U.S. electricity demand is heading for new records as data center development and increased manufacturing activity accelerate commercial and industrial power consumption.
The U.S. Energy Information Administration (EIA) expects electricity sales to reach 4,135 billion kilowatthours (BkWh) in 2026, nearly 2 percent higher than in 2025, before increasing another 2 percent to 4,211 BkWh in 2027, according to its September 2026 Short-Term Energy Outlook (STEO).
Electricity generation is rising alongside demand. EIA forecasts U.S. power generation will increase 2.2 percent to a record 4,368 BkWh in 2026, followed by another 1.7 percent increase in 2027.
Data Centers and Manufacturing Drive Power Demand
The strongest electricity-demand growth is coming from the commercial and industrial sectors as companies invest in data centers, AI infrastructure and manufacturing facilities.
Large data centers require continuous electricity for servers, AI accelerators, networking equipment, storage systems and cooling infrastructure. The rapid expansion of AI computing is consequently turning data centers into an increasingly important source of incremental U.S. electricity demand.
Manufacturing expansion is adding another layer of industrial power consumption, increasing pressure on utilities to invest in generation, transmission, substations and distribution infrastructure.
Texas Region Leads US Electricity Sales Growth
The West South Central region, which includes Texas, is expected to account for the largest share of U.S. electricity sales growth.
The region maintains its leading position despite a pause affecting connections for new data center projects in Texas as authorities examine their impact on the electricity grid.
Strong existing data center development and manufacturing investment mean the region remains a major growth market for electricity suppliers and grid infrastructure companies.
Natural Gas Production Supports Power Market
Strong U.S. natural gas production provides additional support for a power system facing rising electricity requirements.
EIA expects natural gas inventories to reach 3,969 billion cubic feet on October 31, 2026, about 5 percent above the five-year average and 1 percent above October 2025.
The Permian and Haynesville regions are expected to contribute about 70 percent of U.S. natural gas production growth in both 2026 and 2027.
Natural gas generation remains important for providing dispatchable electricity as renewable energy capacity expands and large industrial and data center customers demand reliable, around-the-clock power.
Brent Oil Price Forecast at $90 in Second Half of 2026
EIA also expects global energy markets to remain tight through the remainder of 2026.
Brent crude averaged $91 per barrel in August, increasing $7 from July, as global oil inventories declined by an estimated 400 million barrels during 2026.
EIA forecasts Brent crude to average around $90 per barrel in the second half of 2026, before falling to approximately $74 per barrel in 2027 as production recovers and inventories rebuild.
Middle East supply remains a key uncertainty. EIA expects constraints on oil movements through the Strait of Hormuz to continue through Q4 2026, leaving an average 5.7 million barrels per day of crude production shut in during the quarter.
Most Middle East crude production is expected to return close to pre-conflict levels by Q2 2027.
US Diesel Prices Forecast at $5.55 per Gallon
U.S. distillate inventories are also under pressure. EIA expects inventories to fall below 100 million barrels, reflecting tight global supplies and stronger U.S. exports.
Retail diesel prices are forecast to average $5.55 per gallon in Q4 2026, before declining to approximately $4.40 per gallon in 2027.
High diesel prices could increase costs for transportation, logistics, construction and manufacturing companies.
US Power Market Enters New Growth Cycle
EIA’s latest forecast indicates that the U.S. electricity industry is entering a stronger demand cycle driven increasingly by data centers and manufacturing rather than traditional residential consumption growth.
With electricity sales forecast at 4,135 BkWh in 2026 and 4,211 BkWh in 2027, utilities will need to accommodate large new commercial and industrial loads while maintaining grid reliability. The expansion creates investment opportunities across power generation, transmission networks, substations, natural gas infrastructure, renewable energy and battery storage as the U.S. electricity system adjusts to the rapid growth of AI infrastructure and industrial power demand.
SHAFANA FAZAL