Article
The Energy Transition Is Rewriting the Utility Model—And It’s a Wake-Up Call to Your Business
America’s energy grid is under strain and businesses are next in line to feel the pressure
July 14, 2025
From AI models consuming new levels of power to around-the-clock business operations increasing the rate of consumption, businesses are using more energy than ever, in more complex ways than ever. But while the pace of business intensifies, the U.S. energy infrastructure is struggling to keep up with accelerating demands.
Grid congestion, regional blackouts, new rate structures, and regulatory bottlenecks are signs that utilities companies are at a crossroads. And if energy plays any role in your business operations, it’s time to pay attention. Data from West Monroe’s 2025 survey of utilities illustrates why.
Three Factors Fueling the Energy Crunch
AI is raising the stakes. The generative AI boom is supercharging demand for data centers, which are emerging as one of the most power-hungry segments in the U.S. industrial base. Major technology companies like Microsoft, Google, and Amazon are all racing to add AI infrastructure. Utilities are eager to keep up, but the pace is too fast for now. For example, Oncor Electric in Dallas received requests for an additional 119 gigawatts in Q4 2024. That’s almost four times its system’s peak electricity use.
More hours, more output, more energy. Businesses across sectors are pushing harder, running longer, and using more tech. Think 24/7 fulfillment at Amazon, expanded service hours at fast food restaurants, or increased patient loads at urgent cre clinics. All of this results in higher energy usage. Industry bodies like the Electric Power Research Institute have turned into innovation labs for new standards and AI research. Their work has made managing energy demand flashy again.
Population is shifting where the grid isn’t prepared. The South is experiencing both population growth and more extreme weather. In 2024, the region grew by 39%, more than any other in the United States. Southern states also top the charts for highest number of new corporate headquarters. Dallas alone has seen 100 relocations since 2018. These residential and corporate shifts are driving even higher energy demand. The Texas grid has become a case study in how quickly demand can outpace supply. And the ripple effects don’t stop at the state line.
These are the kind of rapid shifts jolting utilities. Our survey found less than 30% feel “very prepared” to meet new sources of energy demand.
The Energy Grid Wasn't Built for This Reality
Utilities are facing an extremely challenging—and some would say, near-impossible—mandate: deliver reliable, affordable, low-emissions energy to more customers using legacy infrastructure while complying with intensifying regulations.
Regulatory pressure is mounting. Nearly 80% of utilities face high decarbonization mandates, often with hard deadlines and penalties. And while these rules prioritize long-term climate goals, affordability tends to take a backseat. Federal trade policies, like tariffs on key energy infrastructure components, are also adding costs and straining timelines. In our survey, half of all utilities reported increased equipment and material costs. Another 44% reported project delays.
The execution gap is widening. While utilities race to upgrade infrastructure and deploy smart grid technologies, they’re constrained by regulatory red tape and uncertain cost recovery. Three in four utilities report that delayed regulatory approval for necessary investments is slowing them down. That creates lag—and business risk for energy-intensive industries caught in the middle.
Digital transformation is underway but incomplete. Smart metering, advanced analytics, and customer portals have gained traction at utilities—but there’s a long way to go in these multi-year implementation journeys. Without real-time data and operational visibility, utilities can’t respond quickly enough to changing business needs.
What the New Energy Economy Means for Business Leaders
This isn’t just a utility problem. It’s everyone’s problem. If energy reliability, predictability, or cost affect your business’s bottom line, you need to pay attention to the challenges utilities are facing.
Expect cost volatility. New rate structures driven by recent regulations and variable generation in the power supply may penalize peak energy usage based on time-of-day consumption. That can send your monthly energy bill soaring without warning. Reducing usage during high demand periods and shifting usage to low-cost periods as much as possible can help reduce unexpected charges.
Plan for grid variability. Whether it’s a blackout, brownout, or delayed service upgrade, grid stress is now a risk to business continuity. Contingency planning and backup systems need to be part of your operating model. For example, setting up alternative short-term power solutions like generators or uninterruptible power supply (UPS) systems and establishing communication protocols. More than 50% of utilities depend on online portals to share information with customers, so get comfortable navigating yours.
Energy resilience is your edge. Companies that invest in distributed energy resources (DERs), storage solutions, or demand response programs are building competitive advantages—not just insurance policies. Pacific Gas and Electric’s partnership with Schneider Electric and Microsoft is a good example of this. The utility introduced a management system to collect and store information about DERs in the cloud that can be used to improve demand response and provide clean power during peak usage periods.
Dive Deeper:
See how utilities are moving beyond the energy transition to manage complexity, demand and disruption. Our report explores what separates the leaders from the laggards—and what to do next.
What Leading Companies Are Doing to Help Utilities
They’re partnering with utilities. Forward-thinking businesses aren’t waiting for the new energy economy to magically work on its own—they’re helping utilities by being part of the solution. That includes participating in demand response programs, co-investing in grid upgrades, and negotiating tailored energy agreements. Meta has been at the forefront of these kinds of partnerships. The tech company regularly enters agreements with utilities to develop clean energy solutions and keep energy centers open.
They’re modernizing internal energy ops. From advanced metering to centralized energy management systems, companies are getting smarter about usage, forecasting, and reporting. Energy is becoming as trackable and actionable as labor or inventory—and the more companies that proactively participate in the new energy economy alongside utilities, the faster the execution gap will close.
Today’s utilities are doing so much more than delivering energy. They are building muscle to optimize performance in real time while balancing reliability, affordability, and emissions.
For energy-intensive businesses, leaders need to understand that the landscape has fundamentally changed almost overnight. Predictable rates and reliable service are long gone. In their place, a more complex but potentially dynamic ecosystem is taking shape. The companies that lean into this complexity, build adaptive capabilities, and partner strategically with utilities will lead the way forward.
