The energy sector is grappling with a paradigm shift, as the insatiable power demand from artificial intelligence and data centers becomes the single most dominant driver of load growth. A new Bank of America Institute report projects a staggering 2.5% annual increase in U.S. electricity demand through 2035, with data centers as a primary culprit. This surge is creating a veritable gold rush for power, forcing utilities and developers into an all-of-the-above scramble for generation and placing immense strain on an already-creaking grid infrastructure. The White House has taken notice, unveiling a plan to fast-track permitting for both data centers and the energy projects required to power them, signaling the national significance of this challenge.

This new demand is a double-edged sword. On one hand, it’s providing a controversial lifeline to fossil fuels, with some observers noting that coal and gas plants have found a “new best friend.” FERC’s approval of the $16.4B Constellation-Calpine deal, combining nuclear and gas assets, underscores the value of firm, dispatchable power in this new era. On the other hand, it is accelerating the deployment of clean energy at an unprecedented scale. Tech giants are leading the charge, with Meta’s 600-MW solar PPA in Texas serving as a prime example. Concurrently, nuclear power is re-emerging as a key solution for 24/7 carbon-free energy. The Palisades nuclear plant’s progression towards a restart and advanced nuclear developer Oklo’s new alliances to power data centers highlight a significant renaissance for the technology.

Beyond raw generation, the focus is intensifying on resilience, reliability, and flexibility—areas where Battery Energy Storage Systems (BESS) and onsite power are becoming indispensable. Data centers are actively seeking flexible solutions that can reduce grid impacts and ensure uptime. This is catalyzing innovation and strategic partnerships, such as the GM and Redwood Materials deal to deploy second-life EV batteries for energy storage, and Oracle’s agreement with Bloom Energy for onsite fuel cell power. Long-duration storage is also gaining traction, evidenced by Google’s partnership with CO2-battery startup Energy Dome and PG&E’s massive 1.8 GWh LDES contract. These technologies are no longer peripheral but are core components of the modern energy ecosystem being built around data centers.

However, this rapid growth is hitting a wall: grid infrastructure. Interconnection queues are notoriously long, and building new transmission remains a monumental challenge. FERC’s recent order forcing changes to PJM’s grid interconnection process, including mandates for considering Grid-Enhancing Technologies (GETs) and energy storage, is a direct response to this bottleneck. Yet, the problem’s scale was starkly illustrated by the DOE’s termination of a $4.9 billion loan for the Grain Belt Express transmission line, a critical project for moving Midwest wind power to demand centers. This juxtaposition of soaring demand and constrained delivery capability defines the central technoeconomic challenge for the energy industry today.

This Week’s Top 20 Energy News Items

1. Coal- and gas-fired power plants have a new best friend: data centers
2. US electricity demand to grow 2.5% annually through 2035: BofA Institute
3. White House unveils AI plan to fast-track data centers, power projects
4. NRC approvals move Palisades nuclear plant closer to restart
5. GM, Redwood Materials sign deal to deploy energy-storage batteries
6. FERC orders changes to PJM’s grid interconnection process, plus 3 other open meeting takeaways
7. Trump admin cancels $4.9B loan for biggest transmission line in US
8. Meta to power Texas data centers with 600-MW solar plant
9. Oracle, Bloom Energy strike data center power deal
10. Google partners with CO2 Battery long-duration energy storage startup Energy Dome
11. Nuclear Developer Oklo Advances Dual Alliances Targeting Data Center and Industrial Power Needs
12. California’s largest utility PG&E signs 1.8GWh long-duration energy storage deal
13. FERC approves $16.4B Constellation-Calpine deal
14. Data centers seek flexible power solutions for resilience, sustainability
15. ‘21GWh of US ESS cell manufacturing capacity cancelled this year’: Clean Energy Associates reports
16. Latest PJM power capacity auction clears maximum price in all zones
17. Most of the planned coal capacity retirements are in the Midwest or Mid-Atlantic regions
18. Eaton to acquire solid-state transformer technology firm Resilient Power Systems
19. DOE’s national labs reportedly consider layoffs amid budget cuts
20. Energy bill could cost North Carolina billions in lost investments and jobs