From: JohnS’s Newsletter - Substack

By: JOHNS

Date: December 1, 2025

The grid doesn’t have a demand problem; it has a supply problem

The dream customer for a utility would consume a massive amount of power at a constant rate, 24 hours a day, with no seasonal variation. The data center is about as close to that as there is, with an enormous appetite for power and a typical load factor of 86%. The load factor is the utilization rate, defined as the average consumption divided by the peak. The load factor for a large electricity grid, such as ERCOT or MISO, is ~64%. A higher load factor results in lower costs for consumers by maximizing the use of all the equipment.

The data center requires significant resources to satisfy its insatiable appetite for electricity, but it also generates enormous revenue that can help a utility maintain economies of scale. Due to its high load factor, it can raise the grid’s load factor, improving the total capital efficiency. Customers like this, in principle, should reduce everyone else’s electricity bill.

But the reality is that utilities are struggling to serve new data centers. Electricity prices have risen in recent years, and the blame is often placed on the growing demand from data centers. But this doesn’t seem to make sense. (continue reading)

The grid doesn’t have a demand problem; it has a supply problem