Solmar Insights
Solar generation in the U.S. will climb 21% in 2026 and 18% in 2027, according to the U.S. Energy Information Administration’s latest Short-Term Energy Outlook, released on September 9, 2026. Growth in data center and manufacturing loads will push total national electricity demand up 2% each year, setting new records and expanding opportunity in key ISO regions.
Key figures
21% solar growth expected in 2026
18% solar growth projected in 2027
4,211 billion kWh U.S. electricity sales in 2027
3.3% commercial sector demand growth in 2026
Drivers of rising demand
Major expansion in both the data center and manufacturing sectors is set to push U.S. electricity consumption 2% higher this year and next, with commercial users leading the trend. The EIA’s forecast points to record levels of power sales, as capacity additions and efficiency improvements only partly offset load growth from new facilities and power-hungry AI and digital infrastructure.
Commercial sector sales are projected to expand 3.3% in 2026 and 2.7% in 2027, making up well over half of national demand growth in both years. Data centers in particular, driven by artificial intelligence, cloud services, and digital manufacturing, represent a concentrated source of new electrical load, reshaping grid planning and power procurement priorities for utilities and ISOs.
This elevated demand is also accelerating the need for incremental generation. The jump in consumption is most pronounced in PJM, which will account for nearly 45% of overall generation growth, with the rest distributed across ERCOT, MISO, and other RTOs with substantial new project pipelines.
Solar and wind capacity impact
The EIA anticipates robust renewable energy growth, particularly for utility-scale solar and wind. As solar generation climbs 21% in 2026 and 18% in 2027, the bulk of new utility-scale solar installs are forecast in ERCOT (Texas) and the Midcontinent Independent System Operator (MISO) regions. ERCOT alone is expected to add 18 billion kWh of solar output this year and another 20 billion kWh by 2027, while MISO will contribute 13 billion kWh in 2026 and 11 billion kWh in 2027.
Wind generation is also projected to expand, though at a more modest rate than solar, rising 7% in 2026 and 5% in 2027. These renewable increases come as coal generation declines sharply (down 8% and 6% each year), reinforcing the national trend away from fossil fuels for bulk power supply.
The pattern underscores a broader shift in the U.S. resource mix: new capacity additions are steered towards solar and storage in growth states, while the pace of wind builds accelerates in transmission-rich regions, influencing PPA pricing and grid reliability strategies.
Regional growth and transmission implications
While PJM will drive much of the absolute growth in national generation, with natural gas providing the bulk of incremental supply, the most notable renewables activity is focused in ERCOT and MISO. These regions benefit from strong interconnection pipelines, abundant land, and favorable solar irradiance, setting the stage for multi-gigawatt annual build rates.
This year’s forecast shows new solar builds leading output gains by wide margins in ERCOT and MISO. Transmission developers and investors are closely monitoring these zones, as limited transfer capacity and queue backlogs pose ongoing challenges for project sponsors hoping to capitalize on demand for clean firm power and local capacity credits.
Grid operators and regulators in these ISOs will face increased urgency to address bottlenecks in interconnection and siting. As these regions continue adding utility-scale assets, buyer interest is expected to concentrate on near-term operational projects with clear interconnection status, rather than riskier greenfield pipeline plays.
Resource mix and thermal plant outlook
Natural gas-fired generation is forecast to rise by 2% this year and 1% in 2027, with most of this growth occurring in PJM. Coal’s role shrinks even as exports tick up, as the EIA projects an 8% decline in domestic coal burn in 2026 and another 6% drop in 2027.
Across MISO and the Northwest, gains in both natural gas and renewables are steadily reducing coal’s share of the mix. As capacity markets react to the declining margins and the influx of new resources, asset owners are recalibrating strategies around merchant risk and forward offtake, especially for newer projects positioned to meet rising nonresidential loads.
The acceleration in solar and wind builds, coupled with additional battery and flexible gas capacity, reflects a system-wide pivot to meet changing load shapes and intermittent supply patterns. These shifts are likely to result in continued volatility for wholesale prices, especially in regions experiencing high load growth and tight reserve margins.
What this means for buyers
Utility-scale solar and power capacity in ERCOT, PJM, and MISO will be directly impacted by sharp increases in load and asset additions. The EIA’s forecast of 21% solar growth in 2026 and specific new generation volumes in Texas and the Midwest raise the urgency for developers to secure fast-track interconnection. Buyers prioritizing operational or near-ready projects in these regions can capitalize on record-high electricity demand and avoid exposure to queue congestion this quarter.
Reporting via the original publisher
