energy demand

Written By: Paul A. DeCotis
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Paul A. DeCotis, senior partner, Energy & Utilities at consultancy West Monroe, writes on key trends in the energy sector we will need to be on the lookout for in 2025.

In 2025, the energy and utilities sector will encounter both familiar challenges and new uncertainties. With a new presidential administration, potential regulatory changes could influence infrastructure investments and decarbonization efforts.

The industry is facing a significant surge in load demand driven by AI, data centres, and widespread electrification. To address this demand, utilities must enhance grid reliability and resilience while maintaining affordability and advancing clean energy goals. The market is also becoming more competitive as independent providers are looking to address emerging power generation, and infrastructure needs and clean energy goals.

At West Monroe, our Energy & Utilities practice has identified five key focus areas to help utilities navigate these changes and build a resilient, reliable, and inclusive energy future.

Trend 1: Load growth and T&D system needs

Energy demand is climbing rapidly due to AI, data centres, and increased electrification in buildings and transportation. Data centres alone require near-perfect reliability, adding pressure on the grid and necessitating substantial expansion in Transmission and Distribution (T&D) infrastructure.

As demand rises, distribution utilities must balance clean energy goals established by legislation or policy, with the need for accessible, affordable services. This accelerated growth increases complexity in load forecasting, complicating the balance between necessary system upgrades and equitable cost distribution.

Although new technologies aim to expand transmission capacity, the challenge lies in the pace of change and managing investments within the regulated industry structure.

The industry is also shifting from a collaborative stance to a more competitive landscape, with energy companies vying for growth opportunities across regions perhaps bypassing the local distribution utility.

With load growth at this rapid rate, utilities and other companies will struggle to mobilise quickly enough to build the infrastructure needed to meet demand. Technology and data centre companies are already implementing on-site generation solutions, such as solar energy, and co-locating with natural gas and nuclear facilities to meet their energy needs.

Trend 2: Maintaining and enhancing safety and reliability

Maintaining grid reliability is becoming increasingly challenging due to aging infrastructure, extreme weather, and the integration of distributed and renewable energy sources.

Although the US electric grid ranks among the most reliable globally, significant investment is required to ensure ongoing safety, stability, and affordability.

Unpredictable power demands from data centres and cryptocurrency miners further complicate supply management, while the intermittent nature of renewable sources can destabilise the grid, underscoring the need for robust planning and control systems.

To meet rising demands, utilities are exploring decentralised energy resources, microgrids, and remote grids.

However, financial constraints and supply chain issues can delay critical infrastructure upgrades, requiring utilities to prioritise spending strategically. Our energy future will not be solely electric, gas, solar, or wind; it will require a combination of resources working together to maintain safety, reliability, and achieve statewide decarbonisation goals.

Trend 3: Championing energy affordability

Regulators and utilities face complex, interconnected challenges as they transition to a lower-carbon economy.

A critical focus is on identifying cost-effective investments for grid modernisation while keeping energy accessible and affordable for all customers. Utilities are tasked with securing trillions of dollars to upgrade the grid and support cleaner energy, amid rising capital costs and supply chain disruptions.

This situation is further complicated by the public perception of energy as a fundamental right, which can clash with the reality of private sector provision. As utilities refine their operating models and explore digital solutions to improve efficiency, the future of energy affordability remains uncertain, especially with equity concerns in play.

We must balance our clean energy ambitions with the need for a public policy approach that protects vulnerable populations while advancing environmental objectives.

Trend 4: Integrating AI into utility operations

AI, machine learning, and advanced analytics are transforming energy and utility operations, bringing powerful tools for optimisation and predictive insights.

From smart grid management to preventive maintenance, these technologies drive operational efficiency and elevate customer service. AI-driven analytics support regulatory compliance and offer more precise grid monitoring, helping utilities make better informed, data-driven decisions.

While AI can reduce operating costs, it’s not a substitute for the substantial investments required to meet growing electricity demands.

Additionally, the energy demand of AI itself necessitates careful oversight and transparency. Success relies on embedding AI into broader sustainability strategies, emphasising accessible tools and robust workforce training to drive effective change.

AI is the worst it is ever going to be right now—it is only going to improve from here. To thrive in this evolving landscape, organisations must invest in understanding and leveraging new andemerging technologies.

Trend 5: Strengthening cybersecurity to protect critical infrastructure

With rising threats in the energy sector, utilities and non-regulated private energy providers must adopt strong cyber resiliency measures.

The growing number of connected devices introduces vulnerabilities, where even a single compromised supply chain component can put entire systems at risk. Securing and monitoring equipment—and clearly understanding the ownership of critical components—are vital steps.

Utilities also face challenges with tight budgets and a cybersecurity skills gap. Preparing for geopolitical risks and policy changes will shape funding and priorities. As cloud tools expand and national databases for equipment manufacturers become available, utilities will need adaptable, proactive cybersecurity strategies for long-term success.

Cybersecurity in utilities isn’t static—it’s like preparing for a new type of storm. Just as we plan for hurricanes and wildfires, we must continually adapt our defenses to evolving threats.

By The Enel X Energy Intelligence Team, Strategy
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As America enters its second month of widespread lockdowns, the effects of these measures are becoming clearer, especially in electricity demand. Data from the largest United States regional transmission operators (RTOs) show grid-wide declines in electricity usage.

However, because this data includes commercial, industrial and residential end users, the true impacts to specific sectors of the economy are largely hidden—increases in residential energy demand partially or entirely offset significant declines seen in commercial demand. Below, Enel X provides an inside look at our internal data to show how the effects of coronavirus are being felt across individual sectors.

The Broader Picture: Energy Demand Is Down

Grid-wide RTO data shows that energy demand is broadly down for the entirety of 2020. In the first two months of 2020, a mild winter led to lower-than-average consumption due to a decline in heating demand. Then, in mid-March, coronavirus shutdowns led to further drops in demand.

Every year will include variations due to temperature fluctuations, but this sustained and ongoing drop has some analysts worried about long-term effects on consumers. A decline of this magnitude, as James Newcomb of the Rocky Mountain Institute told Utility Dive, could severely affect revenue for utilities. To recoup their losses, utilities may have to increase customer rates.

The drop since mid-March is even more noteworthy when controlling for factors like temperature—The New York Times highlighted work by Steve Cicala, an economics professor at the University of Chicago, who has demonstrated that changes in electricity demand closely tracked changes in GDP during the 2008 financial crisis. Currently, Cicala’s adjusted numbers find electricity demand down about 8% from expectations as of April 6th.

Enel X Internal Data: A Drop in Demand Across Sectors, With Notable Exceptions

Grid-wide data does not tell the story of specific industries, though, and the aggregate numbers include residential data. Internal data from our commercial and industrial customers – who represent approximately 2% of demand across USA and Canada—tells a more detailed story. Most commercial and industrial sectors have seen far more significant declines in consumption than the grid-wide data suggests.

The industries at the bottom of the chart are those with the most drastic reductions, and they are largely unsurprising—media and entertainment is considered inessential, flights are restricted, and schools are closed.

Increases show that some businesses – or even entire industries – are now ramping up their efforts and being called upon to work harder than ever. Manufacturing has seen a moderate decline in average demand, but our numbers show the sector has seen an uptick in peak demand.

In part, this may be because many individual manufacturers are operating at a higher level than ever before. One customer we spoke to – a manufacturer of household foods – explained just how much has changed this past month. As a result of quarantine orders and increases in grocery demand, they said, their products have been flying off of shelves. Their order volume has gone up significantly as a result, and that’s led to much higher production levels—what is normally a 24/5 plant has become 24/7, and the plant itself is expanding.

“Even as demand returns to normal,” the customer told us, “our plant will have to work at higher than normal production levels likely until at least the end of the year.”

What Lies Ahead

Professor Cicala notes that the United States’ electricity trend has tracked Europe with a lag, indicating a further drop may be coming. The grid-wide data shows there is room to fall—ERCOT (Texas), for instance, only implemented state-wide lockdowns on April 2.

If widespread shutdowns and work-from-home measures remain in place when warm summer months arrive, consumption could vary greatly from normal patterns. Commercial buildings often have more efficient cooling systems than personal homes, and offices generally have fewer cubic feet per person than a home does.

While it’s too soon to tell what long-term implications the virus will have on the energy sector, the impact has already been felt in the way homes and businesses are using electricity.

Sustainable Benefits by Emerald Skyline Corporation

From AI to affordability: Five trends defining energy & utilities in 2025