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Anyone holding out hope that increases in electric power prices could ease next year is going to be disappointed – particularly since the drivers of higher costs have such questionable benefits: data centers and cryptocurrency mining.
The U.S. Energy Information Administration forecasts wholesale power prices to rise 8.5% to $51/megawatt-hour in 2026, up from $47/MWh this year, which was 23% higher than in 2024. And overall sales of electricity will likely increase by an additional 2.6% next year after rising 2.4% in 2025. The rise will be “led by the West South Central region, which includes Texas, as electricity demand from data centers and cryptocurrency mining facilities in that region increases,” EIA said.
Ideally, the Trump administration and Congress would use this as an opportunity to pivot even faster to renewable power by doubling down on big solar and wind installations combined with battery storage, not because of climate benefits but because it’s faster and cheaper than building and operating new gas and coal plants. Certainly, renewables will grow next year, likely accounting for a record 26% of U.S. electricity generation in 2026. Combine that with an 18% of total power likely to come from nuclear plants and carbon-free electricity generation should reach 44% of the overall total next year, topping the 40% generated from natural gas.
Even so, overall emissions of carbon dioxide from power generation will be little changed, declining to an estimated 4.8 billion metric tons next year, compared with 4.9 billion metric tons in 2025.
The challenge is that there’s not likely to be a let-up in the rapid addition of AI data centers, the single biggest driver of new electricity demand. On Friday, Google announced plans to add $40 billion more of data centers in Texas through 2027, amid a flurry of such activity by tech firms across the U.S. At least one of Google’s new facilities is to be co-located with a solar and battery storage system, though it’s unclear whether it will still need additional power from the grid.
In time, new nuclear and geothermal systems will help ease some of the data center power burden, but those aren’t likely to be gamechangers until the 2030s. So maybe for now, let’s lighten up on the schlocky AI music and stick to using real money, instead of the virtual variety.
The Big Read
Tesla’s Engineering Exodus Comes Amid Shift From Core EV Mission
Tesla shareholders just overwhelmingly backed CEO Elon Musk’s unprecedented pay package that could be worth $1 trillion over a decade, but engineers running the company’s main vehicle programs, for its top-selling Model Y, Model 3 and the controversial Cybertruck, aren’t sticking around to see how things turn out.
Emmanuel Lamacchia, an eight-year Tesla veteran and program manager for the Model Y, said late Sunday in a LinkedIn post that he was leaving the Austin-based company. His announcement came just a few hours after a similar post by Siddhant Awasthi, another eight-year veteran who ran the Model 3 and Cybertruck programs. Neither gave reasons for their decisions, though both mentioned new career steps, which they didn’t detail.
They’re just the latest high-profile engineers to leave as Musk seeks to shake up Tesla’s business, prioritizing AI-powered businesses – namely robotaxis and humanoid robots – that don’t generate revenue currently, rather than selling more electric vehicles, batteries and charging services, which do. Earlier this year, Musk fired the company’s head of manufacturing and sales in North America and Europe. In August, the director of Tesla’s battery team left the company, as did the head of its former “Dojo” supercomputer team and vice president of North American sales and service. Even the head of Musk’s much-hyped “Optimus” robot project, which the billionaire said last week is likely to be Tesla’s biggest new business, quit in June.
Aside from the fact that the poor-selling, much-derided Cybertruck ranks among the auto industry’s biggest flops, Musk’s prioritization of non-EV businesses is making the company less attractive to auto engineers, according to a former Tesla executive.
Read more here
Hot Topic
CALSTART CEO Michael Berube on what to watch for in the heavy-duty electric truck space
Up until a year or two ago, it looked like battery trucks would be the preferred option for short-haul trucking and hydrogen was shaping up as a better choice for long-range driving. Is that still the case?
Having worked directly in both areas – I had a front row seat to that – hydrogen has a lot of reasons why it wants to be that choice, especially for longer haul. Its energy density and more familiarity to current fueling, even on bus fleets. However, we have to get the cost of hydrogen delivered down. And I believe for hydrogen to work well, the core of it comes to you can’t be moving the hydrogen long distances. Moving hydrogen is really, really expensive. So if you can make the hydrogen close to where you utilize it, utilizing a little bit more of a hub and spoke centralized fleet approach, that’s where you can have a winner. We’re still not quite there on the durability that we need, but we’re getting better. And we are not there on low-cost delivered hydrogen.
Hydrogen has a role to play. Hydrogen will be part of our clean energy economy. There’s no question. The timing though … we’re not quite there yet.
In the shorter term, battery electric is here and can work right now. That doesn’t mean it will be the volume long-term solution, but it is going to be a solution and it can work well today in a lot of applications.
It’s still not clear exactly which one is the ultimate winner, but what we can say is that electrification does work now and we see paths there. I will also say that battery costs are continuing to drop a lot. It may be that hydrogen is the theoretically better solution, but battery just becomes a more practical, scalable one. Sometimes it’s not the best technical solution that wins out.
Despite changes at the federal level that weaken support for advanced vehicle programs, do you think the electric truck space can keep growing?
I am pretty bullish. [CALSTART’s] job is to help manage through this transition. How do you help bridge that gap in some cases? How do we do that to help people along the way? Sometimes we’ve got fleets, we’re just talking to a major California fleet that’s saying [electric trucks] are really working for us.
There are a lot of back-to-base type operations. They’ve said they think they’ll have a competitive advantage in three years because they’re electrifying their fleets today.
It takes capital up front. It takes some vision to do that. That won’t work for everyone. But our job is how do we spread that story? How do we spread the information, the learnings? There are people who have just been the first and you learn, you make mistakes. It can be painful to be the first. Thank God we have those people who are out there willing to take that risk. Part of our job then is how do we now expand that knowledge so others can learn from it and also grow the market.
What Else We’re Reading
Pennsylvania Gov. Josh Shapiro pulls out of the Northeast’s Regional Greenhouse Gas Initiative (The Hill)
Iceland warns that melting glaciers are a national security threat (Reuters)
Why reversing a frog apocalypse may help human health (Washington Post)
The developing world is going to have to do the heavy lifting on climate as the U.S. and other rich nations pull back (Bill McKibben)
A flood of green tech from China is upending global climate politics at COP30 (New York Times)
If the U.S. has to build data centers, here’s where they should go (Wired)
The latest U.N. analysis shows climate pledges cutting carbon emissions by 12% (Reuters)
