The promise of an all-electric future in North America is here. We’re experiencing a shift from an oil, coal, and gas-based economy to an electrified one. Electric vehicles, data centers, renewables, and other factors are accelerating demand. Society today wants and assumes that everything that can be electric probably will be electric.
These changes are positive, but significant challenges remain. Demand is paced to outstrip supply. The key is congruence—balancing generation, transmission, distribution, and demand.
Demand forecasts vary significantly, unlike five to ten years ago. Currently, no model can confidently predict demand. The Department of Energy, economists, and major research firms offer varying projections ranging from 21% to 250% growth by 2050.
Data centers illustrate this well: more data creation means more data centers. In early 2023, AI adoption drove a 25% year-over-year increase in data center construction. Today, data centers consume 4% of our electricity, projected to rise to 6% by 2026—a 50% increase in just one sector.
The problem? The math doesn’t add up. If supply can’t keep up with demand, everything will grind to a halt.
Four main choke points:
- First, the grid is old and struggling. Before expanding, we must replace and modernize the current system. It’s also fragmented: the US grid has three sections and 12 isolated transmission planning areas, preventing excess supply from being shared when demand varies across regions.
- Second, the regulatory environment is a challenge. Due to permitting hurdles, 75% of new-generation projects never reach commissioning, and approval processes are slow, with an average wait time of four years.
- Third, there’s an equipment supply shortage. Critical components like switchgear, high voltage breakers, medium voltage cables, and transformers often have a lead time of one to two years. Remember, the range for predicted demand is anywhere from 21% to 250%. The model companies use determines how much they invest into manufacturing capacity. How companies invest in the future is based on what they believe about the future.
- Lastly, and perhaps most critically, is people. In the US, we add 3,000 electricians annually but lose 10,000, resulting in a net loss of 7,000. These workers are the heart of the system, and their numbers are dwindling each year.
The cracks are already showing—blackouts, brownouts, and outages are happening worldwide, and preventative measures like rolling blackouts have begun.
There’s good news: it can be solved. Achieving balance requires a holistic approach and collaboration with industry partners, suppliers, customers, government entities, and business leaders to resolve the choke points. We must invest in the grid, expedite permitting, increase manufacturing capacity for critical supply chain components, and focus on workforce development to bridge the gap.
At Southwire, we’re connecting with experts, partners, thought leaders, economists, customers, academics, and regulators to ensure we are part of the conversation and part of the solution. We’re also investing in capacity, ensuring we can manufacture the products and solutions needed to power the future. And we’re innovating—exploring new technologies, staying ahead of disruptive trends, and building value-added solutions.
The story of human power has always evolved, and we’re now at the threshold of the next big evolution: total electrification. This promises significant improvements in millions of lives, but only if we solve the congruence challenge. We can—but only if we work together.
