U.S. Power Market Update: Q3 2025 Trends

The U.S. power sector remains in a period of accelerated deployment and shifting signals. On one side, record solar additions are being realized — the result of projects financed under the Inflation Reduction Act from 2022 — extending a nearly two-year streak as the leading source of new power generation. On the other, interconnection data shows a power pipeline swinging back toward natural gas, driven by the structural pull of data centers requiring around-the-clock power. Together, these signals capture a sector defined by solar growth today and a gas-heavy pipeline shaping tomorrow.

Solar Generation Leads Record Capacity Additions

The US power generation landscape has experienced transformative growth during the July-September 2025 period, with solar energy establishing itself as the dominant new capacity source. According to the Energy Information Administration, the US is on track to add a record 33.3 GW of utility-scale solar capacity in 2025, with 21.3 GW of these additions concentrated in the second half of the year. This represents more than half of all new generating capacity planned for 2025, positioning solar to account for approximately 51% of the 64 GW total capacity additions expected this year.

Figure 1. Cumulative utility-scale electric generating capacity additions, U.S. EIA June 2025

Figure 2. H1 2025 US Power Capacity Additions, FERC

The momentum builds on strong first-half performance, where solar contributed 14.6 GW of new capacity, representing 75% of all additions during January-June 2025. Combined with wind's contribution of 16.1%, renewable sources accounted for over 91% of new generating capacity in the first half of the year. By June 2025, solar had maintained its position as the leading source of new capacity for 22 consecutive months.

Transition from IRA to OBBBA

These deployment numbers align closely with expected development timelines following the Inflation Reduction Act's initial passage. Solar projects typically require 18-36 months from financial close to commercial operation, placing many of the projects coming online in 2025 within the cohort that secured financing in 2022-2023 when IRA incentives provided long-term certainty. However, recent policy changes have compressed future development windows significantly.

The One Big Beautiful Bill Act, signed on July 4, 2025, terminated the solar and wind 48E investment tax credit and 45Y production tax credit eligibility for projects placed into service after December 31, 2027. Projects must now begin construction by July 4, 2026, to qualify for credits, creating a 12-month window that has accelerated development timelines. This policy shift is expediting developers to commence construction on priority projects, with an expectation of a second wave of high-priority developments to accelerate through 2026.

MISO Interconnection Queue Highlights Natural Gas Dominance

Figure 3. MISO Fast Track Proposals 2025

While current capacity additions favor renewables, interconnection queue data provides a forward-looking indicator of generation mix trends. MISO's newly launched Expedited Resource Addition Study (ERAS) process offers particularly revealing insights into near-term generation preferences. Of the 47 projects totaling 26.6 GW that applied for MISO's fast-track interconnection process, natural gas generation accounted for approximately 75% of proposed capacity (19.7 GW), while energy storage projects represented 15% (4 GW), and renewable sources comprised only 8.5% combined.

On September 4, 2025, MISO announced the first 10 projects to be evaluated under the ERAS: five natural gas, three solar, one wind, and one battery for a total of 5.3 GW (of which 4.0 GW were natural gas projects). This disparity reflects the influence of around-the-clock load requirements from data centers and industrial facilities, which favor dispatchable generation sources capable of providing continuous power regardless of weather conditions.

The broader MISO interconnection queue shows similar patterns, with 63 gas-fired projects totaling 33.4 GW of summer-rated capacity currently in various stages of development. This substantial natural gas pipeline suggests that while renewable additions dominate current numbers, thermal generation may play an increasingly prominent role in meeting projected load growth over the next five years.

Data Center Demand Drives Around-the-Clock Generation Requirements

The surge in data center development represents a fundamental shift in electricity demand characteristics, with implications extending well beyond current capacity planning. Data centers require continuous, highly reliable power supply with load profiles that remain relatively constant across 24-hour periods. Unlike traditional industrial loads that may vary with production cycles, data center facilities maintain baseline IT loads that operate continuously, supplemented by cooling loads that fluctuate based on ambient temperature conditions.

Entergy's recent agreement to supply Meta's Louisiana data center complex exemplifies this trend, with the utility committing to build 2.3 GW of combined-cycle gas generation to support an initial 2 GW data center installation. The project structure, approved by Louisiana regulators in August 2025, demonstrates how utilities are responding to data center demand with dispatchable generation resources capable of providing reliable around-the-clock power.

Industry projections suggest data center electricity demand could reach 400 TWh by 2030, representing a compound annual growth rate of approximately 23%. This load growth, concentrated in facilities requiring 99.9%+ uptime availability, inherently favors generation resources with high capacity factors and operational flexibility. The result creates a structural demand for baseload and near-baseload generation that can complement variable renewable resources.

Regional Solar Additions and Grid Implications

Texas continues to lead capacity additions, representing 27% of all solar installations in the first half of 2025 and expecting an additional 9.7 GW of solar capacity in the second half. The state's combination of solar resource, streamlined permitting, and growing data center demand has established it as the primary driver of national solar growth.

State	Jan	Feb	Mar	Apr	May	Jun	Total (MW)
TX	682	237		759	315	1,161	3153
AZ				620	300	300	1,220
IN	435				441	199	1,075
FL	969						969
CA		450		116			566
OH	238	120		156		50	563
MO		50			163	250	463
MI			125	80		100	305
KY		86			200		286
WI	11	6	257	6			280
IL	200			15	6		221
ID				200			200
AR				200			200
PA	20	100			20	22	162
CO	140	15					155
CT		140					140
LA		135					135
NY	31	31	17	5	7	15	105
MN	105						105
UT						100	100
OK		100					100
VA	36			40			76
NV	6					70	76
MD						57	57
NJ				20			20
MA			5			5	10
NC	8						8
TN						8	8
WV				6			6
RI	5						5

Table 1. Solar Generation Projects by State Reported in FERC Monthly Updates (Jan–Jun 2025)

However, capacity additions alone do not address grid reliability concerns during peak demand periods. FERC's summer 2025 assessment identified several regions, including MISO, ERCOT, and SPP, as facing potential generation adequacy challenges during extreme weather events or periods of low renewable output. These reliability concerns underscore the continuing need for dispatchable generation resources, particularly as renewable penetration increases and conventional power plants retire.

The disconnect between current renewable-heavy capacity additions and future natural gas-heavy interconnection queues reflects the complex intersection of economic, policy, and reliability factors shaping generation investment decisions. While renewable resources benefit from favorable economics and existing tax incentives, the emergence of large, constant loads is creating market conditions that may favor more traditional generation technologies (e.g., gas and nuclear) for specific applications.

This market evolution suggests that while renewable energy will continue expanding rapidly through 2027 under past energy policy, the post-2027 period may see a rebalancing toward dispatchable resources as data center demand and grid reliability requirements drive investment decisions beyond the current renewable-favorable policy environment.