U.S. electricity generation is expected to rise steadily over the next two years as surging demand from data centres and continued growth in renewable capacity reshape the country’s power mix, according to the U.S. Energy Information Administration’s latest Short-Term Energy Outlook.
The EIA estimates that electricity generation by the U.S. electric power sector totalled about 4,260 billion kilowatt-hours (BkWh) in 2025. Generation is forecast to grow by 1.1 per cent in 2026 and 2.6 per cent in 2027, reaching 4,423 BkWh, driven largely by new solar capacity and rising electricity consumption.
While dispatchable power sources — natural gas, coal and nuclear — accounted for about 75 per cent of total generation in 2025, the EIA expects their combined share to fall to roughly 72 per cent by 2027. Over the same period, the share of electricity generated from wind and solar is projected to rise from 18 per cent to 21 per cent, continuing a longer-term shift toward cleaner sources.
Solar leads growth, especially in Texas
Utility-scale solar is expected to be the fastest-growing source of electricity generation in the United States. The EIA forecasts solar generation will rise from 290 BkWh in 2025 to 424 BkWh by 2027, supported by nearly 70 gigawatts (GW) of new capacity scheduled to come online in 2026 and 2027 — a 49 per cent increase in operating solar capacity compared with the end of 2025.
Much of that growth is concentrated in Texas, where the grid managed by the Electric Reliability Council of Texas (ERCOT) continues to attract large-scale renewable investment. Solar generation in ERCOT is expected to nearly double, from 56 BkWh in 2025 to 106 BkWh by 2027.
Bloomberg has reported that Texas’s relatively streamlined permitting, abundant land and strong power demand from industrial users and data centres have made it one of the most active solar markets globally. The expansion is increasingly supported by battery storage, which helps manage fluctuations in solar output. The EIA expects battery capacity in ERCOT to rise from about 15 GW in 2025 to 37 GW by the end of 2027.
Wind growth slows in the Midwest
Wind power, long concentrated in the central United States, is expected to see more modest growth in the coming years. In the Midcontinent Independent System Operator (MISO) region, which covers much of the Midwest, wind generation is forecast to average just over 100 BkWh annually through 2027, reflecting a slowdown in new wind installations.
Reuters has noted that rising costs, supply-chain constraints and transmission bottlenecks have tempered wind development in parts of the U.S., even as solar continues to expand. In MISO, new solar plants are beginning to offset slower wind growth, with solar generation expected to increase from 31 BkWh in 2025 to 46 BkWh in 2027, according to the EIA.
Natural gas remains dominant, but its share slips
Natural gas remains the largest single source of U.S. electricity generation, although its share has declined from a peak of 42 per cent in 2024. The EIA forecasts natural gas-fired generation will total 1,696 BkWh in 2026, roughly flat with 2025 levels, before rising slightly to 1,711 BkWh in 2027 as overall power demand increases.
Because total electricity generation is growing faster than gas-fired output, natural gas’s share of the power mix is expected to fall to 39 per cent by 2027, down from 40 per cent in 2025.
Regional growth in gas generation remains uneven. The EIA expects gas-fired output to increase 23 per cent in ERCOT and 5 per cent in the PJM Interconnection region, which covers much of the U.S. Mid-Atlantic. Both areas are seeing rapid growth in electricity demand from data centres, a trend Reuters and NPR have linked to the expansion of cloud computing and artificial intelligence infrastructure.
Coal declines after a temporary rebound
Coal-fired electricity generation rose 13 per cent in 2025 to 731 BkWh, supported by colder-than-average weather in some regions and relatively higher natural gas prices. But that rebound is expected to be short-lived.
With existing policies and planned retirements, the EIA projects coal-fired generation will decline by an average of 5 per cent per year over the next two years, falling to 661 BkWh in 2027. Coal’s share of total generation would drop to 15 per cent, from 17 per cent in 2025.
NPR has reported that while coal plants can still play a role during extreme weather or fuel price spikes, utilities continue to retire aging units as renewable capacity and storage expand and operating costs rise.
A power system in transition
Taken together, the EIA’s outlook underscores a U.S. power sector in transition: electricity demand is rising, driven by digital infrastructure and electrification, while solar and battery storage grow rapidly and fossil fuels gradually lose market share.
As Bloomberg has noted, the pace at which new generation and grid infrastructure can be built — particularly transmission and storage — will be critical in determining how smoothly that transition unfolds through the latter half of the decade.
Canada context: How U.S. power trends compare north of the border
While the United States is seeing rapid growth in solar power and battery storage alongside rising electricity demand, Canada’s electricity system is evolving along a different path — shaped by its heavy reliance on hydroelectricity and a slower pace of large-scale solar deployment.
Hydropower accounts for roughly 60 per cent of Canada’s electricity generation, according to Natural Resources Canada, providing a large source of dispatchable, low-emissions power that the U.S. largely lacks. Nuclear power contributes about 15 per cent, concentrated mainly in Ontario, while natural gas plays a smaller but growing role in provinces such as Alberta and Saskatchewan.
Unlike the U.S., where solar is the fastest-growing source of generation, Canada’s recent renewable additions have been led by wind power, particularly in Alberta, Ontario and Quebec. Utility-scale solar remains a relatively small share of Canada’s power mix, although installations are increasing in Alberta and Saskatchewan, where market structures and solar resources are more favourable.
Battery storage is also expanding more slowly in Canada than in the U.S., though several provinces are beginning to add grid-scale storage to support renewable integration and manage peak demand. Alberta and Ontario, in particular, have announced or approved new battery projects over the past two years.
One area where trends converge is rising electricity demand, driven by electrification, population growth and data centres. Canadian utilities and grid operators have warned that meeting future demand will require significant investment in generation, transmission and storage — even in hydro-rich provinces.
As in the U.S., the pace at which new infrastructure can be built, and how costs are managed for consumers, is emerging as a central challenge for Canada’s power transition.
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