Can the U.S. Grid Keep Up with Demand? Energy Law Expert Alexandra Klass Shares Market-Based Solution
June 22, 2026 – Surging electricity needs stemming from residential growth, industrial expansion and the rapid rise of data centers is forcing utilities across the United States to rethink how they generate and allocate power.
That was the focus of “Reimagining the Future of U.S. Electricity: Innovations for Meeting Growing Demand,” a University of Houston Law Center webinar. The event featured University of Michigan law professor Alexandra B. Klass, who studies issues related to energy, environmental, and natural resources law, and infrastructure planning.
“One of the reasons that electricity demand has stayed flat for the last 15 years has really been a combination of moving away from an industrial and manufacturing economy in the U.S., as well as [increased] energy efficiency for appliances and lighting,” Kass explained. “That is really what has kept electricity demand low, but we have an increase in manufacturing. We have an increase in oil and gas operations…you see that data centers are a big part of this story but it’s not the whole story.”
The event, hosted by UHLC’s Environment, Energy and Natural Resource Center, drew almost 200 attendees. Moderator Qaraman Hasan, a research scholar with the center, jumpstarted the conversation with an important question.
“For most of the decade we believed the US power grid operated on a simple promise that electricity would always be there when we flip a switch,” Hasan said. “Today, we are in a different situation. How are we going to meet these demands?”
Klass, who is also co-director of the Environmental and Energy Law Program at Michigan Law, explained that utilities are facing a complex planning environment and the need to make long-term infrastructure investments under significant uncertainty.
Utilities must now decide whether, and how quickly, they should invest in new generation and transmission infrastructure, often based on demand projections that may or may not be accurate.
“Our ability to move quickly and to meet that demand is less than it used to be,” she said. “Right now, we've got these predictions for significant increase in demand. If we end up building the type of infrastructure we need to meet that demand and then that demand doesn’t show up, that’s got to be paid for by someone — usually utility ratepayers.”
That uncertainty is compounded by the changing economics of energy production. Utilities also need to decide what types of energy resources to prioritize, Klass noted. The U.S. electricity generation mix has shifted significantly over the past two decades, shaped by market forces and technological advances.
The rise of hydraulic fracturing in the early 2000s made natural gas more affordable, leading to increased investment in gas-fired power plants and a corresponding decline in coal generation. More recently, the cost of renewable energy has dropped.
“Solar and wind are on the upswing,” Klass said. “Nuclear has been flat, but that may change. We are currently in kind of a nuclear renaissance, at least in terms of public opinion and government support.”
In this dynamic environment, utilities are left weighing heavy sets of tradeoffs: cost versus reliability, speed versus long-term risk, and emerging technologies versus established ones.
Klass and her co-author Professor Dave Owen, associate dean for research and professor of law at the University of California College of the Law in San Francisco, explored all these issues in their recent article, “Allocating Electricity,” published in the George Washington Law Review in February 2026.
Drawing on legal frameworks for federal natural gas markets and U.S. Western water law doctrine, the authors proposed a solution: a contracts-and trading-based regulatory approach that Klass and Owen call “demand-side-connect-and-manage,” focusing on contracts, trading and risk allocation rather than only supply-side mandates. The article states that this approach can help:
- Reduce overbuilding of general plants by aligning incentives with actual demand.
- Allocate risk to major data center operators, encouraging innovation.
- Accelerate grid interconnection for data centers.
Professor Klass ended her talk by emphasizing that while predicting the future of electricity supply availability and ensuring demand is met is difficult, it’s not impossible.
