Powering Growth

Energy is central to economic strategy. Where businesses invest and industries locate increasingly depends on electricity supply, and energy costs are a real factor in household cost of living. U.S. power demand is rising, and economic growth hinges on whether the energy system can expand quickly and reliably. Yet energy policy has become politicized, with debates focused on individual fuels rather than whether the system as a whole can deliver.

Several forces are driving growing demand. Data center expansions alone are projected to increase U.S. electricity consumption by several percentage points over the next five years.¹ Electrification of transportation and industry is raising baseline demand, and energy-intensive manufacturing is expanding domestically as supply chains shift.² Together, these trends are straining a grid built for slower, more predictable growth—even as emissions reduction and resilience to extreme weather remain essential objectives.

Transmission bottlenecks are a major constraint. Interconnection queues—the process for connecting new power plants, data centers, and other large users to the grid—have become severely backlogged, delaying projects by years.³ In some regions, the problem extends to local distribution capacity.⁴ Permitting delays, siting conflicts, and fragmented regulatory processes routinely slow projects that already have financing and customers.⁵ Meanwhile, more frequent and severe weather events are exposing grid vulnerabilities and raising the stakes around reliability.⁶

Global energy markets remain a source of macroeconomic risk. Expanded U.S. oil and gas production has reduced direct exposure to foreign supply disruptions,⁷ but prices are still set in global markets. As a result, geopolitical shocks—seen today in the Middle East—can quickly transmit through higher gasoline prices into broader inflation. Oil and natural gas therefore continue to anchor economic stability, even as electricity demand rises and power systems become more central to growth.

Meanwhile, China is building generation, transmission, and energy manufacturing capacity at scale, backed by centralized coordination.⁸ The U.S. has capital, technological expertise, and abundant natural resources, but lacks the institutional capacity and policy coherence to move at the same pace. Without reform, supply will not scale across technologies and American energy leadership will weaken.

These shifts are already reshaping power markets, raising questions about infrastructure planning, cost allocation, and who ultimately bears the cost of expansion.

The U.S. can secure energy leadership by expanding supply across technologies, improving energy use, and reforming the institutions governing infrastructure development. The central task is to depoliticize energy policy and refocus decision-making on outcomes.

The path forward is an all-of-the-above strategy grounded in system performance rather than fuel preference—treating electricity, fuels, infrastructure, and demand as parts of an integrated system. Economic growth, climate progress, and energy security can pull policy in different directions in the short term. Over time, they converge on a common requirement: an energy system that scales reliably, affordably, and quickly.

Five principles guide our approach:

I. Transmission, Interconnection & Permitting

• Expand transmission and grid infrastructure. FERC should require regional planning processes to incorporate forward-looking demand from AI, electrification, and manufacturing, and establish an interregional framework to advance projects with system-wide value. Congress should reinforce FERC’s authority on cost allocation and backstop siting for interstate transmission, using federal siting authority when states cannot reach agreement. States and utilities should accelerate distribution upgrades and deploy grid-enhancing technologies to increase capacity on existing infrastructure.
• Reform permitting. Congress should establish clear timelines for environmental review and require concurrent rather than sequential agency processes, designating lead agencies for major projects with staffing to match. States should adopt predictable siting processes with defined timelines and clearer approval standards. Judicial review should remain available but structured to avoid indefinite delays that shift risk without improving outcomes.
• Reform interconnection. FERC’s Order No. 2023 moves toward a “first-ready, first-served” approach of studying proposed power generating facilities in clusters, rather than individually, with the goal of streamlining the interconnection process—full implementation is the immediate priority.⁹ Interconnection must also be better aligned with transmission planning, with cost-allocation rules that fairly share grid upgrade costs. Flexible interconnection and grid-enhancing technologies should be used to unlock existing capacity.

II. Supply, Demand & Markets

• Scale energy supply across technologies. Policy should enable supply expansion across technologies rather than privileging individual fuels. Policymakers should maintain a level playing field for renewables—including wind, solar, and storage—alongside transmission and interconnection reform. Congress and regulators should accelerate nuclear and geothermal development through regulatory clarity and targeted early deployment support. Natural gas should remain available to support reliability and flexibility as the generation mix evolves. Wholesale markets should determine which resources are built, provided reliability standards are met and system costs are minimized.
• Treat demand-side resources as core infrastructure. FERC and regional markets should ensure demand response, distributed energy resources, and virtual power plants can compete with generation. Utilities and regulators should prioritize peak demand reduction where it avoids costly infrastructure expansion. States should require large new loads, including data centers, to provide flexibility or bear incremental system costs unless broader benefits justify alternative arrangements.
• Align utility incentives with system performance. State regulators should modernize utility regulation to align incentives through performance-based ratemaking, multi-year rate plans, and outcome-based metrics that reward utilities for reducing congestion, improving reliability, and lowering total system costs—not simply minimizing near-term capital expenditures.
• Strengthen energy supply chain resilience. Congress and the executive branch should support domestic manufacturing of transformers, grid equipment, batteries, and critical minerals through targeted incentives and procurement. Partnerships with allies should diversify supply chains and reduce geopolitical risk.

III. Fuels, Security & Long-Term Transition

• Strengthen oil and fuel market resilience. The federal government should support stable domestic oil and gas production and resilient fuel markets. Strong production should be paired with stronger standards to reduce methane leakage—a significant emissions source and economic waste. The Strategic Petroleum Reserve should remain an emergency buffer, with stronger coordination with allies during supply disruptions. Policies restricting exports of oil or liquified natural gas should be avoided. Constraints on domestic shipping and fuel distribution should be reviewed where they raise costs or limit flexibility.
• Invest in long-term transition technologies. Federal policy should focus on early-stage deployment challenges where private capital is unlikely to bear risk alone, using demonstration funding, loan authorities, and targeted procurement. Carbon capture is especially relevant for large continuous loads like data centers. Support should be time-limited, cost-disciplined, and designed to reach commercial scale.

Leadership Now supports energy policy that improves scalability, reliability, affordability, and environmental impact.