U.S. may struggle to build power fast enough to meet rising demand, Barclays says

The U.S. may struggle to expand its power infrastructure quickly enough to meet rising electricity demand, with lengthy permitting processes and slow transmission development creating significant bottlenecks, Barclays said in a report released Friday.

The investment bank said meeting growing demand will require a rapid expansion of both electricity generation and transmission capacity, but argued that policy constraints could prevent the U.S. from adding supply at the necessary pace and scale.

The challenge is particularly stark when compared with the country's earlier infrastructure buildout. U.S. electricity generation more than doubled during the 1950s and nearly doubled again in the 1960s, while the country built about 8,000 miles of transmission lines annually between 1965 and 1975.

Since then, transmission expansion has slowed sharply. Barclays said annual transmission capacity growth averaged about 2% during the 1980s and 1990s, fell to 1.2% between 2004 and 2016 and slowed further to just 0.6% between 2017 and 2024.

The Congressional Budget Office estimates transmission capacity may need to grow by at least 3% annually to meet future electricity demand.

Permitting emerges as key bottleneck

Barclays said the U.S. permitting system has become increasingly complex, with federal, state, local and judicial reviews potentially adding years to major infrastructure projects.

For large projects costing more than $200 million and subject to the National Environmental Policy Act, Barclays counted at least 64 permits and reviews involving 15 federal agencies and 34 agency subdivisions. It also identified about 425 actions and milestones in the federal permitting process, 230 of which it considers non-optional.

The delays extend beyond Washington. Thirty-four states require public meetings or hearings during permitting, while 37 give local governments authority over siting and permitting standards. Almost 30% of large energy-related projects in Barclays' analysis had either been cancelled or paused.

Reform may not be enough

Previous attempts to accelerate permitting have produced mixed results, Barclays said. The 2023 Fiscal Responsibility Act established a two-year deadline for environmental impact studies, but only 39% of studies have met that target, leaving 61% beyond the statutory deadline.

President Donald Trump's executive orders aimed at accelerating energy and data-center infrastructure could improve the process, but Barclays said it is too early to judge their effect because most reviews initiated under the administration remain incomplete.

The bank concluded that without durable legislative reform across federal, state and local governments, permitting is likely to remain a major obstacle to expanding U.S. energy infrastructure at the speed required.