Power Generation in the Age of AI: Year-End 2025 Outlook
View original at finance.yahoo.comPower Generation in the Age of AI: Year-End 2025 Outlook In early 2020, the prevailing narrative in the power sector was a continuation story of the developments from the decade before: renewable buildout will keep compounding, thermal capacity will keep retiring (albeit at a slower rate), markets will evolve to compen…
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This is a 'once-in-a-century' industrial demand shock comparable to prior waves of large-scale infrastructure expansion
80% confidenceElectricity abundance is now part of the great power competition between the U.S. and China due to AI's geopolitical consequences
80% confidenceThere is roughly 2 TW of utility-scale solar and BESS projects in U.S. interconnection queues
80% confidenceData centers are the key driver for forecasted 5.7% annual energy demand growth in the U.S. over the next five years, compared to 0.2% annual average in the 2010s
80% confidenceLead times for generation step-up transformers have been documented at approximately 143 weeks in 2025, with large transformer lead times stretching into multi-year territory
80% confidenceThe Comanche Peak PPA has implied reliability/capacity value of roughly $24/kW-month or approximately $790/MW-day
80% confidenceSolar levelized cost of energy fell by roughly 85% between 2010 and 2019
80% confidenceMany private transactions are clearing around 6-9x EV/EBITDA, while public IPPs trade above 11x, creating room for accretive consolidation
80% confidenceChina built more than 50 GW of thermal generation and 277 GW of utility-scale solar in 2024, versus the U.S. at approximately 2.5 GW thermal generation and 40 GW solar
80% confidenceData centers consumed more than 25% of Virginia's electricity in recent years
80% confidenceOnly approximately 2% of queued capacity gets built annually
80% confidenceAll-in CCGT costs, which were roughly $1,200/kW in 2022, can now approach $2,500-$2,800/kW depending on configuration and site conditions
80% confidenceGeothermal and SMRs can plausibly become real contributors after 2035 because they provide firm, carbon-free power with high availability
80% confidenceThe U.S. built roughly 40 GW utility-scale solar and 10 GW utility-scale BESS in 2024, with expectations for 33 GW solar and 18 GW storage in 2025
80% confidenceData centers are expected to represent up to 12% of total U.S. electricity consumption by 2028, up from approximately 4.4% in 2023
80% confidence