2026 Energy Price Forecast for Large Commercial & Industrial Users

Electricity markets across the United States are heading into 2026 with a combination of accelerating demand growth, constrained supply conditions, and region-specific capacity challenges. For large commercial and industrial (C&I) organizations, this convergence of market pressures will likely translate into higher energy costs, more volatile pricing environments, and increased operational risk. Understanding the forces behind these shifts is essential for developing procurement strategies, managing load exposure, and planning for resilience.

This forecast synthesizes the major demand- and supply-side factors shaping 2026 markets, highlights expected regional dynamics, and outlines key implications for large energy users.

1. Demand-Side Forces

AI & Data Centers

The most significant driver of load growth heading into 2026 is the rapid nationwide expansion of AI-driven computing and hyperscale data centers. These facilities require unprecedented levels of continuous power, and their scale is reshaping load demand curves hour-by-hour and region-by-region. The largest concentrations of new data center development are in Texas, Virginia, Georgia, and portions of the Midwest. These clusters are driving substantial congestion on local transmission networks and further tightening regional reserve margins.

With demand in these regions forecasted to grow faster than supply can keep pace, both forward power and capacity prices have escalated, and are forecasted to remain so for at least a few years.

Additionally, regulatory uncertainty remains a key risk factor, particularly in PJM, where policymakers and grid operators are still evaluating how to integrate large-scale data center load into long-term planning. The outcome of these regulatory decisions may influence capacity market prices, congestion charges, and interconnection timelines for years to come.

Electrification Across Sectors

Electrification continues to expand rapidly across commercial transportation, industrial processes, and building systems. Businesses are deploying larger EV fleets, converting heating and cooling systems, and electrifying manufacturing operations to reduce emissions, increase efficiency, or comply with policy requirements. While some of these efficiency gains are helping, ultimately, this transition is raising baseline electricity demand more quickly than many utilities originally anticipated.

ERCOT is expecting a substantial increase in load in 2026. Although it remains uncertain exactly how much of this anticipated load will be fully energized next year, ERCOT’s planning scenarios point to meaningful year-over-year growth, much of it driven by data centers, industrial expansions, oil and gas industry growth in West Texas, and overall economic growth, specifically in the larger urban areas of the state. The combination of higher base load, regionally concentrated growth, and long lead times for new generation increases the risk of higher prices and more volatile system conditions.

Peak Load Intensification

Higher summer peaks will continue to challenge grid operators in 2026. Increased reliance on cooling and the layering of new industrial and data center load onto the grid all contribute to steeper peak curves. Extreme weather remains a critical wildcard: longer, more frequent heat waves and winter storms can push peak demand beyond forecasted expectations.

In regions with growing shares of solar energy, such as Texas, California, and increasingly PJM, the concern about having sufficient supply to meet summer peak demand is easing. Instead, the market’s focus is shifting toward managing net load (total load minus renewable generation, illustrated by the “duck curve” as solar output declines at sunset). Grid-scale battery storage helps mitigate this risk, but its contribution remains limited by the finite amount of storage assets.

Businesses with inflexible 24/7 operations face the greatest exposure in this environment. Non-flexible load cannot easily shift away from peak pricing intervals, meaning these customers will see higher demand and capacity charges unless they adopt strategic load-management programs.

2. Supply-Side Constraints

Fuel & Generation Costs

Despite growth in renewable energy resources, natural gas remains the marginal fuel in many U.S. power markets and will continue to heavily influence wholesale power prices in 2026. This linkage is especially pronounced in the Northeast, where regional dependence on gas-fired generation is high, and pipeline constraints limit fuel deliverability, especially during the coldest winter days.

Gas price volatility is expected to persist next year, driven by global LNG demand and greater domestic LNG production, natural gas production variability, and ongoing geopolitical risk. Winter weather poses an additional uncertainty: a colder-than-normal 2026 winter could simultaneously drive up gas consumption and tighten both natural gas and electricity markets, pushing both commodities sharply higher.

Delayed Renewable Additions

Renewable energy is expanding across the U.S., but not fast enough to offset demand growth and aging fossil capacity. Several factors continue to slow renewable deployment:

• Supply chain disruptions

• Long permitting timelines

• Interconnection backlogs, particularly for large-scale solar and battery projects

• Regulatory uncertainty

These delays reduce the downward price pressure that would otherwise be expected from additional renewable generation. Battery deployment remains strong but is still limited in many regions relative to the scale of load growth, and wind development continues to face siting and permitting challenges.

Aging Grid Infrastructure and Power Plants

Much of the U.S. grid infrastructure, both transmission lines and generating plants, is aging. Utilities are undertaking multi-billion-dollar transmission and distribution (T&D) upgrades to meet growth and reliability needs. Simultaneously, many fossil-fueled generation assets are approaching retirement or require costly upgrades to remain reliable.

These capital investments are increasingly showing up on commercial and industrial bills as higher T&D charges and other cost-recovery mechanisms. Organizations should expect the cost of infrastructure modernization to remain a major component of rate increases through 2026.

3. Regional Market Conditions

ERCOT

ERCOT’s market fundamentals remain under heavy pressure due to expected rapid data center growth, industrial expansion, and tightening reserve margins. Forecasted wholesale prices in 2026 are expected to rise, with the greatest increases occurring during summer peaks. The scale of anticipated new load means that even modest delays in generation or transmission projects could have meaningful pricing impacts.

PJM

PJM faces escalating congestion costs and rising capacity prices due to interconnection queue backlogs and infrastructure constraints. Several states within PJM are experiencing strong data center and industrial growth, tightening supply conditions, and raising the cost of securing firm capacity. Regulatory and planning uncertainties add additional risk for large C&I buyers in this region.

New England and NYISO

New England and New York continue to experience some of the highest structural power costs in the nation. Limited local generation, constrained natural gas pipeline capacity, and stringent environmental regulations contribute to elevated prices across both wholesale and retail markets. These regions are especially sensitive to winter conditions, fuel constraints, and policy-driven retirements of older assets.

4. Cost Structure Trends

Across most U.S. markets, several cost-structure trends are converging:

• Transmission and Distribution Costs: Grid modernization and new capacity investments are pushing T&D charges higher.

• Demand and Capacity Charges: Utilities are increasingly recovering fixed costs from peak contributors, raising the importance of load shape management.

• Dynamic Pricing: Time-of-use and real-time pricing structures are becoming more common, increasing exposure for peak-heavy customers.

These structural trends make load flexibility and advanced procurement strategies more valuable than ever.

5. Implications for Large C&I Users

For large commercial and industrial customers, the implications of these market dynamics are significant:

• Budget Impacts: Many businesses should prepare for double-digit percentage increases in electricity costs by the end of 2026.

• Procurement Challenges: Fixed-price contracts are becoming both more expensive and more restrictive, with more suppliers including passthrough clauses for components like capacity. Index exposure offers flexibility but comes with higher volatility.

• Strategic Procurement Needs: Layered purchasing, block-and-index strategies, and market-timed hedging will be essential to manage risk effectively.

• Flexible Load Value: The ability to curtail or shift load, either operationally or through automated controls, will become a critical lever for cost management in 2026 and beyond.

6. Strategic Role of Demand Response (DR)

Demand response will become an increasingly important component of commercial energy strategy in 2026.

DR programs provide direct financial incentives for reducing consumption during peak pricing events or periods of grid stress. For businesses with flexible or interruptible load, manufacturing plants, cold storage, schedulable computing, and large HVAC systems, DR can generate substantial savings and help offset rising energy costs.

Beyond financial benefits, DR participation enhances operational resilience by reducing local grid stress. Early evaluation of DR opportunities will help companies integrate load flexibility with procurement, operations, and distributed energy strategies.

Conclusion

The 2026 electricity landscape is shaped by accelerating demand from AI and electrification, supply-side constraints, and significant regional market pressures. While cost increases appear unavoidable for most large C&I users, the severity of the impact will depend on how proactively businesses plan. Companies that reassess former procurement strategies, actively manage load, explore DR participation, and invest in distributed energy resources will be best positioned to mitigate risk and maintain cost control in the evolving energy environment.