From AI to the OBBBA: 4 Drivers Reshaping the U.S. Power Grid

In Energy Exemplar’s recent webinar, Harnessing the Winds of Change: The Future of Green Energy in a Turbulent Present, Senior Product Manager, Rob Homer, opened with a quote from FERC Chairman Mark Christie to set the stage:

“The combination of rapidly increasing electricity demand, driven by hyperscale customers such as data centers, paired with the alarming rate of baseload generation retirements and lack of dispatchable generation is not sustainable and must be addressed.”  

Homer went on to outline 4 key drivers of an energy landscape that is shifting rapidly:  

1. The AI Race & Historic Data Center Load 
2. Reliability 
3. Delays 
4. The Passage of the One Big Beautiful Bill Act (OBBBA) 

This blog will focus on these 4 key drivers of the current landscape - keep an eye out for part two where we’ll dive into a PLEXOS ® analysis of the OBBBA’s impact on renewable development.  

AI and Data Centers Driving Historic Load Growth

It’s no secret that data centers are the topic of the hour, predicted to significantly increase loads across the globe. Research by Goldman Sachs projects that global power demand from data centers will increase 50% by 2027 and up to 165% by 2040 from 2023 levels.  

This growth is not hypothetical. Major hyperscalers are actively requesting sites requiring between 1 and 5 GW of capacity — a scale equivalent to building several nuclear power plants within the timeframe of a single load interconnection study. The implications for the energy industry are profound: transmission, siting, permitting, and resource adequacy must all adjust to match this new demand profile. 

Reliability Risk is Rising Fast

The key takeaway from the US Department of Energy’s (DOE) recent Resource Adequacy Report was that if the current retirement schedule and incremental load additions remain unchanged, most regions will experience unacceptable reliability risks within five years. DOE modeling shows that annual outage hours could rise from the low single digits to over 800 hours per year by 2030, leaving millions of customers vulnerable. Additionally, to adequately evaluate resource adequacy, modern methods must: 

• Incorporate frequency, magnitude and duration of power outages  
• Move beyond exclusively analyzing peak load time periods 
• Develop integrated models to ensure proper analysis of increasing reliance on neighboring grids 
  

A Backed-Up Interconnection Queue

Compounding the issue is that interconnection queues across the country are significantly backlogged. Interconnection wait times now average five years from request to commercial operation, with less than 10% of projects in the queue expected to reach commercial operation within three years. From 2021 to 2023, more than 6,500 projects entered the queue — triple the rate seen a decade earlier — but without infrastructure to support them, most won’t be built on time, if at all. 

FERC Order 2023 

Cutting the interconnection queue wait times is a significant priority for the Federal Regulatory Commission (FERC). As a result, FERC issued a new rule to reform procedures and agreements that transmission providers use to integrate new generating facilities into the existing transmission system. Designated FERC Order 2023, the rule aims to:  

• Reduce backlogs for projects seeking to connect to the grid  
• Improve certainty in the interconnection process managed by dozens of transmission providers around the country  
• Ensure access to the transmission system for new technologies 

Shifting Policies - From the Inflation Reduction Act (IRA) to the OBBBA

If the physical system is strained, the policy environment is even tighter. Until May 2025, the Inflation Reduction Act (IRA) defined the incentives landscape. That changed with the passage of the OBBBA, which introduced compressed timelines and stricter eligibility rules for renewable developers.  

The Inflation Reduction Act consisted of three key pillars:  

1. Incentives for low carbon energy which provided a 30% credit for qualifying wind and solar projects and escalators for projects serving low-income areas or domestic manufacturing.  
2. Emerging Technology Credits offered credits for hydrogen. Credits were tiered, with the maximum $3/kg credit available to the lowest emission projects (below 0.45 kg C02e/ kg H2), with progressively lower credits for higher emission projects.  
3. Energy Storage – for larger, grid-scale storage projects, the IRA provides an Investment Tax Credit (ITC) and other incentives that in some cases amount to 70% of the project cost.  

Then, in May of this year, much of this changed with the OBBBA. Key changes made under the OBBBA include:  

• Accelerated end of credits for utility scale renewable assets. The 30% tax credit roll-offs will begin earlier (in 2026) and will be terminated by July of 2027.  
• Methane emissions costs delayed until 2034.  
• Dual-condition eligibility for projects seeking to claim technology neutral clean electricity tax credits. Projects must now meet both of the following: begin construction within 60 days of the bill’s enactment AND be placed in service by December 31, 2028. This dual requirement effectively excludes all but shovel-ready projects from eligibility.
  •  Nuclear projects are exempt from the dual requirement, only needing to start construction prior to 2029.  

What’s Next in a Rapidly Shifting Landscape? 

The energy landscape is shifting worldwide, but in the US these shifts are driven particularly by data center load growth, reliability concerns, interconnection delays and policy changes. How will these policy changes affect the makeup of the US power grid in the future? In part 2, we’ll look at how the Energy Exemplar team used PLEXOS® to simulate this policy-constrained future — and what the results reveal about investment decisions in the post-OBBBA world.