BAF NEWS

Rising US Power Demand and Reliability Risks

Here’s what changes and why it matters: winter reliability risk is climbing as demand surges. NERC links the rise to data centers and electrification, while supply growth lags additions, according to Reuters.^[1]

Reuters reports that “Peak demand has grown by about 20 gigawatts, or 2.5%, from last year.” It also notes that “New electricity net supplies added since last year were less than 10 gigawatts.”

• Peak demand rose roughly 20 gigawatts year over year.
• Net new supply additions were under 10 gigawatts.
• Risk factors include prolonged severe cold and natural‑gas freeze‑offs.
• Regions flagged include parts of New England, Texas, the West, and the Southeast.

Zoom in: data centers are clustering near cheap power and fiber. However, siting and interconnection queues slow responses to fast load growth. Intermittent renewables help on annual energy, yet peak adequacy remains sensitive to weather and gas deliverability.

Moreover, NERC highlights notable growth in PJM, the Southeast, and parts of the West. Still, reliability risks persist in several areas under prolonged severe cold snaps. Therefore, preparedness and fuel assurance are immediate priorities.

The upshot: operators need fast, flexible capacity and demand‑side tools this winter. Still, most projects arrive after the season. Consequently, contingency procedures and resource coordination remain front‑line work.

Major Acquisition in European Power Generation

TotalEnergies agreed to acquire 50% of EPH’s Western European flexible generation portfolio. Reuters described it as “acquiring 50% of EPH’s Western European flexible power generation portfolio in a 5.1 billion euro all‑stock deal.”^[2]

The assets span about 14 GW across Italy, the UK, France, and other markets. The company says the transaction will more than double its net gas generation capacity.

Reuters also notes that EPH will receive new TotalEnergies shares and hold “about 4.1%” of the company, pending approvals. Closing is targeted by mid‑2026, subject to regulatory review.

• Stake: 50% of a ~14 GW flexible portfolio.
• Consideration: €5.1 billion in newly issued shares.
• Implied ownership: EPH to hold about 4.1% of TotalEnergies.
• Timeline: closing aimed by mid‑2026, pending approvals.

Zoom in: flexible plants stabilize systems with more variable renewables. They also enable trading strategies that monetize intraday and seasonal volatility. However, policy design and carbon costs still shape dispatch, maintenance, and margins.

Reuters adds that the venture includes gas‑fired, biomass, and battery assets. Moreover, the move supports TotalEnergies’ Integrated Power strategy across Western Europe. Consequently, the firm gains optionality across capacity markets and ancillary services.

The upshot: consolidation may accelerate grid flexibility builds in key markets. Therefore, merchant spreads and balancing revenues matter more to project economics.

Affordability Constraints on US Utilities

Even with demand surging, affordability is a hard ceiling. Bloomberg’s Energy Daily reports that “While US power demand is expected to surge, affordability concerns are posing issues for utilities.”^[3]

Therefore, rate design and capital sequencing are decisive. Stakeholders are weighing new capacity needs against household and business tolerance for higher bills.

Zoom in: this tension complicates near‑term reliability fixes. Projects that ease winter risk can be capital intensive. Consequently, approvals and timelines may lag demand growth.

The upshot: utilities will likely lean on efficiency, demand response, and targeted upgrades. However, larger builds still hinge on regulatory support and customer affordability.

Trends in UK Household Energy Prices

In Great Britain, the household energy price cap is forecast to edge down in January 2026. The Guardian cites Cornwall Insight’s view of a roughly 1% fall to £1,733.^[4]

However, bills are expected to rise again in April by about £75. The report links the increase to higher non‑energy charges, including policy and network costs.

• January 2026: cap forecast around £1,733, about 1% lower.
• April 2026: cap forecast to rise by roughly £75.
• Driver: higher non‑energy costs, including policy and network charges.

Zoom in: wholesale gas prices are not the only lever. Network upgrades and policy schemes add to bills even as fuel costs ease. Therefore, stability depends on both commodity trends and regulatory components.

The upshot: households may see temporary relief before charges rebound. Consequently, suppliers and regulators face a familiar balancing act as they fund networks and protect consumers.

What’s next: Signals to watch

Zoom in:

• In the U.S., track peak forecasts, forced‑outage rates, and gas storage near key hubs.
• Watch generator winterization, firm fuel commitments, and demand response readiness.
• Monitor interconnection reforms, storage additions, and fast‑ramping capacity in constrained pockets.
• In Europe, follow regulatory approvals and dispatch patterns across Italy, the UK, and France.
• In GB, watch Ofgem updates on non‑energy charges and supplier hedging strategies.

The upshot: demand is shifting faster than many investment cycles. However, targeted flexibility, smarter demand, and prudent sequencing can narrow the gap. What’s next: execution under time pressure, and policy that balances reliability with bills.