A New Era Of Power Demand

INTRO

The U.S. is entering a new phase of electricity demand growth after two decades of near-stagnation. The combination of artificial intelligence and manufacturing reshoring is reshaping the national energy landscape. This transformation has significant implications for utilities, industrials, and energy producers. From 2005 to 2020, total electricity consumption barely increased (EIA 2025). The rise of AI data centers, electric vehicles (EVs), and domestic industrial expansion has lifted power usage nationwide (Deloitte 2025). The sectors best positioned to benefit (utilities, industrials, and energy) are already seeing steady capital inflows and earnings strength, and many investors are looking into the theme. We will first identify the sources of new power demand, then explore the investment opportunities in these areas, and finally assess some vulnerabilities.

DRIVERS OF POWER DEMAND

Artificial Intelligence and Data Centers
AI remains the single biggest driver of incremental electricity demand. Each AI model requires exponential computing power, and data centers hosting these systems are rapidly scaling. According to ConstructConnect, total U.S. data center construction starts reached $14.0 billion in July 2025, compared to just $682.0 million in July 2024, reflecting a massive year-over-year expansion. Deloitte reports that the proliferation of AI workloads is straining existing grid capacity, prompting large technology companies to contract long-term power supplies and invest in grid-scale generation. AI-driven data centers are also energy-intensive, with the smallest consuming ~18,000 gallons of water per day and the largest reaching 5 million. For context, each ChatGPT query uses around 0.34 watt-hours of electricity, and with over 122 million daily users on ChatGPT alone, plus many other AI tools, the energy burden is growing exponentially. From 2021 to 2024, the number of U.S. data centers doubled, and their power capacity is expanding even faster (ConstructConnect 2025). Statista data show that private-sector data center completions have increased every year since 2021, confirming that this buildout represents a sustained structural trend, not a short-term boom.

Manufacturing Reshoring
Reshoring (the process of returning the production and manufacturing of goods to the company's original country) is another major source of new power demand. Companies are moving production back to the U.S. to secure supply chains and cash in on billions in government incentives like the CHIPS Act. U.S. manufacturers are expanding production domestically after decades of offshoring, supported by new incentives and supply chain realignments. Valco Cleve reports that 69% of U.S. manufacturers are now reshoring or planning to reshore operations, with advanced manufacturing facilities (particularly chip fabrication and EV plants) among the largest new energy users. Federal Reserve data show consistent growth in private manufacturing construction spending, confirming that investment in energy-intensive industrial infrastructure is accelerating (FRED 2025). As reshoring continues, this trend reinforces long-term electricity consumption growth, particularly in regions like the Midwest and Northeast, where most large-scale plants are being built.

INVESTING IN POWER GENERATION: COMPANY OPPORTUNITIES

Utilities / Power Producers

Talen Energy (TLN)
In June 2025, Talen announced a 1,920 MW power purchase agreement (PPA) with Amazon Web Services to supply carbon-free electricity from its Susquehanna nuclear plant to AWS data centers in Pennsylvania (Talen Energy Corporation 2025). The agreement transitions the plant’s output to a “front-of-the-meter” structure and runs through 2042, with full delivery expected by 2032 (World Nuclear News 2025). Separately, Talen agreed to acquire two combined-cycle gas plants, Moxie Freedom (Pennsylvania) and Guernsey (Ohio), for about $3.5 billion net, adding nearly 3 GW of generation capacity and expanding its flexibility to serve large, continuous power loads (Reuters 2025). These projects strengthen Talen’s role as a diversified, high-capacity power producer positioned to benefit from the surge in AI-driven energy demand.

Constellation Energy (CEG)
Constellation is advancing its acquisition of Calpine Corporation in a deal valued at around $16.4 billion, expected to expand its generation portfolio across nuclear, natural gas, and renewable assets. The merger, approved by FERC under mitigation conditions, will broaden Constellation’s footprint to roughly 60 GW of generation capacity and is slated to close by late 2025 (Nasdaq/Zacks 2025). Constellation has also maintained strong relationships with corporate clients like Microsoft and Meta, providing nuclear-based clean energy through long-term power purchase agreements.

Industrials / Electrification Providers

GE Vernova (GEV)
Formed through GE’s 2024 energy spinoff, GE Vernova supplies grid infrastructure, gas turbines, and renewable power equipment. The company remains one of the top-performing industrial stocks in 2025, supported by strong demand for electrification and grid modernization projects across the U.S. and abroad (Nasdaq/Zacks 2025).

Energy / Natural Gas Producers

EQT Corporation (EQT)
EQT remains the largest U.S. natural gas producer and is strategically positioned to serve rising power demand from AI data centers and electrified manufacturing facilities. The company has increased firm gas supply commitments to Appalachian and Mid-Atlantic markets, ensuring stable throughput as electricity-driven consumption rises. In July 2025, EQT signed a long-term agreement to supply natural gas to a planned 2.7 GW gas-fired power and data center campus on the site of the retired Bruce Mansfield coal plant in western Pennsylvania (Weixel 2025). The project includes up to 800 MMcf/d of new natural gas capacity and an adjoining 2 GW hyperscale data center, highlighting EQT’s growing role in directly fueling AI-related infrastructure (Weixel 2025). This deal reflects the company’s strategy of securing firm demand for its production from Marcellus and Utica while supporting the rapid expansion of electricity-intensive digital infrastructure across the U.S. (Weixel 2025). EQT’s established infrastructure gives it a unique role in supporting reliable baseload energy, particularly as AI and electrification continue to elevate natural gas demand.

INVESTMENT RISKS ASSOCIATED WITH THE THEME

While the opportunity for rising power demand is substantial, investors should remain mindful of certain risks across the sectors most exposed to this theme. The utilities sector could be hurt by a slowdown in AI-related capital spending or a downdraft in power demand. While this scenario seems unlikely given current trends, any shift in the pace of data center buildouts or regulatory headwinds could introduce volatility. The industrial sector is highly sensitive to the global economy, as its international supply chains and sales are exposed to risks like geopolitical shocks and shifting currency values. Industries like machinery and electrical equipment are vulnerable to trade tensions or geopolitical shocks. A weakening U.S. dollar could offset some of these pressures, but a broad economic slowdown would still weigh on earnings growth. This energy sector, particularly natural gas producers, remains closely tied to expectations for domestic and international power demand. If electricity usage fails to scale as forecasted, or if natural gas prices decline due to oversupply, energy equities could underperform. 

FINAL THOUGHTS

Power generation is no longer a slow-moving, utility-only theme: it is now a multi-sector, macro-level shift with long-term investment potential. The surge in electricity demand from AI, electrification, and domestic manufacturing is creating structural tailwinds across utilities, industrials, and energy.

While risks exist, they are outweighed by the durability and scale of this transformation. Companies positioned at the intersection of infrastructure, technology, and energy security are likely to see continued benefits as power demand continues to accelerate. Investors who position early stand to participate in one of the most important infrastructure-driven themes of the decade.

References

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ConstructConnect. 2025. “Data Center Spending Sets New Record as Construction Surges to $14 Billion.” ConstructConnect News. Accessed November 2025. https://news.constructconnect.com/constructconnect-report-record-data-center-construction-spending-surges-to-14-billion.

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Federal Reserve Bank of St. Louis. 2025. “Private Manufacturing Construction Spending (TTLCONS).” FRED Economic Data. Accessed November 2025. https://fred.stlouisfed.org/series/TTLCONS.

Reuters. 2025. “Talen to Acquire Power Stations in Pennsylvania and Ohio for $3.5 Billion.” Reuters Business. July 17, 2025. https://www.reuters.com/business/energy/talen-acquire-power-stations-pennsylvania-ohio-35-billion-2025-07-17.

Reuters. 2025. “Constellation Energy to Buy Calpine in $26.6 Billion Deal.” Reuters Markets. January 10, 2025. https://www.reuters.com/markets/deals/constellation-energy-buy-calpine-266-bln-deal-2025-01-10.

Statista. 2025. “Private Sector Data Center Construction Completed in the United States (2021–2025).” Statista Research Department. Accessed November 2025. https://www.statista.com/statistics/1559548/private-sector-data-center-construction-completed-us/.

Talen Energy Corporation. 2025. “Talen Energy Expands Nuclear Energy Relationship with Amazon.” Talen Energy Investor Relations. Accessed November 2025. https://ir.talenenergy.com/news-releases/news-release-details/talen-energy-expands-nuclear-energy-relationship-amazon.

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Weixel, Jack. 2025. “EQT Inks Supply Deal to Fuel Giant Data Center.” East Daley Analytics – The Burner Tip, July 24 2025. Accessed November 2025. https://eastdaley.com/the-burner-tip/eqt-inks-supply-deal-to-fuel-giant-data-center