Jul 82025

U.S. Department of Energy: U.S. Grid Faces Urgent Reliability Challenges Amid AI-Driven Load Growth and Plant Retirements

Kenneth W. Irvin, Samuel B. Boxerman, Grace Dickson Gerbas and Christopher J. Polito
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A new report by the U.S. Department of Energy provides a comprehensive assessment of the adequacy and reliability of the U.S. electric grid and warns that without urgent reforms and investment, the U.S. electric grid will be unable to support the nation’s economic ambitions, particularly in artificial intelligence (“AI”) and digital infrastructure. The report responds to recent executive orders emphasizing the need for a uniform, data-driven approach to evaluating grid reliability, particularly in the face of accelerating power plant retirements and surging electricity demand from data centers and AI applications.

Key findings include:

  • Grid Reliability at a Crossroads: The report finds that the current trajectory of plant retirements, coupled with insufficient additions of firm, dispatchable generation, places the S. grid at significant risk of widespread outages by 2030. This risk is compounded by rapid load growth, especially from data centers supporting AI and digital infrastructure.
  • AI and Data Center Load Growth: Electricity demand from data centers represents a major new source of load. This growth is concentrated in key regions such as PJM, ERCOT, and the West and cannot be met with existing approaches to load addition and grid management.
  • Retirements Outpacing Reliable Additions: By 2030, 104 GW of generation (primarily coal and natural gas power plants) is slated for retirement, while only 22 GW of new firm baseload generation is expected to be added. The majority of new generation will come from intermittent sources (solar and wind), which do not provide the same reliability benefits as traditional baseload plants.
  • Risk of Outages Increases Dramatically: Under a scenario where all announced retirements occur, the report projects a 100-fold increase in annual hours of lost load, with some regions facing the possibility of losing up to 43% of hourly load during extreme events. Even if retirements are avoided, reliability risks remain elevated in several regions.
  • Regional Vulnerabilities: The analysis highlights that PJM, SPP, ERCOT, and SERC are particularly exposed to reliability shortfalls, especially during winter peaks. In contrast, regions such as ISO-NE and NYISO, which are not projected to see significant AI/data center load growth, remain relatively robust.
  • Modernization and Data Sharing Needed: The report underscores the inadequacy of traditional resource adequacy metrics and calls for modernized, granular approaches that account for the frequency, magnitude, and duration of outages. Enhanced regional collaboration and data exchange are identified as critical to effective grid planning and risk mitigation.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Kenneth W. Irvin

Washington, D.C.

kirvin@sidley.com

Samuel B. Boxerman

Washington, D.C.

sboxerman@sidley.com

Grace Dickson Gerbas

Dallas

gdicksongerbas@sidley.com

Christopher J. Polito

Washington, D.C.

cpolito@sidley.com

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