U.S. may struggle to build power fast enough to meet rising demand, Barclays says

In a report released Friday, Barclays cautioned that the United States may be unable to expand its power infrastructure quickly enough to keep pace with rising electricity demand, pointing to lengthy permitting processes and sluggish transmission development as major bottlenecks.

The investment bank said meeting growing demand will require a rapid expansion of both electricity generation and transmission capacity, but argued that policy constraints could prevent the U.S. from adding supply at the necessary pace and scale.

The difficulty becomes especially clear against the backdrop of earlier U.S. infrastructure expansion. American electricity output more than doubled in the 1950s and nearly doubled again in the 1960s, with roughly 8,000 miles of transmission lines added per year from 1965 to 1975.

Since that period, transmission buildout has decelerated markedly. According to Barclays, annual transmission capacity expansion averaged around 2% in the 1980s and 1990s, eased to 1.2% between 2004 and 2016, and dropped further to only 0.6% in the 2017-2024 stretch.

The Congressional Budget Office has estimated that transmission capacity may need to grow by at least 3% annually to satisfy projected future electricity demand.

Permitting proves to be key bottleneck

Barclays argued that the U.S. permitting regime has grown increasingly complex, with federal, state, local and judicial reviews able to add years of delay to major infrastructure projects.

For large projects costing more than $200 million and subject to the National Environmental Policy Act, the bank counted at least 64 permits and reviews involving 15 federal agencies and 34 agency subdivisions. It also identified about 425 actions and milestones in the federal permitting process, 230 of which it regards as non-optional.

The obstacles are not confined to Washington. Thirty-four states require public meetings or hearings during permitting, while 37 states give local governments authority over siting and permitting standards. Nearly 30% of large energy-related projects in Barclays' analysis had been either cancelled or paused.

Reform alone may be insufficient

Earlier attempts to accelerate permitting have delivered mixed results, Barclays said. The Fiscal Responsibility Act of 2023 established a two-year deadline for environmental impact studies, but only 39% of studies have met that target, leaving 61% past the statutory deadline.

Barclays acknowledged that President Donald Trump's executive orders aimed at accelerating energy and data-center infrastructure could improve the process, but said it is too early to judge their effect because most reviews initiated under the administration remain incomplete.

The bank concluded that without durable legislative reform across federal, state and local governments, permitting will probably remain a major obstacle to expanding U.S. energy infrastructure at the required speed.