What Utilities Can Expect in 2025: Challenges and Opportunities

2025 is already shaping up to be a pivotal year for the energy industry. Devastating wildfires in Los Angeles and massive snowstorms across the South are stark reminders the climate crisis is front and center. At the same time, the Trump Administration will bring unknown changes for utilities and the clean energy sector. As we move into 2025, utilities will play a key role in balancing sustainability, reliability, and affordability in a rapidly changing environment. 

Here are five things utilities should lookout for in 2025:

• Power Surge: Prepare for Record-Breaking Demand. The U.S. Energy Information Administration (EIA) is predicting record high energy demand, reaching 4,163 billion kWh in 2025. The increased demand and extreme weather pose an imminent threat to grid reliability. The North American Electric Reliability Corporation (NERC) has warned that more than half of the U.S. electric grid could experience energy shortages in the next 5-10 years. This winter, the grid is showing signs of strain amidst cold weather, and summer demand is expected to grow by 15.7%, adding even more pressure. Utilities continue to face an urgent need to modernize their grid and take proactive steps to maintain reliability during this growth. 
• Energy Giants: Data Centers & AI. The rapid growth of data centers and artificial intelligence (AI) is driving the significant increase in power demand. A study from Bain & Company found data centers could account for 44% of electricity load growth in the U.S. between 2023 and 2028 and could potentially use 9% of electricity generation by 2030. The report highlights the need for utilities to make an additional 10-19% in revenue each year to accommodate this growth, which means data centers could increase customer bills by 1% per year. To mitigate this, utilities should form partnerships with data centers to encourage participation in demand response programs and adopt energy efficiency measures from the start. Balancing this growth with sustainability goals will be a key challenge for utilities in 2025. 
• Clean Energy Growth & Setbacks. With energy demand on the rise, 2025 also brings uncertainty around clean energy policies. Biden’s Inflation Reduction Act was monumental for clean energy, clean vehicles, and clean building initiatives; but the Trump Administration has threatened to repeal the law. Experts predict the private sector will drive electrification and renewable energy no matter what happens at the federal level. According to the Rocky Mountain Institute, renewables investments are already outpacing fossil fuels by 10 to 1, and renewable sources are projected to overtake coal as the leading power source in 2025. Renewable energy can be stored in a variety of ways—from customer’s backup batteries to pumped hydroelectric. For utilities, this means stepping up their efforts to smoothly integrate renewables into the grid and modernize transmission infrastructure to deliver power efficiently to places with high demand. 
• Grid Resilience and Distributed Energy Resources. In the face of climate crisis, building a more resilient grid has never been more critical. Utilities need to prioritize updating their grid to handle both increasing energy demand and climate-driven weather events. One solution can be found in Distributed Energy Resources (DERS). DERs help utilities provide flexibility and reliability to the grid through a combination of energy efficiency, demand response, power generation, and energy storage. Deloitte highlights that creating smart systems such as non-wire alternatives, microgrids, and virtual power plants can help manage demand and offer backup energy when needed. This will strengthen the grid and make it more resilient and adaptable to unforeseen disruptions, ensuring power stays reliable when it’s needed most. 
• Evolving Customer Needs. In 2025, utilities will benefit by focusing more on the customer experience. Investing in digital solutions that enhance customer interactions will boost satisfaction and help grow revenue. The digital transformation is moving fast but many utilities are falling behind. It’s time to update websites, making them more user-friendly and efficient so customers can easily access things like billing info or energy efficiency rebates. It’s also necessary to break down internal silos and make customer-first thinking a core part of everything utilities do. 

Looking Ahead 

2020 will bring challenges—like rising power demand, policy shifts, and the need for a smarter, more resilient grid. But these challenges also present big opportunities for innovation and growth as clean energy continues to expand and distributed energy resources gain traction. Utilities that invest in digital transformation, renewable integration, and climate-resilient infrastructure will be well-positioned to thrive in this fast-changing energy landscape.