For over 20 years, Ascend Analytics has developed purpose-built analytic models to power the energy transition. With our inaugural Energy Transition Predictions, our strategists, economists, and analysts direct their attention to what’s ahead in 2025. These 10 predictions provide a first look at the near-term implications of load growth, grid modernization, renewable innovation, emerging market structures, and the energy transition under new national leadership.
All the talk about an IRA repeal will be a red herring for near-term projects. The generous safe harbor precedent allows developers to continue momentum with locked in tax credits and major components on order. We believe the risk of IRA repeal or substantive modifications to renewables and storage are small, as House Republicans favor keeping the IRA. Moreover, projects with Commercial Operation Date targets during the second Trump administration are likely to be safe harbored.
Tariffs are more likely to have a greater impact both on project costs and secondary effects on interest rates. Tariffs add to the economic challenge of more marginal renewable projects east of the Mississippi, where economies of scale are limited because of foliage. The impact of tariffs poses a much greater threat to large scale and rapid expansion than the specter of an IRA repeal.
Projected load growth remains steep enough that the market will desperately need new supply resources—and beggars can’t be choosers. With additional onshoring of manufacturing and AI in the wings, this challenge becomes only more acute. Energy intensive industries in the long run will migrate toward low-cost clean energy sources. Off-takers with short-term needs and deep pockets will prioritize available power, clean or not, and with less regard to long-term geographic advantages.
While load growth will likely hit the hardest in 2026 and beyond, look to 2025 for the year when big tech’s money will get the ball rolling on meeting demand.
Are cannabis farms the new data centers? AI and crypto load growth are getting the headlines, but don’t ignore cannabis farms as another energy-hungry player competing for resources. The Biden administration’s recent efforts to reclassify marijuana as a Schedule III drug, further endorsed by Trump, could pave the way for increased production and expanded financing opportunities if passed, accelerating industry growth.
Indoor cannabis production is incredibly energy-intensive: Indoor lighting units in grow operations are 500x times more powerful than normal reading lights and a pound of finished product can require up to 2,000-3,000 kWh of energy. As energy-intensive indoor cannabis farms drive load growth, utilities may want stronger infrastructure, special interruptible rates, and clean energy to meet demand. The future of cannabis isn’t just green—it could also be a goldmine for energy developers looking to meet demand with efficient and cost-effective resources.
With latency less constraining for AI training than other data center applications, AI datacenters can more freely go where energy and land are available and inexpensive. While ERCOT has started to earn its title as the next data center alley, 2025 will see the alley expand north into SPP. Stretching from Texas to North Dakota, SPP offers significant overgeneration in wind pockets, strong wind and solar resources, and complementary wind and solar profiles.
SPP’s 2024 Integrated Transmission Plan signals its readiness for this demand, with 2,333 miles of new transmission and 495 miles of upgrades on the way. SPP’s abundant wind and sun make it the low-cost competitor to ERCOT.
Battery development will continue to thrive in 2025, driven by both traditional offtake agreements and novel structures to firm storage revenues (e.g. revenue puts and collars). The big question: to whom will they deliver the most value? Competitive pressures and falling battery costs will keep tolling prices lean and limited to more regulated markets but larger balance sheets and risk-taking capacity will play a significant role in merchant markets with competitive electric retailers.
However, corporates may see competitive advantages to hedge capacity, advance toward 24x7 green, and realize the emission benefits of storage, creating a new and significant outlet buyer. Tolls will serve as the bellwether for market sentiment, indicating where the storage market may head next and the role of corporates.
Forget flower crowns. Going off-grid could be the “peace” of the sustainability puzzle for environmentally conscious corporate consumption. Constrained supply infrastructure and growing line charges will compel new loads to look for expedient self-supply. Industrial load, and especially big tech, may explore the potential of taking their load expansion plans behind the meter and supplying power on-site.
Data centers are looking for direct connect for renewable and traditional supply resources. Exxon Mobil’s December 2024 announcement to directly deliver electricity to data centers with a new natural gas fueled plant underscores this trend. By skipping interconnection queues, Exxon aims to bring the plant online within five years, signaling the need for speed and control. Success will all depend on who can give data centers power faster, and if FERC will continue to stand in the way of moving existing assets off-grid.
Energy market hedges have traditionally followed two on/off-peak blocks, but the duck curve has disrupted this model. With on-peak generally from 6 am to 10 pm, solar generation covers a large portion. This leaves the post-sunset hours from 6 to 10 pm as the most expensive and riskiest.
Make way for the super-peak period, as it addresses the critical price periods for electric retailers in ERCOT and trades on both the Intercontinental Exchange (ICE) and over the counter through brokers. Today, August 2025 Houston Hub on-peak forward trades at $129/MWh, while from 5 pm to 10 pm super-peak trades at nearly $200/MWh. We expect storage to take a page out of the playbook for thermal and hedge summer super-peak physically backed by storage to firm future revenue streams and support near-term debt instruments.
The offshore wind industry, still in its infancy, has hit rough seas, leading to several project delays and cancellations. Inflation and rising interest rates have increased project costs, making some projects financially unviable under their existing PPA contracts. The incoming Trump administration has voiced opposition to offshore wind development, potentially curbing new leases and stalling progress. Potential federal policy changes and continued economic challenges may lead to further headwinds in developing the offshore wind industry.
Yet, there are clear winners: existing thermal plants once slated for retirement gain a second wind, while early movers in offshore wind now earn stronger competitive moats around their value. The biggest loser in this scenario may be hydrogen. Without an abundant surplus of renewable energy, hydrogen risks becoming a niche solution rather than a viable product.
The overnight load problem isn’t one short-duration batteries can sleep through. Lithium-ion batteries with two- and four-hour durations excel at serving short-term periods and super peaks. But without a technological breakthrough, lithium-based storage struggles to compete as a cost-effective capacity resource to solve overnight load challenges. Current long-duration options are either too expensive or not efficient enough to operate profitably.
Compounding the issue, existing market structures fail to sufficiently value long-duration capacity, and meeting long-duration peaks with storage remains a costly endeavor. Piling on is a renewed interest in new thermal development and the re-emergence of nuclear as a capacity expansion option. The bottom line? Long-duration energy storage becomes a tough sell to an increasingly cost sensitive rate base.
Throughout the West, renewable growth, fossil fuel retirements, and shifting load patterns are incentivizing additional cooperation between utilities, prompting the development of WRAP, EDAM, SPP Markets+, and the Pathways Initiative. Moving from bilateral trading and the current CAISO Energy Imbalance market will increase efficiency throughout the WECC—by about 10%—but not as much as if there was a unified market throughout the region, which would likely have double the impact.
Despite stronger transmission ties to California and its EDAM participants, Bonneville Power Administration and Arizona utilities have already opted to join SPP Markets+, implying mistrust of CAISO governance. Competing markets could turn undecided utilities, including WAPA Desert Southwest, into additional adopters of SPP Markets+. For developers, California EDAM and SPP Markets+ will provide new market opportunities previously obscured. Price transparency inherent to the new DA and RT markets offers clear investment signals, guiding power developers toward emerging opportunities.
If you're interested in exploring a specific prediction or the macro trends shaping them, connect with Ascend to speak to our experts.
Dominique Bain, PhD, Energy Market Economist
Carley Dolch, Director of Portfolio Risk Solutions
Connor Donovan, Manager of Market Intelligence
Gary Dorris, PhD, CEO & Founder
Robert LaFaso, Director of Valuation & Forecasting
Brent Nelson, PhD, Managing Director of Markets & Strategy
Scott Nicholson, Manager of Resource Planning & Valuation
Larissa Ramirez, Senior Energy Analyst
Benjamin Solberg, Energy Analyst