The Grid Is Nearing Its Limit

Editor's note: AI is creating a surge in electricity demand. And as Joel Litman from our corporate affiliate Altimetry explains, that's straining the country's power grid. In this issue, adapted from the August 4 edition of Altimetry Daily Authority, Joel highlights one often overlooked power source that could be the key to America's energy future...

Two weeks ago, Texas' power grid was under intense pressure...

By late afternoon on July 20, temperatures had climbed past 100 degrees Fahrenheit from Dallas to Houston. So homes and businesses turned up their air conditioning.

Electricity demand soared as a result, approaching the previous record of 85.5 gigawatts ("GW") reported by the Electric Reliability Council of Texas ("ERCOT").

According to ERCOT, the grid had more than 114 GW of power available that day. But the surge was still a clear warning... The state's power needs were moving into extreme territory.

Two days later, demand did hit a new record...

Texas' electricity usage reached 91.1 GW on July 22. That was roughly 7% more than the previous high from August 2023.

This energy story is about more than one hot week in Texas.

As I'll explain today, power demand is rising nationwide. And this could create a major opportunity for folks who invest in specific parts of the energy sector.

For much of the past decade, U.S. electricity consumption was flat.

Everything was becoming more energy efficient: factories, machines, heating and cooling systems, you name it. As time passed, they all needed less and less electricity... for a while.

Now, that time is over.

Energy Demand Is Spiking

The International Energy Agency expects U.S. electricity consumption to rise about 2% per year between 2026 and 2030. That might not seem like much, but it's more than double the average growth rate from the past decade.

And data centers alone are expected to account for roughly half of that growth.

You see, data centers never turn off... Their demand is constant.

Texas provides a clear picture of just how fragile the system has become. Population growth, a surge in manufacturing, and the explosion of data centers are pushing electricity demand past the grid's limits.

It's obvious that we need to generate more power. The question is how.

The answer could be an energy source that you might not think of as futuristic... natural gas.

Building more power plants won't be enough to satisfy electricity demand. The grid also needs power sources that can quickly produce more energy when consumption spikes.

Solar power and batteries help, but they can't meet every spike in demand. Solar panels only generate electricity when the sun is shining. Battery storage helps fill the gaps, but they can only provide power for a short time before needing to be recharged.

These sources are useful. But all told, when the country needs extra electricity, the grid still depends on natural gas.

The U.S. Energy Information Administration expects natural gas consumption in the electric-power sector to increase 2% in 2026 and another 4% in 2027. That growth is expected to push monthly natural gas consumption to an all-time high of 50.6 billion cubic feet per day in July 2027.

To handle the demand, the energy industry will need to increase natural gas production and expand its infrastructure. This gives the energy sector a major earnings driver... one that's unaffected by the daily swings in crude-oil prices.

Texas' summer weather is just the beginning...

U.S. electricity demand is rising. Data centers, manufacturing plants, and homes are all using more power. It won't be long before grids all across the country feel the strain. Many already have.

To meet demand, we'll need reliable electricity generation every hour of the day. That means natural gas will be a crucial piece of the puzzle.

The energy industry is already among the market's leaders this year. With the power crunch intensifying, the boom should continue.

But this opportunity is bigger than any short-term energy cycle. This shift will reshape the power market for years to come.

Find the companies helping America meet its growing energy needs. Your portfolio will thank you.

Regards,

Joel Litman

Editor's note: With energy demand rising, it's only a matter of time until Wall Street floods this sector with investment dollars. Joel just unveiled a special tool designed to spot these kinds of massive institutional moves – before they show up in the headlines. And he sees a major shift on the horizon... Make sure you get the details before August 12.