The Balancing Act of U.S. Energy Supply

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Pulse – Part 2 in Our Energy Series

By Fred Carey, PE and Dawn Schilling, PE

Welcome back to Pulse! In Part 1 of our energy series, we explored the forces behind rising electricity demand in the U.S.—from population growth to electrification of vehicles and buildings. In this installment, we turn our attention to the supply side of the equation: where our energy comes from, whether we’re generating enough, and what obstacles lie ahead.

Where Does U.S. Energy Come From?

The U.S. energy system has always been diverse, shaped by natural resources, economic priorities, and policy shifts. Historically, fossil fuels—coal, oil, and natural gas—dominated the mix, with coal fueling much of the early and mid-20th-century grid. Nuclear energy emerged in the 1950s and 60s as a zero-emission baseload option, while hydropower became one of the first widely adopted renewable sources.

Today, the mix is evolving rapidly. As of 2024:

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  • Natural Gas supplies over 40% of U.S. electricity due to its availability and flexibility.

  • Renewables—mainly wind, solar, and hydro—provide roughly 20%, and are growing quickly.

  • Nuclear Power contributes about 18-19%, valued for its reliability and carbon-free generation.

  • Coal has declined to under 17% but still supports grid stability in many regions.

The future, however, looks very different. According to the U.S. Energy Information Administration (EIA), renewables are projected to surpass both coal and nuclear in generation share by 2030. Utility-scale solar and wind projects have been developing at record pace, bolstered by falling costs and favorable policies. However, recent shifts in federal policy may put a damper on such projects.

But while the energy mix is changing, fossil fuels and nuclear will remain essential in the near term, especially for baseload power and grid stability during peak demand or low renewable output.

Are We Generating Enough Power?

The short answer: not yet.

According to the EIA, the U.S. will add about 63 gigawatts (GW) of new utility-scale capacity in 2025—up nearly 30% from 2024. The majority of these additions will come from solar and battery storage. Yet, even with this growth, supply may fall short of what’s needed.

A recent analysis by the North American Electric Reliability Corporation (NERC) warns that the U.S. is entering a period of “elevated resource risk.” By 2034, according to NERC’s Long-Term Reliability Assessment as much as 120 GW of existing capacity—mostly coal and nuclear—could retire. These retirements, unless offset by new reliable generation and storage, will create a capacity gap that increases the risk of blackouts or forced load shedding.

Meanwhile, the American Clean Power Association projects that electricity demand could grow by 35% to 50% by 2040. Major drivers include:

  • Expansion of AI data centers, which consume large and constant power loads

  • Electrification of transportation (EVs), heating systems, and industrial processes

  • Growth in onshoring and clean manufacturing activity

  • Increased demand for resilient and redundant power in urban and industrial areas

This combination of rapid demand growth and uncertain supply additions presents a clear challenge: we need to build more generation—and faster.

What’s Preventing Supply Growth?

While technology and capital are available, three key roadblocks slow our ability to meet future energy needs:

Infrastructure and Siting Challenges

Building power plants, solar farms, wind arrays, and battery storage systems takes land, time, and local support. Transmission interconnection queues can delay projects by several years. For example, developers often wait 2–4 years just to get approval to connect new generation to the grid.

Regulatory and Permitting Delays

Energy projects must comply with a web of federal, state, and local regulations. Environmental reviews, community input processes, and multi-agency coordination often delay or derail otherwise viable projects. While safeguards are important, streamlining these processes is critical for timely energy deployment.

Technology Integration and Market Design

Some renewable energy sources are inherently variable—like solar and wind power, which depend on sun and wind availability. To reliably integrate them into the grid, we need large-scale storage, flexible demand programs, and market mechanisms that reward fast-ramping and distributed energy resources. Most regional grids are still adapting to these new requirements.

Recent, within the past several years, federal policies are aiming to overcome some of these barriers. The Bipartisan Infrastructure Law (BIL), CHIPS and Science Act, and Inflation Reduction Act (IRA) are injecting hundreds of billions of dollars into energy infrastructure, clean technology deployment, and grid modernization. However, many of the allocations, credits, and subsidies expire the end of this year or in 2026.

One notable initiative is the Energy Infrastructure Reinvestment (EIR) Program, which provides up to $250 billion in loan guarantees to repurpose existing fossil infrastructure into clean energy hubs. Across the country, communities are exploring projects that convert retired coal facilities into battery storage sites, hydrogen hubs, or solar generation stations—preserving jobs and accelerating the energy transition. The EIR loan authority is also set to expire in September of 2026.

The current Administration is shifting the focus back on fossil fuels, including liquid natural gas and nuclear energy. While pending policies are likely to slow the growth of renewables, they are not going away and will still be an important part of the U.S. energy mix moving forward. With the ongoing changes to federal policy, the future composition of energy generation in the U.S. is murky.

Conclusion: The Next Critical Piece—Transmission

The bottom line: energy demand is growing faster than supply, and our existing generation fleet is aging. Without significant investment in new capacity, streamlined permitting, and innovative grid technologies, the U.S. risks falling behind.

Solving this challenge requires a balanced strategy—one that integrates renewables, supports clean dispatchable generation like gas and nuclear, and embraces large-scale storage and demand management tools.

But generation is only half the battle. In our next edition, we’ll dive into transmission—the system that delivers energy from power plants to homes and businesses. We’ll explore whether today’s grid can handle the power of tomorrow—and what it will take to build one that can.

About PHE

PHE is a national consulting firm that specializes in environmental planning for Energy, Defense, and Civilian infrastructure.  The firm has supported efforts for the siting of novel and complex energy projects throughout the U.S. in the areas of fossil fuel, renewable, and nuclear energy sources.  For any questions or for more information, please reach out to Dawn Schilling, PE, AICP at dawn.schilling@phe.com.