First, so long, 2025. You were a weird year for clean power and distributed energy.
Many folks won’t miss you, especially the rooftop solar companies that built their business models around federal tax incentives cut by the One Big Beautiful Bill Act and now bracing for slower solar growth through 2030.
You also won’t be missed by communities and tribes thrown into confusion because of on-again, off-again federal grants for local energy projects.
Households and businesses won’t miss you either after seeing their natural gas and electricity bills rise an average of 9.6%.
And to offshore wind, our apologies. It had looked like the US was finally embracing you, but 2025 treated you brutally.
Despite all of this, it’s hard to miss a sense of excitement within the clean power industry as we enter 2026, especially among those who work in distributed energy.
Some of the exhilaration comes from encouraging numbers that emerged in 2025, despite everything. Even as the federal government leaned into fossil fuels, the solar and energy storage industries managed record quarterly installations. They dominated US capacity growth, accounting for 83% of new additions through September 2025.
Allison Feeney, research analyst at Wood Mackenzie, summed up the cause: “Despite new federal policies and tariffs, the market fundamentals remain exceptionally strong.”
The field of opportunity is getting bigger
Chief among those fundamentals is growth in demand for electricity, a remarkable shift after decades of stagnation.
Long-term forecasting is always a tricky business, but several projections point to a rising need for power through 2050. Moreover, it’s not just a future phenomenon; it’s happening now.
Electricity consumption reached a record high in 2025 and will do so again this year, according to the US Energy Information Administration’s short-term outlook published in December. Texas is most notable with 5% growth in 2025 and 9.6% forecast for 2026, according to the outlook.
Because supply isn’t keeping up with demand, much of the country faces the risk of power outages this winter if severe cold snaps occur, according to the North American Electric Reliability Corporation (NERC). The non-profit organization blames the 20 GW rise in demand since last winter.
Shifting business relationships and market dominance
Demand growth is creating problems—and opportunities — for those who can solve them. The question becomes, with what and by whom? Distributed energy is the obvious solution because it’s quick to build. As for the “by whom” question, the answer may lie in shifting business relationships.
The immediate need for power could ease the decades-long competitive antagonism between utilities and distributed energy companies, as it’s no longer a zero-sum game. When load growth was low, an independent microgrid or a combined heat and power plant siphoned customers away from utilities. In the new landscape, where utilities worry about having enough power to serve customers, they may see distributed energy providers less as competition and more as assets or partners to help them keep the lights on.
That’s one view.
Another is that customer-sited energy will siphon larger swaths of the market away from utilities, creating an increasingly decentralized grid that decreases utility dominance, increases consumer control, and gives more business to distributed energy providers. Hyperscalers, with gigawatt-size appetites, could hasten development of the decentralized grid by choosing onsite power rather than waiting in line to connect to the utility grid. To some degree, this is already happening, resulting in a new class of microgrid that isn’t “micro” at all, each producing hundreds of megawatts that would have otherwise come from a centralized utility power plant.
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Whichever utility-DER-customer-grid relationship dominates, it’s inevitable that distributed energy — whether in the form of energy efficiency, demand flexibility or distributed power — will be called upon increasingly to serve new electricity consumption because it’s neither easy nor quick to build the alternative — large centralized power plants and transmission lines.
ICF finds that demand response, energy efficiency, and behind-the-meter capacity, such as rooftop solar and battery storage, could meet 10% of electricity demand by 2030. Meanwhile, Goldman Sachs expects distributed energy to provide one-quarter to one-third of the power AI will need globally over the next five years.
The newly aware and unhappy utility customer
Growing demand for electricity isn’t the only change creating inroads for distributed energy. Something else is afoot: a new kind of electricity customer.
For a long time, it was hard to convince a household or business that they could benefit from a smart thermostat or solar panels. Their utility bills were relatively low and stable, so they didn’t think about them much.
That’s clearly changed. Utility rates are quickly becoming a political issue, part of a wider affordability worry that is influencing elections and prompting community demonstrations against data center development.
Electricity consumers and political leaders are paying attention. It’s a good time to educate them about the economic benefits of distributed energy and it’s ability to lower utility bills. It might be a simple story told to a household that compares electric bills before and after a solar panel installation. Or it may be a more complex discussion about the multi-tasking abilities of microgrids, batteries, EV chargers and virtual power plants that allow them to serve their hosts and also supply the grid during peak periods, dampening costs for everyone.
The right side of history
One more thing to consider. Distributed energy is on the right side of technology trends. We are in an era of decentralization – cell phones, IoT, peer-to-peer networks, distributed cloud computing and the like.
So here comes the sun. Plus the batteries, microgrids, community solar, virtual power plants, demand flexibility and other distributed energy technologies and services.
Of course, creating a decentralized grid is a decades-long endeavor. But the distributed energy industry is already on its way, with supply, price, consumer, and technology influences conspiring to make 2026 a powerful springboard.
