Jigar Shah and Arnab Pal in Utility Dive:
Across the country, a particular brand of conventional wisdom has set in: The only way to power the AI boom is a massive buildout of gas — both on the grid and “behind the meter” at data center campuses. The assumption is that anything else will be too slow, too risky or too complicated.
But “gas first” is simply a reflex, and it comes with two problems that are colliding with politics. First, it’s expensive. New generation and the upgrades to support it cost real money, and the utility model often pushes those costs onto ratepayers. Second, it’s slow, particularly where the grid is constrained. In many regions, equipment timelines are now measured in years rather than months.
If states respond with peak-driven planning — building the grid to serve the hottest hour of the year plus a reserve margin — customers will pay for infrastructure that sits underutilized most of the time. In our analysis, the grid is only 50% used throughout the year. There’s a better way: Build smarter before you build bigger.
The U.S. grid has a lot of unused capacity waiting to be unlocked. Today, we face rapid load growth and rising bills. If we treat every new megawatt like it must be served with new poles, wires, substations and peakers, we will lock in another decade of rate shock.
Instead, states should pursue an affordability roadmap that does three things immediately: increases utilization of existing grid assets; scales flexible capacity fast; and ensures large new loads pay their fair share so households aren’t subsidizing growth.
This is not just some far-flung theory. It’s happening now, beginning in Virginia under the leadership of Governor Abigail Spanberger, who identified grid utilization as an early priority for her administration. Each chamber of the Virginia General Assembly recently passed a first-of-its-kind bill requiring major utilities to propose grid utilization metrics and giving regulators a stronger framework to evaluate whether customers are benefitting from the full value of existing infrastructure before approving new spending.
The legislation still needs to be signed into law. But while Governor Spanberger leads, other governors should take notes, rather than make bold promises on rates without confronting the math of the grid.