ADI Analytics has released its power and electricity outlook for this year, and the global power industry sees 2026 as a genuine inflection point: demand accelerates, supply lags, and physical constraints—not capital—set the pace. The following ten points summarize the key findings from our latest analysis.
1. Electricity consumption grows 3.5–5.5%, led by data centers, of course, and with equally important contributions from industrial, building, and consumer segments.
Utilities such as Duke Energy and Xcel Energy have signaled rising winter peaks as building electrification shifts seasonality. Re industrialization in North America, mining and desalination in Latin America and the Middle East & North Africa (MENA), and heat electrification in Europe are all adding firm load. India will post ~6–7% demand growth as cooling and manufacturing scale (see Exhibit 1 for a regional summary).
Exhibit 1. Regional summary of power and electricity markets and trends in 2026.
2. Energy security and pragmatism will drive generation strategy toward natural gas and coal.
Natural gas is no longer just a bridge; it is increasingly the destination for baseload power in many markets. The catch is equipment: large gas turbines are effectively sold out into 2028–2030 (see Exhibit 2), turning delivery slots into strategic assets for buyers like Vistra and NRG that have been consolidating dispatchable fleets to serve reliability critical load. Coal use for power generation continues on its geographic divergence: U.S./EU retirements are slowing, with many now delayed beyond 2030, while China adds roughly 50 GW per year through 2030 and the Indian government is calling for 80 GW of coal fired capacity by 2032. This divergence is energy security made visible.
Exhibit 2. Lead times for power equipment.
3. Renewables will continue to grow, but at a much slower pace than seen in recent years.
China has led solar installations at a scorching pace, but tariff reforms and curtailments may slow new capacity additions (increasingly paired with energy storage) in 2026 so much that only flat to modest growth is expected. Europe’s wind sector stabilizes with larger onshore auctions and clearer market design, but the U.S. wind sector struggles, having fallen out of favor in the Trump administration. On hydropower, La Niña improves hydro in Indochina and supports Andean systems, even as drought risk lingers in parts of Chile. Capacity developers will revisit and re sequence project pipelines to match interconnection and equipment realities. The supply chain serving renewables is plagued with overcapacity and will struggle far more in 2026, although some players such as Vestas are driving through pricing and margin discipline.
4. Nuclear bifurcates as well.
China moves first with commissioning of the ACP100 small modular reactor and accelerates approvals of large units, while the U.S. and Europe focus on life extensions and uprates supported by production credits. Constellation’s strategy illustrates the Western playbook: sweat the existing fleet, monetize reliability, and defer SMR output beyond 2028. The UK and France advance construction (Hinkley Point C, Sizewell C), but 2026 remains a build year, not a commissioning year.
5. Storage enters a deflationary boom that changes project math.
After an estimated ~45% drop in battery pack prices in 2025, costs decline further in 2026, enabling hybrid solar‑storage to deliver firm evening energy at competitive prices. Utility‑scale BESS additions steepen as integrators such as Fluence and Sungrow scale multi‑hour systems, while Latin American utilities deploy storage to flatten the duck curve in high‑solar grids. Energy storage in 2026 will continue its march to become a portfolio standard.
6. The bottleneck that the grid has turned into will be highlighted yet again in 2026.
A capex super cycle is underway, yet lead times for large power transformers stretch to 3–5 years, specialized HVDC components exceed 5 years, and cable prices are roughly 2× versus 2018. U.S. utilities such as Edison International, AEP, and Xcel are focused on wildfire hardening, undergrounding, covered conductors, and inter regional ties. Europe is pursuing HVDC “energy highways” and offshore connections, China seeks to add ultra high voltage (UHV) lines in addition to modernizing distribution, and India is placing tenders for HVDC corridors to evacuate desert renewables at scale.
7. Pricing diverges across the Atlantic.
U.S. wholesale power prices rise ~10–25% in 2026 as reserve margins tighten; ERCOT and CAISO see outsized gains, and PJM capacity clears at $329/MW‑day as scarcity gets priced into reliability. European prices will likely trend ~5–10% lower as gas normalizes and French nuclear availability strengthens. Corporate PPAs are already mirroring these forecasts: U.S. prices have lifted 20–35% since 2022 and continue to climb on data center demand, while EU PPAs drift down, reflecting softer commodity tails.
8. Policy fragmentation will accelerate in 2026.
In the U.S., tariff regimes on batteries and some renewables components will raise delivered costs, pushing local manufacturing and “bring‑your‑own‑power” strategies at large loads; federal permitting reforms will advance unevenly, and select offshore wind and federal‑land solar projects will see pauses. In Europe, the Grids Package and RED III begin to accelerate approvals and formalize capacity payments for low‑carbon firm power. And CBAM’s full implementation in 2026 exports carbon pricing into trade flows and tightens compliance for electricity and materials.
9. Corporate development will be dominated by two trends.
First, renewable developers will pursue asset rotation, selling stakes in de risked projects and recycling $0.8–3.5 billion of proceeds to fund pipelines, as we have already seen at Grenergy, EDP, and Acciona. Second, independent power producers and private equity will consolidate gas fired power portfolios in multi billion dollar transactions (e.g., Vistra, NRG, Capital Power), prioritizing dispatchable capacity and long term service contracts to anchor data center PPAs and industrial load.
10. Suppliers hold rare pricing power as the sector confronts physical scarcity.
On critical HV equipment; GE Vernova is targeting ~20 GW of annualized gas turbine output as backlogs swell; Prysmian and Nexans plan to expand cable capacity, while Quanta and MasTec lock in multi year builds across transmission and grid modernization. Skilled labor—linemen, relay technicians, HVDC engineers—becomes the hidden rate limiter. Most markets should expect tangible relief only from late 2027 into 2028 as new factories and training pipelines come online.
We expect another promising year for power and electricity markets in 2026 as demand growth continues, storage scales, nuclear life extensions and gas fleets drive reliability, and grid capital investments accelerate—although it will continue to be a bottleneck. The winners will pair dispatchable capacity and storage with firm interconnection rights, secure multi‑year equipment slots early, and rotate portfolios to recycle capital while compounding regulated rate‑base growth. We invite you to join us at the ADI Forum on January 28 in Houston, where we will discuss these findings in greater depth with a panel of executive perspectives.
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