America’s Demand for Power Is Soaring—and So Are the Costs of Building Out the Grid

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It's not a vocation. It's a shared obsession to make this nation great. I'm honored to be part of this country's ascent into tech dominance.

Sure, I'm handsomely rewarded. That's besides the point. It's never been about the money. No I don't apologize for owning a few Cessna Citations. I don't care to fly commercial*

*Really you have no idea do you? Spent you're formative years in a double wide trailer? It's a private jet. Jesus!

America’s Demand for Power Is Soaring—and So Are the Costs of Building Out the Grid

Equipment backlogs, permitting delays, tariffs and yearslong waits to connect to the grid are pushing up the expense

By Jennifer Hiller, WSJ

July 24, 2026 11:10 am ET

Surging electricity demand and equipment backlogs have pushed up construction costs for U.S. power plants more than 10% since last year.

America has a record amount of electricity generation under development. Building it is becoming far more expensive.

Surging demand for electricity from artificial-intelligence data centers—combined with equipment backlogs, permitting delays, tariffs and yearslong waits to connect to the grid—are pushing up construction costs for every type of power plant.

Costs for building natural-gas plants and large-scale solar and wind projects have increased more than 10% since last year, according to Lazard’s annual report on electricity-generation costs.

That poses a growing problem for consumers already frustrated by rising electricity bills.

The higher cost of building power plants today will eventually work its way into monthly utility bills as companies recover those investments over time. Electricity prices rose 4% in June from a year earlier, according to the Bureau of Labor Statistics, outpacing overall inflation.

Demand growth is “dominating everything in energy,” said George Bilicic, Lazard’s vice chairman of investment banking and global head of power, energy and infrastructure.

“If you’re an [exploration and production] company, you’re thinking about it, a pipeline company, you’re thinking about it, utilities, power companies, certain infrastructure-services companies. It is really pushing costs up.”

The U.S. is in the grips of a once-in-a-generation power-grid construction spree, driven in large part by the race to build data centers for training AI models, which can consume as much electricity as entire cities. Many regions are also experiencing rising industrial power demand, the electrification of building heat, more electric vehicles and population growth.

Capital-spending plans for 51 investor-owned utilities have reached an estimated $1.4 trillion for the next five years, up more than 20% from last year’s projections, according to PowerLines, a consumer-education group.

A cooling system on the roof of a data center in Oakland, Calif. Fred Greaves/Reuters

Most of the near-term additions to the grid are expected to stem from renewable-energy and battery-storage projects. Those sources make up about 90% of projects under construction that are likely to start generating electricity this year, according to the Energy Information Administration.

Costs for large-scale solar projects increased to an average of $69 per megawatt hour, up from $58 last year, according to Lazard. Adding batteries to a solar project increased costs to about $109 per megawatt hour, up from $91.

Spiking electricity demand is also fueling huge interest in natural-gas-fired power plants, which provide the largest share of U.S. electricity. Manufacturers face yearslong backlogs for gas turbines, essentially big jet engines that generate power.

Scott Strazik, chief executive of GE Vernova, a major supplier of gas turbines, said Wednesday that many customers are ordering equipment for delivery into the 2030s, and the company is boosting its output to try to keep pace. By the end of the year, he expects to already have half of the company’s 2031 turbine output under contract.

“This is just a larger market for a longer period of time,” Strazik said.

Combined-cycle plants, which are a grid workhorse and the most efficient gas plant, capture waste heat from turbines to generate more electricity. Construction costs have climbed to their highest level in roughly 15 years, according to Lazard, to about $90 per megawatt hour, from $79 last year.

“You’re going to see costs continue to rise. I don’t see how they can’t just as a basic supply-and-demand matter,” Bilicic said.

Politicians across the U.S. have been railing about rising electricity costs this year, none more prominently than President Trump. The White House has persuaded tech companies—and now a group of electric utilities—to pledge to avoid shifting the cost of new grid equipment needed by data centers onto regular households and businesses.

It isn’t clear how those voluntary pledges will work in practice. Utility rates are usually overseen by state regulators. And tracking costs specifically caused by data centers will be difficult, as some system upgrades benefit all users and are traditionally applied to all customer bills.

Construction work at Fort St. Vrain Generating Station.

Construction at the Fort St. Vrain natural-gas-powered plant in Platteville, Colo. Chet Strange/Bloomberg News

There are more than 190 cases across the country of utilities wrestling with things such as contract provisions, special rates or ways to charge giant customers, according to utility filings aggregated by AI startup Halcyon.

The uproar around data centers and electricity is particularly acute for the roughly 67 million people in a region spanning the mid-Atlantic into the Midwest who get their power from a market operated by PJM Interconnection, which functions as an air-traffic controller for the grid, rerouting power as needed to meet demand. Power prices in the region have climbed as data-center growth, particularly in Virginia, collides with the need to add power generation.

PJM pays power plants to guarantee they will be available when electricity demand peaks. Its latest capacity auction came up short of the reserves it hoped to procure. It plans another auction this fall for additional capacity, but details haven’t yet been filed with regulators.

Monitoring Analytics, PJM’s independent market monitor, is calling for new data-center load to be removed from the capacity market and procured separately. Of about $16.4 billion in capacity-market charges, $6.3 billion was caused by data-center demand, said Joe Bowring, president of Monitoring Analytics.

Because the auction hit a price cap, capacity prices still aren’t high enough to spur developers to build the additional power plants, especially natural gas, that the market needs, said Peter Gardett, chief executive of market-data platform Noreva.

“The auction has pulled off making everyone unhappy,” Gardett said.