A new report from the American Council for an Energy-Efficient Economy argues that greater energy efficiency and load shifting can address rising U.S. electricity needs without extensive new power plants. These demand-side measures could cut costs in half and reduce emissions. Utilities and governments are urged to prioritize such strategies amid surging demand.
The conversation on U.S. energy use has intensified, with concerns about utilities meeting growing electricity demands from sources like data centers and electrification. A report released on February 4, 2026, by the American Council for an Energy-Efficient Economy (ACEEE) challenges the focus on supply-side solutions, such as new gas plants.
Mike Specian, utilities manager at ACEEE and the report's author, emphasized the overlooked potential of demand-side measures. "A lot of folks have been looking at this from the perspective of, Do we need more supply-side resources and gas plants?" he said. "We found that there is a lack of discussion of demand-side measures."
The analysis shows that energy-efficiency programs could reduce usage by about 8 percent, or 70 gigawatts, by 2040, at a cost of $20.70 per megawatt—far below the $45 per kilowatt for the cheapest gas-fired plants. Load shifting, through time-of-use pricing, smart devices, or utility controls, might save 60 to 200 gigawatts by 2035, exceeding projections for data center growth.
"Energy efficiency and flexibility are still a massive untapped resource in the U.S.," Specian noted. "As we get to higher levels of electrification, it’s going to become increasingly important."
Vijay Modi, director of Columbia University's Quadracci Sustainable Engineering Laboratory, agrees on efficiency's role but stresses government incentives over utilities alone. He highlights load balancing to avoid costly grid upgrades. "This is a big concern," Modi said, noting upgrades for peak loads raise rates. Utilities can use data for demand response, battery storage, and localized renewables. "It defers some of the heavy investment," he added. "In turn, the customer also benefits."
Specian points to misaligned incentives: utilities profit more from capital investments in infrastructure, earning a 10 percent return, while efficiency programs are operating expenses without such premiums. Solutions include energy-efficiency standards, performance-based regulation, revenue decoupling, and fuel cost sharing, which shares savings between utilities and ratepayers.
Joe Daniel from the Rocky Mountain Institute praised fuel cost sharing as a logical policy adopted in several states. The Edison Electric Institute stated that its members' programs already save enough power for 30 million homes and support demand response.
Ben Finkelor of the University of California, Davis, warned that infrastructure planning spans 10 years, urging action now to save billions and possibly avoid new baseload plants.
