Growth Perspectives for North America’s Power Markets

As North America enters a decade defined by electrification and surging industrial demand, the region’s power markets are facing a complex mix of opportunity and constraint. In his presentation, “Growth Perspectives for North America’s Power Markets: What are the challenges ahead?”, Juan Pablo Londoño, Principal Analyst for the Americas Power Markets, Wood Mackenzie, examines how structural shifts, from new federal policies to accelerating large-load growth, are reshaping the outlook for generation, storage, and investment across the continent.

Wood Mackenzie’s latest power market outlook projects steady demand growth in the United States, driven by new industrial projects, data centers, and electric vehicle infrastructure. More than 147GW of high-probability new load, equivalent to roughly 20% of current US peak demand, is now in advanced development or near-term forecasts. Utilities have already committed to over 17GW of large loads under construction and another 99GW in the pipeline. This rapid acceleration is testing the flexibility of regional grids, with markets like MISO and SPP better positioned to absorb new demand than more capacity-constrained regions such as PJM, SERC, and ERCOT.

The report also highlights how supply chain constraints are becoming a defining challenge for new generation projects. Global gas turbine manufacturing capacity is now stretched thin, leading to delivery times of up to five years for orders placed in 2024. This tightness limits the ability of North American utilities to bring new gas-fired capacity online through the rest of the decade, raising concerns about reliability and reserve margins amid growing demand.

At the same time, clean energy development is being reshaped by US policy. The passage of the One Big Beautiful Bill Act (OBBBA) has muted the near-term outlook for renewables, cutting Wood Mackenzie’s solar forecast by 12%, or about 60 GW, over the next decade. The onshore wind outlook also declined by 21% after the law ended production tax credits for projects placed in service after 2027. However, developers are racing to meet remaining tax credit deadlines, pushing a near-term surge in installations through 2027 and 2030. For storage, the story is more nuanced: demand remains strong, but the sector faces a major supply chain shift as FEOC restrictions take effect, incentivizing the move toward domestic manufacturing.

The storage market, in particular, illustrates the transition underway. With new tax incentives for domestic content and sustained eligibility for the investment tax credit (ITC), utility-scale and residential systems alike are gaining ground. Developers are accelerating projects to secure Chinese components before tariffs tighten, while United States-based suppliers race to ramp up production. Wood Mackenzie forecasts storage additions holding steady even under more restrictive conditions, supported by continued demand growth and renewable integration needs.

Mexico, meanwhile, presents a different but equally complex landscape. Peak demand there is expected to climb from 51GW in 2024 to 90GW by 2050, a 2.6% compound annual growth rate, requiring a balanced mix of new thermal and renewable capacity to maintain CENACE’s planning reserves and clean energy targets. Natural gas generation continues to dominate Mexico’s power mix, but renewables are set to gain traction over the next decade. Still, with turbine delivery backlogs and uncertain compensation mechanisms for grid-injected surpluses under the new Electricity Sector Law (LESE), developers face a challenging investment environment.

There are, however, signs of a more collaborative approach taking shape. “We’re seeing a much more open attitude toward private participation from the government, a real willingness to invite the private sector to collaborate with CFE and ensure that supply strategies are ready and available on time,” said one industry observer. “It represents a positive change. Much progress has been made, though there are still pieces that need to be fully understood.”

Another key factor underpinning Mexico’s energy outlook is its privileged access to low-cost natural gas, one of the cheapest in the world, thanks to strong commercial ties with the United States. “While that does carry a degree of geopolitical risk, it’s a manageable one that also highlights areas of the industry still needing attention, such as the development of strategic gas storage,” said the same source. “Natural gas will remain a fundamental pillar, not only for new installed capacity but also in how it supports renewable operations. Even as storage becomes an essential part of the market, expected to reach around 30% of new capacity compared with wind and solar, natural gas, increasingly flexible and efficient, will continue to play a central role in helping the Mexican system integrate clean capacity.”

Taken together, these dynamics suggest a region in transition: a power sector simultaneously expanding and straining under the pressures of policy shifts, industrial demand, and infrastructure constraints. For investors and utilities, the message is clear, planning for the next decade will require agility, diversified portfolios, and a long-term view of technology, regulation, and market fundamentals. As Londoño’s analysis underscores, the path forward for North America’s power markets will depend not just on building new capacity, but on how effectively the region can align investment, policy, and innovation to meet the energy demands of a rapidly electrifying economy.