster. To put it short, the U.S. power grid was not built for this level of use now or in the future.
According to Climate Central, 2011-2021 had 64% more major power outages than 2000-2010, and roughly 83% of all reported power outages from 2000-2021 can be attributed to a weather-related event. Between 2011 and 2021, the average annual number of weather-related power outages increased by roughly 78%.
“We’re seeing that the warming is having a direct impact on severe weather,” noted Jen Brady, a senior data analyst at Climate Central, in an interview with The Guardian. “The conditions that our infrastructure was built to handle are much different [now] than what they were.”
Institutional Investments and Innovation
It’s no secret that renewable energy, coming from solar and wind, is a key part of our energy future. It’s also growing, generating over a fifth of all U.S. electricity and surpassing coal for the first time in 2022. By 2025, the EIA says domestic solar energy generation is expected to increase by 75% and wind by 11%.
The rise in intermittent renewable energy sources like solar and wind requires more battery storage to maintain grid reliability, and companies like Tesla are leading the way with innovations like their Powerwall and Megapack. In the United States, battery storage capacity is expected to nearly double by the end of 2024, reaching over 30 gigawatts (GW) from around 16 GW at the end of 2023.
At the same time, the Department of Energy (DOE) is making big investments. Last year, it announced up to $3.5 billion for 58 projects across 44 states to strengthen electric grid resilience and reliability across the United States. These projects plan to leverage over $8 billion in federal and private investments as part of the Grid Resilience and Innovation Partnerships (GRIP) Program, funded through the Bipartisan Infrastructure Law.
New projects, like Edwards Sanborn Solar and Energy Storage in Mojave, California, are already online. It’s the highest-capacity solar farm in the United States with the largest battery storage system in the world. Bill Gates' company, TerraPower, is constructing a next-generation nuclear power plant in Kemmerer, Wyoming. It’s expected to be fully operational by 2030.
Individual Investment Toward Energy Independence
The grid isn’t the only challenge. Energy costs are also on the rise.
According to new projections from the National Energy Assistance Directors Association and the Center for Energy Poverty and Climate, the average cost to cool a home in the U.S. from June through September is expected to be $719 this year, up from $661 last year. This is a 7.9% increase, more than double the inflation rate.
At the same time, the cost of installing solar is decreasing. "Over the last decade, prices have come down by over 50% in the residential space," noted Shawn Rumery, senior director of research for the Solar Energy Industries Association, in an interview with CNET last year. In addition, the federal solar Investment Tax Credit (ITC) offers a direct reduction in taxes as an incentive for installing a new solar energy system or storage device 3 kilowatt-hours (kWh) or greater—homeowners can deduct 30% of the installation costs between 2022 and 2032.
Most homeowners see a return on investment (ROI) with solar panels. In the U.S., the average ROI for solar installations is around 10%, meaning homeowners typically earn a 10% profit on their solar system costs. On average, households save approximately $1,500 annually on energy bills, allowing them to recoup their investment in solar panels within eight to 13 years.
According to Rumery’s organization, approximately 3.3 million households in the United States had solar panels installed as of 2022. A recent Forbes survey found that nearly 9 out of 10 homeowners with solar panels are satisfied with them.
“To seize a future of energy abundance, we must simplify the generation, transmission, and consumption of electricity; this entails decentralizing the grid, wrote venture capital firm Andreessen Horowitz in April. “Big power plants and long power lines are burdensome to build, but technologies like solar, batteries, and advanced nuclear reactors present new possibilities.”