Barclays: US Power Growth Lags as Regulations Delay Grid Projects

U.S. electrical infrastructure expansion is falling behind surging power demand due to complex regulatory approval workflows and slowing transmission network growth, according to a Barclays research report.

While electricity demand climbs across the country to feed data centers, manufacturing, and electrification initiatives, the physical capacity to transport that power is expanding at a fraction of its historical pace.

Decades-Long Decline in Transmission Growth

The slowdown in grid expansion spans decades, compounding the current supply strain. According to Barclays, U.S. transmission capacity annual growth dropped from roughly 2.0% in the 1980s and 1990s down to 1.2% between 2004 and 2016.

That deceleration intensified further in recent years. Between 2017 and 2024, annual transmission capacity growth slowed to just 0.6%, leaving the national power grid ill-equipped to handle modern load requirements.

Regulatory Permitting Bottlenecks and Project Cancellations

Behind the sluggish infrastructure growth lies a dense labyrinth of federal permitting hurdles. Large-scale energy projects costing over $200 million and requiring review under the National Environmental Policy Act involve at least 64 distinct permits and reviews.

These reviews span 15 federal agencies and 34 sub-agencies, encompassing roughly 425 steps and nodes in the federal approval workflow, of which 230 are strictly mandatory.

"Nearly 30% of the large-scale energy-related projects analyzed by Barclays have already been cancelled or put on hold," the report noted, highlighting the toll of administrative delays.

The Impact of Statutory Deadlines

Legislative efforts to streamline the approval process have yielded mixed results so far. While the 2023 Fiscal Responsibility Act introduced a two-year statutory deadline for environmental impact assessments, execution continues to lag behind the mandate.

Data from the report show that only 39% of those environmental impact assessments are currently being finished on time. That leaves 61% of projects languishing past the statutory deadline, delaying capital deployment and exacerbating the country's looming power deficit.

What Is at Stake for U.S. Energy Markets

The mismatch between rising electricity consumption and stagnant grid development threatens regional grid stability and constrains economic growth. As utilities and developers navigate years of multi-agency reviews and high project attrition rates, policymakers face mounting pressure to reform environmental permitting frameworks to prevent widespread power shortages.