RE+ 2025: Navigating the U.S. Power System’s Current Challenges

The U.S. power system is entering uncharted waters. The conversation at RE+ this year wasn’t just about renewables; it was about navigating a new energy reality. On one hand, demand for electricity is surging, from the explosive growth of artificial intelligence (AI) and data centers to the rapid electrification of vehicles and buildings. On the other hand, how do we ensure “just and reasonable” utility rates, keeping the electricity bills affordable for customers?

A Perfect Storm of Challenges

A major concern is resource adequacy. While AI and data centers are driving significant load growth, the interconnection queue is clogged with renewable projects. This interconnection backlog is delaying clean energy from coming online just as new load growth accelerates.

Electricity affordability is another concern amid load growth and lagging supply. The IRA’s tax credits have turbocharged clean energy investment, but the phaseout schedule under the OBBBA, coupled with foreign entity of concern (FEOC) compliance rules, threatens to drive up project costs. Developers are already warning that power purchase agreement (PPA) prices could climb, and ultimately, those costs land on customer bills. In addition, higher transmission buildout costs and soaring capacity auction prices have created more pressure on customers.

Turning Challenges into Opportunities

Unleash What We Can Build Fast

Among all the available technologies, solar and storage can be brought online quickly, making them the most viable option to support near-term AI-driven demand growth. Developers can bring solar projects online within just 18 to 24 months, compared to other resources such as wind, small modular reactors (SMRs), natural gas, and hydrogen fuel cells, which typically take 3 to 15 years from project conception to commercial operation.

To deploy the resources faster, we must react quickly to address the “soft cost” of time. Permitting and interconnection delays are the primary bottleneck. Every month of delay adds cost, jeopardizes project viability, and keeps us reliant on more expensive, marginal resources during peak times. We can speed things up by creating narrow, time-limited fast-track lanes for near-term reliability needs—limited to projects with proven site control, deliverability, and financing. MISO and SPP’s Expedited Resource Adequacy Study (ERAS) pilots show the feasibility of this model. Pair that with surplus interconnection at existing POIs, and clear transfer of rights at retiring sites to plug in capacity faster.

Maximize the Grid We Already Have

Building new transmission is essential, but slow and expensive. We can act now by deploying Grid Enhancing Technologies (GETs) across our existing network. Tools like Dynamic Line Rating (DLR) use sensors to determine a line’s real-time capacity, which is often higher than its static rating. Grid topology optimization software can re-route power flows to reduce congestion. These GETs are not silver bullets, but they can be an effective solution to maximize the transmission capacity across the existing power system.

Value Flexibility as a Resource

The existing U.S. grid can handle significant new loads such as data centers, as long as they can be curtailed when the electric system is stressed. Grid operators like ERCOT and PJM are now exploring policies like mandatory curtailment and demand-response programs for large load customers during critical hours.

On the supply side, at the grid edge, distributed energy resources (DERs) and virtual power plants (VPPs) can shave peaks, provide frequency services, and ease congestion. Unlocking this at scale takes market design and regulatory reform: FERC Order 2222 compels RTOs/ISOs to enable DER/VPP participation, while performance-based regulation can align utility incentives with demand-side optimization and include LMI-focused metrics to reduce bill spikes.

Looking Ahead

The unprecedented demand surge is the catalyst that the grid has needed for decades. It’s exposing pressing issues and pushing us toward a more dynamic, decentralized, and digitally native power system. The true test now lies in our market and policy designs: will they simply adapt, or unlock the full potential of this transformation?

Jie Ying

Master of Environmental Studies Candidate

Jie Ying is a Master of Environmental Studies Candidate at the University of Pennsylvania.

Manling Hu

Master of Environmental Studies Candidate

Manling Hu is a Master of Environmental Studies Candidate at Penn. She is also a research assistant supporting research on energy insecurity and utility disconnections at the Energy Justice Lab.