Top 10 Energy Issues for 2026: What to Watch and Why It Matters

Here are the top developments we are following.

Data centers, especially those serving artificial intelligence (AI) workloads, are transforming electric load forecasts and reshaping the electric grid and both generation and transmission siting strategies. Data center operators are moving from a passive reliance on the grid to an “all-of-the-above,” behind-the-meter approach designed to overcome multi-year interconnection delays and secure 24/7 power quality. Natural gas electric generation has emerged as a near-term bridge for firm on-site power, while large technology companies are exploring repowering legacy nuclear plants or committing to small modular reactors to lock in a clean, continuous supply. Microgrids that integrate on-site generation with storage are increasingly favored to harden resilience and hedge market volatility. 

Reliability remains a core requirement even as rack densities climb, rendering traditional air cooling inadequate. Operators are expanding renewable power purchase agreements, often in regions that require “bring your own power,” and deploying large battery energy storage systems for peak shaving and grid support, with attractive payback periods. Liquid cooling, AI-driven thermal management, and heat reuse are becoming standard for high-density campuses. Regulators are pressing for transparency and grid support, and some regions are experimenting with non-firm connections that allow curtailment in emergencies. Performance metrics are shifting from efficiency-only measures to ones that tie power use to productive output. 

There also is an ongoing policy debate about the allocation of costs for this buildout and the extent to which the data center operators are responsible for supporting the build-out of the overall electric grid, costs which have for the last century been shared among users — an economic model now being challenged by efforts to facilitate “behind the meter” energy development dedicated to data centers. This has caught the attention of politicians who are concerned about the rising costs for other consumers.

Developments to watch in 2026 include a wave of behind-the-meter gas plus storage deployments, early nuclear commitments linked to AI campuses, regulatory stances on non-firm interconnections and on-site emissions, and allocation of build-out costs between data center operators and other consumers. “Power-first” site selection may reshape regional development. We likely will not know during 2026 whether the projections for new data center buildout are accurate, so expect many new projects to be advanced by developers, even though not all of them will be built. The impact on consumer electricity prices due to increased electric demand forecasts has significant political implications, as does increasing local opposition to the siting of AI data centers in communities that do not support them. 

A revived “energy dominance” strategy prioritizes maximizing domestic production of fossil fuels and geothermal and nuclear power, deregulating to speed development, expanding exports, and asserting stronger federal authority over energy infrastructure. The strategy is explicitly aimed at energy independence and geopolitical leverage, and it often de-emphasizes policies that privilege competing technologies, such as electric vehicles (EVs), when those are perceived as constraining domestic fuel markets. 

By design, this posture narrows state veto points, challenges state-led climate rules and state laws that had set deadlines for the closure of fossil fuel-fired power plants where they conflict with federal priorities, and seeks to streamline permits even over state objections. The result is a more federalized energy policy that places reliability, affordability, and industrial policy at the center, with implications for state resource plans, state renewable portfolio standards and energy incentive programs, offshore wind ambitions, and EV adoption trajectories. Energy dominance is also being cited as support for other Trump Administration initiatives, such as recent military actions in Venezuela, including embargoing vessels carrying sanctioned Venezuelan crude.

Developments to watch in 2026 include executive actions ranging from affirmative litigation to federal rulemakings that preempt or condition state authorities, changes to export authorizations that affect domestic prices, and litigation testing the scope of federal power over energy projects. These moves will influence capital allocation among fossil, nuclear, and clean energy supply chains.

The Federal Energy Regulatory Commission’s (FERC) mission is to assist consumers in obtaining reliable, safe, secure, and economically efficient energy services at a reasonable cost through appropriate regulatory and market means and collaborative efforts. Current policy emphasizes market efficiency, streamlined pipeline certification, and a reduced focus on broad climate and environmental justice policy within FERC’s internal organization. Even so, the complexity of managing interconnection backlogs, resource adequacy, and long-lead transmission has produced multi-year, bipartisan initiatives seeking to reform queue management. 

Regional Transmission Organization (RTO) and Independent System Operators (ISO) market redesign debates are also intensifying, from capacity market reforms and ancillary service products to transmission cost allocation and long-term planning. In particular, the PJM market, which covers several Mid-Atlantic states and parts of the Midwest, is being scrutinized at state and federal levels due to delayed auctions, concerns about rising costs to consumers, and shortfalls in new supply. New FERC orders seek to reform PJM’s tariff to better support the co-location of data centers and grid interconnection. While political leadership may push for lower perceived administrative costs and faster approvals, durable market changes typically arise from broad consensus around reliability and efficiency, especially as load growth accelerates and resource mixes diversify. 

Developments to watch in 2026 include new FERC orders or notices of proposed rulemaking affecting capacity accreditation, transmission planning and incentives, and interconnection timelines. We will also track whether RTO and ISO compliance with order 2023 (a 2023 FERC order purporting to streamline grid interconnection) translates into measurable queue reductions and whether reforms alter project financing timelines. 

Rapid advances in technology and controls are making energy storage and distributed generation projects central to grid flexibility. Distributed energy resources can support voltage and frequency, provide fast-ramping capacity, and enable islandable microgrids that bolster resilience during emergencies. These capabilities are increasingly valuable as variable renewables scale, and as large loads seek to manage costs and reliability with behind-the-meter assets. 

At the same time, public opposition to energy storage projects — specifically those involving battery storage — persists, driven by fire safety concerns, local land-use issues, and skepticism toward specifically large-scale renewable integration and industrial development more generally. Many battery components are imported or rely on imported critical minerals, which expose projects to trade, pricing, and geopolitical risks. Regulatory frameworks for interconnection, aggregation, and compensation will shape the economics and pace of adoption in 2026. 

Developments to watch in 2026 include state and federal actions clarifying interconnection rules, safety codes, and market participation pathways for storage and distributed resources. Market watchers should also focus on how utilities incorporate distributed assets into distribution planning and how capacity accreditation evolves to reflect actual performance. 

After decades of retrenchment following the Three Mile Island accident in 1979 and recent cost overruns that culminated in high-profile bankruptcies, nuclear energy is now being promoted as a source of firm, reliable, and carbon-free electric power generation. Interest spans traditional large reactors and smaller, modular designs that promise standardized manufacturing, improved safety, and faster deployment. Small modular reactors (SMRs), in particular, have captured attention as a way to add dependable capacity at or near load, including for energy-intensive campuses. 

Yet SMR technology remains untested at commercial scale, with licensing, supply chain, and cost curves still to be proven. Federal support — through preserving and in some cases extending the availability of Inflation Reduction Act of 2022 tax incentives, licensing efficiency, cost-sharing, credit support, and early deployment partnerships — will be decisive. Private demand signals from data center operators and industrials could catalyze the first wave of projects if risk allocation will get traction. 

Developments to watch in 2026 include the level and structure of federal support for new nuclear, Nuclear Regulatory Commission licensing milestones for SMR designs, and concrete commitments by large-load customers to anchor early projects. Also unknown is whether early cost trajectories and schedule performance will support project bankability.

Electricity regulation and cleantech development are traditionally a matter of state and local law, with states controlling resource planning, siting, permitting, and retail rates, while the federal government oversees wholesale markets, interstate transmission, and pipelines. Many states, including California, New York, and those in New England, have adopted detailed policies to drive renewable integration and large-scale offshore wind dependent on timely transmission and port build-out, plans that have been brought into question by the federal government’s anti-offshore wind actions during 2025.

This tension is surfacing in preemption arguments, agency guidance, and legislative proposals that would narrow state veto points or accelerate federal approvals for nationally significant energy projects. The stakes are high for state-integrated resource plans and offshore wind roadmaps, which require stable transmission planning and predictable siting authority to hold procurement economics together. Early 2026 saw the Trump Administration lose a string of court cases in its efforts to stop the construction of offshore wind projects in Massachusetts and New York, but it is unknown whether these holdings will survive appeals or whether further regulatory actions and the costs and delays caused by these disputes will ultimately prevent the projects from advancing.

Developments to watch in 2026 include federal efforts to preempt state laws or add conditions to states’ access to funding in the name of reliability, affordability, or national security, and whether there will be new litigation testing the boundary between state and federal jurisdiction, and whether certain energy projects threaten national security. 

Trade policy is a material driver of energy capital costs and delivery timelines. Tariffs and trade restrictions affecting polysilicon and solar components, inverters, batteries, transformers, steel, aluminum, and critical minerals have raised the cost of key components and complicated supply chains. 

Developments to watch in 2026 include Section 232 investigations into wind turbine imports and any changes to tariff regimes for renewable and grid components, new or extended exemptions, and policy moves that affect the cost and availability of batteries and power electronics. Industry participants will surely be watching how trade outcomes feed into bid prices in RTO and ISO procurements and bilateral power purchase agreements.

Electricity affordability has moved to the center of energy politics as prices rise amid constrained supply and surging demand. Data centers are attracting public scrutiny for their contribution to load growth, while renewables’ variability and interconnection delays are blamed by some stakeholders for putting upward pressure on capacity and balancing costs. At the same time, robust natural gas exports can tighten domestic supply, raising fuel costs for gas-fired generation, and, by extension, retail rates. 

The policy response space is wide — ranging from retail rate design and acceleration of cost-reducing infrastructure to targeted relief for vulnerable customers.

Developments to watch in 2026 include potential executive or legislative initiatives aimed at restraining retail electricity costs, adjustments to gas export policy that could affect domestic fuel prices, and state commission decisions rebalancing rate design, cost recovery, and performance incentives, and how independent power producers and large load offtakers structure contracts to hedge price risk.

There is a rare bipartisan consensus that the US permitting process is too slow and costly, constraining energy, transportation, and housing infrastructure development alike. For the energy sector, there is consensus that interconnection queues, transmission siting hurdles, and detailed environmental review are now colliding with historic load growth, reliability concerns, and the need for both firm and flexible resources. States and federal agencies are under pressure to deliver reforms that shrink timelines without sacrificing the legal protections that check unpopular or inappropriate projects. Numerous proposals to reduce permitting requirements and environmental reviews and accelerating timelines are presently being implemented, such as the “Let them Build” agenda recently announced by New York’s Governor Kathy Hochul and New Jersey Governor Mikie Sherrill’s Executive No. 5, issued on her first day as governor, to accelerate the permitting. These are in addition to several actions proposed or being implemented by the federal government as part of the Trump Administration’s energy dominance agenda.

Developments to watch in 2026 include legislative and administrative actions at the federal level that weaken or eliminate environmental and social justice checks on development and create binding timelines, “one-stop shop” processes, and expedited judicial review, together with state-level siting reforms for transmission, storage, and flexible thermal assets. 

The Clean Air Act remains the keystone of federal air regulation, including greenhouse gas controls premised on the US Environmental Protection Agency’s endangerment finding for carbon dioxide. In 2026, efforts are underway to weaken the scope of the Act, revise or rescind the endangerment finding, and recalibrate cost-benefit analyses by discounting or excluding the value of emissions on human health. These moves would affect how agencies justify rules, how courts review them, and how developers price compliance risk in new-build and retrofit projects. 

A shift in the Clean Air Act architecture would ripple across permitting timelines, New Source Review applicability, and state implementation plans, with immediate consequences for thermal generation, industrial facilities, and large behind-the-meter projects. The practical question for project sponsors is not only whether changes are finalized, but how litigation and state responses shape the effective compliance regime over the next several years. 

Developments to watch in 2026 include proposed rulemakings revisiting the endangerment finding and federal cost-benefit guidance, as well as the posture of federal courts in fast-tracked challenges. Market participants should track how any interim guidance affects near-term permitting for new capacity and large-load campuses.