1. Continued Rise in Electricity Prices
Experts predict that electricity prices in the U.S. will continue to rise in 2025, driven by factors such as increasing demand, higher transmission and distribution costs, and anticipated increases in natural gas prices. According to data from the U.S. Energy Information Administration, the average electricity price for all users is expected to be 13.2 cents per kilowatt-hour in 2025, significantly higher than the 12.68 cents per kilowatt-hour in 2023.
2. Demand Growth Threatens Grid Reliability
At the beginning of the year, the North American Electric Reliability Corporation (NERC) issued a serious warning about the electricity industry. Following nearly two decades of stagnant electricity demand growth, the rapid expansion of data centers and the advancement of electrification are driving up U.S. electricity consumption. NERC's assessment report released in December 2024 stated that more than half of the U.S. grid may face unprecedented challenges over the next five to ten years, severely threatening grid reliability.
3. Grid Operators Seek Market Reforms
Wholesale electricity market operators in the U.S. face numerous challenges, primarily ensuring sufficient electricity supply to meet growing demand. Independent system operators and other market entities are working to ensure that markets send appropriate signals to stimulate new power generation projects, while also addressing grid connection queue issues. For example, PJM Interconnection is facing significant challenges in reforming its capacity market and must navigate complex market environments to find paths for transformation and development.
4. Renewable Energy Sector Proceeds with Caution
In 2025, the ongoing growth in U.S. electricity demand should theoretically boost demand for renewable energy. However, Trump's pledge to prioritize fossil fuel-based power generation has introduced uncertainty for the renewable energy sector. Additionally, integrating renewables into the grid remains challenging. Although the U.S. Congress is considering bipartisan legislation to support grid integration, the outlook for this legislation remains unclear, forcing the renewable energy sector to proceed cautiously.
5. Nuclear Industry Poised to Benefit from NRC Reforms
The U.S. nuclear industry was highly active in 2024. Experts indicate that the revitalized Nuclear Regulatory Commission (NRC) will play a crucial role in the development of the nuclear energy sector, potentially bringing new opportunities and driving better development for the industry in 2025 and beyond.
6. Decreasing Battery Costs Mitigate Tariff Risks
In the third quarter of 2024, the U.S. installed 3,806 megawatts/9,931 megawatt-hours of energy storage capacity. Despite a projected slowdown in the deployment of storage devices from 2025 to 2028, decreasing battery costs will provide momentum for the industry, helping it counter potential tariff risks and maintain stable growth.
7. Load Growth Prompts States and Utilities to Adopt Virtual Power Plants
According to a report by Wood Mackenzie in July 2024, only 19.5% of North America's distributed energy resources have joined virtual power plants. As load growth exceeds generation capacity growth, states and utilities are increasingly focusing on virtual power plants as a key solution to address electricity supply and demand issues, with potential for further development in 2025.
8. FERC and DOE Advance Transmission Policies Amid Challenges
The U.S. transmission sector achieved significant progress in 2024. The Federal Energy Regulatory Commission (FERC) largely maintained its Order 1920 on transmission planning and cost allocation in November, while the U.S. Department of Energy (DOE) released a national transmission planning study in October. However, advancing transmission policies in 2025 and beyond will continue to face challenges, requiring ongoing efforts from relevant agencies to ensure stable development in the transmission sector.
9. Electrification Process Driven by Private Sector and Transportation
Over the past four years, the U.S. has made significant strides in electrifying building and transportation systems. Despite Trump's intention to cancel electric vehicle tax credits, the private sector will continue to invest heavily in clean energy manufacturing, driven by optimism about the future of clean energy and strategic business considerations. This will remain a crucial force driving the electrification process, partially offsetting the impact of policy changes.