Power Surge: Why Electricity Is the Next Credit Constraint

For decades, US power demand was flat. Now it’s surging:

• +2% in 2024 — and accelerating to 2.2% annually through 2026
• Driven by AI, data centers, semiconductors, and reshoring (CHIPS Act, OBBB)
• Renewables (solar, wind, hydro, nuclear) set to outpace natural gas for the first time in a decade

This shift isn’t just about utilities. It’s reshaping credit risk and opportunity across the industrial economy:

• Borrowers in energy-intensive industries face margin pressure from rising tariffs
  
• Supply-chain and construction firms tied to renewables face execution bottlenecks as incentives shift
• Winners will be those aligned to new demand hubs (data centers, chip fabs, renewables); laggards will be those exposed to high-cost, volatile inputs

For C&I lenders, the takeaway is clear: electricity demand is now a core credit driver.

At ONCI, our borrower-level models integrate sector dynamics like power consumption forecasts — helping banks see which borrowers will thrive, which will strain, and where hidden exposures lie.

How are you factoring power demand into your lending strategy?