The electric power sector in the United States is witnessing a notable shift toward fossil fuel projects, recording the highest rates of infrastructure construction for it in over a decade, at a time when the growth of the renewable energy sector is slowing due to regulatory and federal policy changes.
This shift comes in response to the unprecedented rise in electricity demand, driven by the rapid expansion of artificial intelligence data centers, factories, and electric vehicles connecting to the national power grid. According to a report issued by the Environmental Defense Fund and the research firm Atlas Public Policy, current government policies under the U.S. administration led by Donald Trump focus on supporting fossil fuels and meeting the massive energy needs of data centers, taking measures that have led to restricting or slowing the expansion of wind and solar energy projects by canceling tax incentives and delaying permits.
What is practically changing in the energy sector?
Data indicates a radical change in future infrastructure plans:
- New fossil fuel infrastructure plans rose from only 5 percent of total new capacity in 2024 to reach 30 percent by the second quarter of 2026.
- Companies are planning to add fossil fuel-based capacities reaching 68 gigawatts by 2030, representing large leaps compared to previous plans.
- Cancellation rates for renewable energy projects are increasing compared to fossil fuels, amid warnings that these projects could lead to locking in pollution rates and higher electricity costs for decades to come.
Why does this development matter to the tech sector?
The energy and infrastructure crisis is closely linked to the massive growth of artificial intelligence technologies and large data centers that require enormous power to operate. Although solar and wind energy projects still maintain a cost advantage compared to new natural gas plants, regulatory changes and the shift toward gas reflect the operational and environmental challenges faced by major tech companies in securing sustainable and reliable energy sources for their future operations.