Until recently, the energy industry's infrastructure plans have been based on historic electricity demand growth of under 1%.
Today – in an era of power-hungry datacenters, electric vehicles, and the electrification of industrial processes – that looks hopelessly inadequate.
To keep pace with current demand, the industry would need to build new generation and transmission capacity at more than six times the rate of recent years, RBC Capital Markets' Clean Energy Outlook for 2026.
Electricity use is now forecast to grow by an average of 5.7% annually over five years, notes the report's author, Chris Dendrinos, who leads on equity research for U.S. clean energy. "We need every electron we can get," he says.
Solar rides out tax credit cuts
With gas turbine prices soaring due to limited supply, renewables are the most affordable option. "Broadly speaking, solar is the most cost-effective electron to the grid," Dendrinos says.
He anticipates a surge of new solar projects, potentially adding around 40GW in 2026, and potentially more than that in 2027, assuming labor and connection challenges can be overcome.
Despite concerns about the roll-out of policies removing tax credits on renewables projects, these projects can still be viable, says Dendrinos.
"Practices like 'safe harboring', for example, allow the industry to lock in some of those tax credits," he says. "That will make it economic to continue to develop solar deep into the 2020s."
"Broadly speaking, solar is the most cost-effective electron to the grid."
Chris Dendrinos, U.S. Clean Energy Analyst
Versatility counts for batteries
Solar's disadvantage is its intermittent nature, so new projects are generally built with battery storage. More affordable and longer-duration batteries are adding to the tailwinds for this sector.
Batteries' initial advantage was their ability to respond to sudden spikes in demand. Today their use cases are expanding: for example, some utilities require large-load customers to add battery back-up as a grid stabilization mechanism.
"It can be used to unlock stranded transmission capacity on the grid," says Dendrinos. "And datacenters all deploy large amounts of diesel generator backup – battery storage can be a replacement for that."
"Battery storage can be used to unlock transmission capacity on the grid."
Chris Dendrinos, U.S. Clean Energy Analyst
Tech giants could cut nuclear costs
Nuclear energy, as a clean, always-on power source, is having a resurgence. While its long gestation times limit its usefulness for immediate power needs, the opportunity is extensive, says Dendrinos.
He notes that hyperscalers have shown themselves willing to put up the heavy costs required to build new nuclear, potentially reversing the recent dearth of new U.S. projects.
This could ultimately drive costs down: "You need build-out and expertise in building these things to drive cost efficiencies. Hopefully we'll see that over the next number of years."
