U.S. AI brings "power acceleration," and energy storage may be the overlooked solution.

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AI data centers are driving a surge in U.S. electricity demand, with energy storage likely to become a key solution.

According to the latest research by Huatai Securities, Artificial Intelligence Data Centers (AIDC) are significantly boosting U.S. electricity demand, with a projected power gap of 18-27GW by the end of 2026. Given the long construction cycles for traditional power sources, electrochemical energy storage is expected to become an important means to ease power shortages.

According to the U.S. Energy Information Administration (EIA) data updated in September, U.S. electricity consumption is forecast to grow by 2.3% and 3.0% in 2025 and 2026, respectively. Based on the latest data center capex assumptions, Huatai Securities estimates that AIDC electricity demand in the U.S. could increase by 6-13GW per year in 2025-2026, far outpacing historical growth rates. By the end of 2026, the cumulative power gap in the U.S. grid could reach 18-27GW.

The lengthy construction period for conventional power sources makes rapid response difficult, while energy storage, with its fast deployment advantage of 1 to 1.5 years, promises to be an overlooked yet vital solution. For investors, this trend will drive U.S. electrochemical energy storage demand to maintain growth rates above 50%, and will also benefit battery cell manufacturers, storage system integrators, backup power equipment suppliers, and companies related to fuel cells.

Data Centers Drive Steep Increase in U.S. Power Demand, Power Shortages Push up Market Prices

According to the latest EIA data, U.S. electricity consumption rose by 3.1% in 2024, with forecasted increases of 2.3% and 3.0% for 2025 and 2026, respectively. Based on updated data center capex assumptions, it is expected that U.S. AIDC power demand will increase by 6-13GW per year in 2025 and 2026.

Huatai Securities notes that incremental load forecasts for six key regions (which account for 55% of the U.S. peak load and cover major data center hubs) show annual increases of more than 15GW, meaning that non-data center loads will also increase by more than 2GW annually. Overall, the U.S. peak load could maintain annual growth above 2%, four times higher than the compound annual growth rate of 0.5% from 2016-2024.

Due to network connection and power source scarcity, data centers are locking in supply at prices much higher than the market level. Large tech companies and nuclear power companies have signed direct connection agreements at $100/MWh, and with an additional $20 transmission fee, the total comes to $120—nearly three times PJM’s 2024 average wholesale electricity price of $41.

The rise in capacity prices quantitatively reflects power shortage expectations. For the PJM power market, capacity prices for the 2026/27 period reached $329.17/MW-day, 22% higher than last year's auction price for the 2025/26 period. This increase is equivalent to residential/commercial electricity prices rising by 47%/59% respectively.

Energy Storage Becomes a Key Near-term Solution

A slowdown in coal power retirement could partially ease the pressure. According to the latest EIA statistics, 6.2GW/3.4GW of coal power will retire in 2025/26, leading to a cumulative replacement demand of 9.6GW. Huatai Securities estimates that, even if half of coal retirements are postponed, there will still be a short-term power gap of 11-20GW.

However, the long construction cycles for new gas and nuclear plants remain a major challenge. In 2024, new gas turbine orders in the U.S. reached 11.4GW, but considering a three-year lead period, these will not be online until the end of 2027 at the earliest. On the nuclear front, although the Trump administration signed an executive order in May to accelerate nuclear expansion, targeting 400GW of operational nuclear capacity by 2050, U.S. nuclear projects require 4-6 years for approval and 6-8 years for construction, meaning there is low visibility for new nuclear units before 2030.

Huatai Securities states that, unlike the capacity bottlenecks and lengthy installation/commissioning processes with gas turbines, the solar-plus-storage supply chain is comparatively unconstrained, with fast deployment possible—typically coming online within 1 to 1.5 years.

Based on PJM’s evaluation of independent energy storage providing a 40% derating factor in the grid, the equivalent installed storage demand is 28-51GW. With four-hour configurations, this equals 110-205GWh installed demand over two years. Compared to the 37GWh of U.S. electrochemical energy storage installed in 2024, this requires a sustained annual growth rate above 50%.

Solid oxide fuel cells (SOFC) also show advantages in flexibility. U.S. companies such as Bloom Energy offer SOFC products featuring small modularity, clean and stable operation, and flexible distributed deployment, aligning with data center power needs. In November 2024, U.S. utility AEP signed a 1GW fuel cell supply agreement with Bloom Energy, but with only about 2GW annual SOFC capacity, the overall scale remains limited.

Huatai Securities further notes that if the U.S. begins an interest rate cut cycle in the second half of the year, it will have a “double-boost” effect for solar and storage installations: for every 0.5 percentage point decrease in interest rates, the equity return of solar-storage projects can increase by 0.5 percentage points; meanwhile, lower rates further raise the relative attraction of solar-storage project investment returns over risk-free rates.

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