CHA Energy Market Outlook

ENERGY MARKET OUTLOOK An Evolving Landscape of Opportunities & Challenges

2026 CHA Energy WINTER Market Outlook | Page 1

FINDING A BETTER WAY.

Charting a Course for a Sustainable Future In 2025, the energy sector continued to experience transformative changes that will impact the structure and future of power delivery and consumption. Following years of stagnant load growth, electricity demand is increasing again, driven by Artificial Intelligence (AI) workloads, the adoption of electric vehicles (EVs), industrial electrification, and hyperscale data centers. The International Energy Agency projects a 26% increase in U.S. peak demand by 2035.

Global investment in clean energy has significantly outpaced investment in fossil fuels. However, U.S. policy reversals and rollbacks of clean energy incentives, as well as accelerated fossil fuel leasing, have introduced uncertainty into electricity prices. Rollbacks and funding cuts have slowed renewable energy deployment and paused significant projects. Affordability has become a dominant theme for industry leaders, policymakers, and consumers, forcing utilities and regulators to carefully balance clean energy goals with cost control. Technology also took center stage as cybersecurity posed threats to reliability, and new tools emerged, including AI and Grid-Enhancing Technologies (GETs). The availability of real-time data enabled smarter, proactive approaches to reliability and provided greater insight into the grid’s operations.

Despite some headwinds and seismic industry shifts, 2026 is poised to be a year of growth and opportunity. Technology, including AI, will present significant opportunities to improve core operations, enabling predictive maintenance, real-time grid optimization, and enhanced reliability. Utilities will also have opportunities to modernize the grid and utilize new technologies to integrate energy storage and demand response more efficiently and effectively, thereby improving system performance. Microgrids and nuclear power will continue to emerge as strategic solutions to address resiliency and energy reliability in the face of severe weather, growing energy demand, and supply chain challenges.

The successful utilities of the future will embrace dynamic, AI-enhanced, data-driven operations as they transition from static planning to digital, real-time decision-making. Their key priorities will likely include investing in grid hardening, storage, and flexible generation; balancing affordability with decarbonization; and managing significant capital costs as they replace aging infrastructure. Utilities that embrace this new frontier with agility, technology integration, and sustainability while navigating policy and market volatility will serve their diverse stakeholders and communities with confidence and reliability.

In an energy sector transformed by growing demand, policy shifts, and rapid innovation, CHA stands out as the partner of choice. Utilities face unprecedented challenges, from policy shifts to rising costs. Affordability and reliability have become paramount, forcing a delicate balance between clean energy goals and cost control. New technologies, such as AI and GETs, are reshaping grid operations through real-time optimization; however, these tools require advanced expertise and specialized training. Clients need a holistic, innovative partner with deep industry expertise, one who can seamlessly integrate all aspects of a project and navigate complexity with agility. CHA delivers this value, setting us apart as the firm so many clients choose over the competition.

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Affordability: The New Reality of Cost Affordability will dominate utility priorities in 2026 as surging electricity demand collides with infrastructure constraints and capital costs. Several forces are driving this challenge. The rapid rise of load growth from data centers, AI, the electrification of transportation, and the reshoring of manufacturing is straining grids nationwide. Peak demand is up 14%, while interconnection queues for new generation already exceed two terawatts.

At the same time, utilities face aging infrastructure, supply chain delays for critical components such as transformers, and escalating costs associated with integrating clean energy. These pressures translate into higher rates, prompting regulatory pushback and rate freezes in markets such as New York and New England.

Utilities can leverage demand-side management and distributed energy resources (DERs) to reduce peak loads and defer costly upgrades. Clean energy portfolios, which combine an “all-of-the-above” energy mindset, including renewables, storage, and demand flexibility, are increasingly cost-competitive and resilient. They offer a pathway to affordability while meeting the goals of the energy transition.

Advanced analytics and AI-driven grid optimization can unlock efficiencies, improve reliability, and direct utilities to actions that may minimize spending on outage restoration. Additionally, regulatory and financing innovations, such as performance-based ratemaking and flexible capital structures, can align utility incentives with affordability objectives.

Collaboration will be critical. Utilities must engage regulators and customers transparently, demonstrating how investments deliver tangible value. Federal funding and partnerships can offset capital burdens, while prioritizing low-cost, high-impact projects can also help stabilize rates.

Utilities can achieve affordability through a disciplined mix of cost control, technology adoption, and stakeholder alignment.

Those that integrate clean energy, embrace digital tools, and pursue innovative financing, such as performance-based ratemaking, green bonds, or securitization, will not only manage affordability but also strengthen resilience and public trust in an era of unprecedented demand growth.

FINDING A BETTER WAY.

Peak demand is up 14% CHA Energy Market Outlook | Page 5

Given the extreme reliability requirements of massive critical base loads, such as data centers, utilities require resources capable of providing firm, dispatchable power.

FINDING A BETTER WAY.

The Energy Transition: Balancing Growth, Reliability & Supply Scarcity The energy sector is undergoing a fundamental redirection, shifting its focus from reducing emissions to enhancing reliable energy delivery. Utilities are grappling with a market where historically flat load projections have been violently reset due to unprecedented demand. This surge is driven overwhelmingly by the exponential expansion of AI-driven data centers, industrial electrification, and the reshoring of manufacturing. Federal regulatory agencies, responding to key industry analyses, acknowledge that projected load growth has accelerated by a factor of six compared to previous forecasts based on historical data. This demand, coupled with infrastructure development cycles that require years to complete, is fundamentally straining grids and compressing traditional planning cycles.

In this climate of peak supply scarcity, utilities are prioritizing flexibility and resilience, leading inevitably to an “all-of-the-above” approach in generation planning. Given the extreme reliability requirements of massive critical base loads, such as data centers, utilities require resources capable of providing firm, dispatchable power.

Natural gas is again playing a pivotal role as the immediate go-to energy source for balancing the grid. Gas infrastructure provides the necessary reliability and generation flexibility, enabling adaptation to evolving environmental policies and regulations. The financial viability of natural gas projects often involves a combination of utility rate base investment and private developer capital, both of which are subject to rigorous permitting and complex regulatory processes across federal, state, and regional levels. In contrast, many decarbonization technologies rely on securing targeted government grants or tax incentives, which can present additional uncertainties. Concurrently, investment is surging in Battery Energy Storage Systems (BESS).

There is also a rising stakeholder interest in long-term, low-carbon Dispatchable Emissions-Free Resources (DEFRs), such as Small Modular Reactors (SMRs).

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AI and the Digital Transformation of Utility Operations AI is no longer a distant concept; it’s a transformative force driving efficiency and resiliency across electric and gas utilities. Faced with aging infrastructure, the need for renewable integration, and increasing reliability demands, utilities are turning to AI for smarter, data-driven solutions.

AI shifts utilities from reactive to predictive operations. By analyzing data from sensors, weather models, and historical performance, AI forecasts demand, optimizes grid performance, and prevents outages before they occur. Embedding AI and other predictive technologies within utility Supervisory Control and Data Acquisition (SCADA) and distribution management systems (DMS) enables operators to gain greater visibility into energy systems and improve real-time decision-making. Utilities utilizing AI report up to an 11% improvement in grid uptime and a 10% increase in energy efficiency, resulting in cost savings and enhanced customer satisfaction.

AI Impacts • Improvement in Grid Uptime • Predictive Maintenance • Smart Grid Optimization • Storm Response

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AI adoption is expected to accelerate with advancements in machine learning, the Internet of Things (IoT), and generative AI, leading to increased automation in reporting and compliance.

Emerging trends include self-healing grids, virtual power plants, and the real-time management of DER, which create a more adaptive and efficient energy ecosystem.

For utilities, embracing AI is no longer optional; it’s essential for navigating the energy transition and building a smarter, more resilient future.

Where AI Is Making an Impact

Predictive Maintenance

Over 45% of utilities now use AI analytics to detect early equipment issues, reducing downtime by up to 30% and extending asset life.

Smart Grid Optimization

AI helps balance DER and anticipate surges.

In North America, 81% of utilities use AI, and 57% prioritize grid optimization as a key application.

Storm Response

AI-powered drones, GIS mapping, and predictive modeling enable faster restoration, cutting outage recovery times by 20–50%.

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Grid-Enhancing Technologies: Unlocking Capacity for a Modern Electric Grid Traditional solutions, such as building new transmission lines, continue to be hindered by long lead times due to long permitting processes, escalating costs, and public opposition. Enter Grid-Enhancing Technologies (GETs): innovative tools that maximize the available capacity of existing infrastructure, providing a faster and cost-effective path to a resilient and sustainable grid.

GETs encompass hardware and software solutions designed to improve transmission efficiency, reliability, and safety without major construction. Key technologies include: Dynamic Line Ratings (DLR): Unlike static ratings based on conservative assumptions, DLR adjusts transmission capacity in real time using weather and environmental data to unlock significant hidden capacity, reducing congestion and improving reliability.

Power Flow Control Devices: These systems reroute electricity to underutilized lines, alleviating bottlenecks and minimizing reliance on costly generation during congestion events.

Advanced Conductors: High-temperature, low-sag conductors allow more current to flow through existing lines, further boosting capacity.

Topology Optimization and Analytics: Software tools that reconfigure grid operations and forecast constraints, enabling proactive management of transmission assets.

GETs can enhance transmission capacity by up to 40%, accelerating the integration of renewables and reducing congestion costs, which are estimated to save utilities and consumers billions of dollars annually. By leveraging existing infrastructure, utilities can avoid the environmental and financial burdens associated with new transmission projects while meeting their clean energy targets.

FINDING A BETTER WAY.

GRID-ENHANCING TECHNOLOGIES

DYNAMIC LINE RATING

Real-time adjustment of capacity

POWER FLOW CONTROL Routing of electricity

Benefits for Utilities Faster Deployment: Most GETs can be installed and operational within 6–18 months.

Deferred Capital Expenditures: GETs reduce the need for costly new transmission projects.

Congestion Cost Reduction: By alleviating bottlenecks, utilities can save millions annually on congestion and redispatch costs; these cost savings are directly passed onto the consumer.

Improved Renewable Integration: Unlocking latent capacity accelerates interconnection of wind and solar projects, helping meet clean energy mandates.

Enhanced Reliability: Real-time monitoring and control improve situational awareness and reduce outage risks.

Regulatory Compliance & Incentives: GETs align with emerging FERC and DOE initiatives, potentially qualifying utilities for federal funding and performance-based incentives.

Grid-enhancing technologies represent a transformative opportunity for utilities to modernize the grid quickly and economically. By unlocking latent capacity and enabling smarter operations, GETs bridge the gap between today’s infrastructure and tomorrow’s clean energy future.

ADVANCED CONDUCTORS High-efficiency cables

TOPOLOGY OPTIMIZATION AND ANALYTICS

Grid reconfiguration and forcasting

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Reliability: A Defining Priority for Utilities Reliability has always been a core operational goal; it is the foundation of customer confidence and utility performance.

The disruptions of 2025, marked by severe weather events, escalating cyber threats, and unprecedented load growth, have fundamentally reshaped expectations across the sector. Customers now expect uninterrupted service as a baseline, and regulators are demanding higher standards of service. Reliability has become the defining measure of trust and resilience, influencing everything from regulatory compliance to shareholder value. With outage durations rising and demand increasing, utilities must take decisive action to maintain system stability.

Reliability is under pressure from multiple fronts. The average outage duration in the U.S. climbed from 8.1 hours in 2022 to 12.8 hours by mid-2025, with southern states averaging 18.2 hours due to hurricanes and extreme heat. Nearly 45% of customers experienced an outage in the first half of 2025, with half of those incidents being attributed to severe weather.

Rapid load growth has outpaced infrastructure upgrades, with peak demand forecasts surging sixfold in three years, leaving aging assets vulnerable to outages and cascading failures. Climate-related events in 2025 exposed systemic weaknesses in transmission and distribution networks, prompting regulators to impose stricter reliability standards and increase penalties for non-compliance. These events also highlighted the need for integrated regional planning across generation, transmission, and distribution to maintain system stability. Adding to these challenges is the escalating risk of cyberattacks on operational technology, which threatens real-time grid visibility and stability as utilities embrace digitalization and advanced control systems. The convergence of physical and cyber risks means utilities must rethink reliability as a multidimensional challenge that spans infrastructure, technology, and governance.

FINDING A BETTER WAY.

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FINDING A BETTER WAY.

Opportunities & Challenges Despite these challenges, 2026 offers significant opportunities for utilities to strengthen reliability and create long-term value. Grid hardening and modernization through the use of advanced conductors, undergrounding, and storm-resilient infrastructure will be essential to reduce outage durations and meet evolving reliability metrics.

Digital solutions can enable proactive maintenance and optimize grid operation and performance. Utilities can also leverage real-time data integration and automation to enhance situational awareness and accelerate restoration efforts. Furthermore, federal and state programs are increasingly providing funding for resilience and modernization initiatives, creating a window for utilities to secure financial support while reinforcing stakeholder confidence.

Those who act decisively will not only mitigate risk but also position themselves as leaders in a market where reliability is synonymous with operational excellence and customer trust.

Reliability in 2026 can be seen as both a challenge and an opportunity. Utilities investing in resilient infrastructure, advanced technologies, and strategic partnerships will set the standard for uninterrupted service in an increasingly complex energy landscape.

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Why CHA? CHA is uniquely positioned to help clients navigate the complexity of this diverse energy transition and evolving landscape of challenges. Our power delivery and integration team specializes in managing the full spectrum of resources required for the resilient “all-of-the-above” grid. We can deliver a full complement of power, utility infrastructure, industrial/manufacturing, environmental, and asset management services under one roof.

We offer extensive expertise in supporting electric and gas infrastructure and integration technologies: Affordability as a Priority: CHA is uniquely positioned to help utilities navigate affordability challenges through a holistic approach to services. Our expertise in energy efficiency and grid modernization prioritizes efficient integration of renewable energy and advanced technologies, reducing long-term costs. We provide strategic regulatory guidance to align investment plans with evolving policies, minimizing compliance risks, and optimizing rate structures. Our client-first mindset optimizes data and innovation to deliver measurable savings without compromising reliability.

Natural Gas and Electric Infrastructure: CHA offers subsurface gas and electric services, covering the planning, design, and maintenance of crucial underground gas infrastructure. Our experience includes traditional T&D engineering solutions and trenchless design methods, such as horizontal directional drilling (HDD), used for major transmission pipeline and cable replacement projects.

AI and GET: We leverage AI internally to enhance project planning and risk analysis, ensuring precision and speed.

For clients, we integrate AI into project scope development and cost estimating, helping utilities minimize risk, optimize investments, and meet regulatory and sustainability goals. Our approach combines engineering expertise with advanced analytics to deliver actionable insights.

Renewable and Grid Integration: We provide grid resiliency and energy transition solutions, including design and planning for geothermal, wind, solar, and EV infrastructure. We also specialize in advancing robust underground transmission solutions, such as buried HVDC cables, which are crucial for enhancing system resilience against severe weather events and delivering new power into constrained load centers.

By combining deep engineering knowledge in traditional gas and electric delivery with cutting-edge technology integration capabilities, CHA empowers utilities to strengthen grid reliability and successfully manage the accelerating energy transition.

To face these challenges, utilities need an industry-experienced collaborator with an innovative approach to problem-solving.

CHA is your trusted partner, committed to your success.

FINDING A BETTER WAY.

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GRID RESILIENCY & ENERGY TRANSITION SOLUTIONS: Asset Integrity Assessments • Construction Inspection • Data Management • Electric Distribution & Transmission Design • Energy Efficiency • Environmental Services • Gas Engineering • Geothermal, Wind, Solar, EV Infrastructure • Grid Enhancing Technologies • Linear Permitting & Licensing • Program Management & Owner’s Engineer Services • Protection, Control & SCADA Design • Regulatory Assistance • Storm & Feeder Hardening • Substation Design & Interconnection Service

FINDING A BETTER WAY.

For more information, please reach out to our team:

Greg Corso, PE

Executive Vice President Sector President, Power & Manufacturing gcorso@chasolutions.com

Frank Ginocchi

Energy Infrastructure Market Segment Leader fginocchi@chasolutions.com

Jim Fuller, PE, LEED

Power Delivery & Integration Business Line Director jfuller@chasolutions.com

Michael Abboud

Energy Infrastructure Market Segment Leader mabboud@chasolutions.com

Greg Germain, PE

Dwayne Basler, PE

Energy Infrastructure National Market Director ggermain@chasolutions.com

Energy Infrastructure Market Segment Leader dbasler@chasolutions.com

Nick Margarone

Troy Vessel, PE

Power Delivery & Integration Business Development Leader nmargarone@chasolutions.com

Frank Peverly, PMP

Energy Infrastructure Market Segment Leader fpeverly@chasolutions.com

Power Delivery & Integration Business Development Leader tvessel@chasolutions.com

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