The U.S. power grid is straining under the weight of aging infrastructure, extreme weather, and surging demand from AI, EVs, and electrification. Real estate, which consumes the 75% of U.S. electricity, is going to be directly impacted. What was once a stable utility is now a strategic risk — and potentially, a competitive advantage. The question isn’t whether grid disruption will affect your portfolio, but how you’ll lead through it.
Key takeaways
- Data center growth, regulatory uncertainty, renewable bottlenecks, industrial resurgence, widespread electrification, and tariffs are redefining grid dynamics.
- Infrastructure constraints and policy instability will likely slow grid decarbonization, prolonging reliance on fossil fuels and complicating corporate sustainability efforts.
- Increased electricity prices are anticipated due to higher grid demand and infrastructure investment delays, potentially pressuring operational margins.
- Investment in efficiency measures, smart-building technologies, and behind-the-meter renewable solutions can significantly mitigate exposure to energy price volatility and reduce grid dependency.
Six forces redefining the grid
- Exponential data center expansion: Driven by AI and cloud computing, data centers are projected to triple power consumption by 2030, particularly in concentrated markets like Northern Virginia, Atlanta, and Phoenix. Their continued proliferation will strain grid capacity and potentially increase reliance on fossil fuels in some regions, thereby raising emission factors.
- Regulatory uncertainty: The new administration has threatened to rollback key policies such as the Inflation Reduction Act’s clean-energy incentives, which could slash new renewable capacity by 15% and increase annual household bills by up to $400 in the next 10 years.
- Transmission bottlenecks: Despite unprecedented renewable capacity proposals (2.6 TW queued in 2024, double current U.S. capacity), insufficient transmission infrastructure and significant lead times for interconnection requests are slowing project execution. The U.S. added merely 55 miles of high-voltage transmission in 2023, creating a critical mismatch between demand growth (1-2 years) and infrastructure deployment (4+ years). This mismatch leads to grid congestion, curtailments, and delayed decarbonization.
- Manufacturing resurgence: Spurred by federal incentives and geopolitical reshoring, over 150 major industrial facilities (EV batteries, semiconductor fabs, etc.) have announced operations since 2021, creating concentrated, energy-intensive hubs — especially in the Midwest and Southeast. If the increased activity is can’t be matched by existing or planned resources, it could place local grids under significant stress.
- Widespread electrification: Transitioning vehicles and buildings away from fossil fuels could add tens of gigawatts to peak load. Electric vehicles now represent 9% of new auto sales, potentially adding 20 GW to peak load by 2029. Combined with building electrification initiatives, this shift could increase annual demand by 100-185 TWh by 2030. Although essential for reducing emissions, electrification intensifies grid pressure.
- Trade dynamics and tariffs: Import tariffs may increase capital costs of renewable and grid equipment by up to 50%, making the U.S. one of the most expensive markets for solar. Coupled with volatile fuel prices, equipment delays, and an increased difficulty to import energy from neighbour countries, this significantly inflates electricity rates and delays infrastructure investments.
These converging trends have significant implications for emissions, costs, and grid reliability. While total yearly carbon emissions from power plants in the US have dropped 34% from 2011 to 2023, recent events are expected to slow down progress. Average electricity prices have climbed 13% nationally since 2022, and forecasts suggest residential rates could rise an additional 15–40% by 2030.
Strategic imperatives for real estate leaders
To navigate these seismic shifts, real estate firms must embrace three core strategic actions:
- Proactive energy cost management: With a likely increase in electricity prices, portfolio-wide energy efficiency retrofits and smart building technologies must become standard. AI-enabled building systems are demonstrating up to 30% efficiency improvements and AI-powered platforms (such as Odyssey, which allows building owners and operators to create energy efficiency roadmaps) are becoming baseline requirements. On-site renewables, particularly solar and battery storage, can insulate tenants from price volatility and reduce operational costs significantly.
- Going beyond “greening” of the grid to meet local regulations: Emerging building performance standards (e.g., New York’s Local Law 97) impose hefty penalties on energy-inefficient and high-emissions properties. Most companies are relying on electrification to be compliant; however, with the increasing uncertainty about the evolution of the grid emissions factor, early investments in energy management systems and on-site renewables will prove essential.
- Staying ahead of grid capacity constraints: By accelerating electrification of their assets, real estate companies can prevent project disruption as the capacity of the grid is being increasingly stressed and utilities might limit significant load increases. Integrating behind-the-meter solutions — renewables and battery storage — into assets can dramatically enhance real estate players’ ability to keep electrifying their portfolios even as the grid faces capacity constraints.
Considerations for real estate leaders:
- Have we modelled different scenarios of grid emissions and energy prices into our operations and investment decisions?
- As volatility and uncertainty around energy prices increases, how can we leverage retrofits to turn risk into accretive returns?
- In a context of a highly stressed grid, have we defined an asset level decarbonization strategy for key properties located in geographies with nascent and stringent building performance standards?
- Which high load sites can reduce grid dependency, either by operating as microgrids or by investing in on-site renewables, converting outage avoidance and demand response revenues into a tenant premium differentiator?
Telesto Strategy works with real estate leaders to navigate energy risk, uncover opportunity, and turn sustainability goals into action.
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Our people
Andrew Alesbury
Partner, Washington DC
Andrew supports real estate investors and other firms with large portfolios of physical assets to create sustainable strategies which integrate resilience and sustainable risk management into their business models and investment processes.
Ben Vatterott
Partner, San Francisco
Ben supports clients on a number of strategic topics such as setting net zero targets, embedding sustainability and emissions reduction into capital deployment, and capturing sustainable growth opportunities.
Diego Bernstein
Manager, Miami
Diego helps real estate practitioners implement their sustainability strategies including net zero roadmaps, climate risk strategies, building economic models, demonstrating his expertise in renewables and sustainable technologies.
