Utilities are being asked to serve electricity demand at a scale and speed the grid was not designed to handle.
Hyperscale data centers, AI infrastructure, and broader electrification are compressing timelines from years to months. Interconnection queues, on the other hand, are stretching, and large-load customers are no longer willing to wait for traditional grid buildout.
The question is no longer whether demand will materialize, but how utilities will be able to serve it.
Bridging the Gap Between Demand and Delivery
Utilities have reached a critical inflection point. Driven by the explosive demand of artificial intelligence, hyperscale data centers, and sweeping electrification, utilities are facing a historic capacity crunch to meet the needs of AI-driven compute demand.
The issue is timing.
Transmission and distribution infrastructure takes years to plan, permit, and build. Large-load customers are operating on much shorter timelines, and that gap is widening. As a result, utilities are being pushed to find ways to serve new load requirements without waiting for full grid expansion.
Bloom Energy’s newly released 2026 Utilities Insights Report shows how utilities are responding. Behind-the-meter (BTM) onsite power is becoming central to how large load demand is served, rather than sitting outside the system, as a temporary measure. Instead, utilities see it as a structural, permanent pillar of the modern energy ecosystem.
The findings point to a broader shift in how utilities and developers are approaching new load with onsite power solutions.
Key Findings
- 80% of utilities now view behind-the-meter generation as permanent infrastructure, expecting it to serve a significant share of large-load demand by 2030 and an even larger share by 2035.
- Nearly two-thirds of data center developers cite onsite power as their primary response when grid timelines slip — choosing to stay in their utility territory rather than relocate.
- The energy landscape is shifting from rigid, centralized distribution toward integrated hybrid ecosystems. Onsite generation is now a mechanism for grid optimization, not a signal of grid failure.
- New commercial models, including utility-owned BTM assets, tolling agreements, and co-development partnerships are unlocking revenue opportunities for regulated and unregulated utilities alike.
Taken together, the data reflects a change not just in preference, but in operating reality.
How Can Utilities Ease Mounting Grid Bottlenecks?
As demand accelerates, the pressure shows up first at the grid edge.
Connecting a large-load customer requiring hundreds of megawatts or gigawatts is no longer a standard operational request. Transmission and distribution (T&D) infrastructure takes years to build, and standard interconnection queues are buckling under the weight.
According to the double-blind survey of senior decision-makers at U.S. utilities[1], interconnection timelines ranked as the highest barrier, with more than half of utility leaders reporting that wait times have deteriorated. Equipment availability and community acceptance follow close behind, and both are getting worse. While regulatory cost allocation and tariff pathways show modest signs of improvement, the physical realities of grid expansion simply have not kept pace with the accelerating timelines of modern data center developers.
How Are Data Center Developers Staying Put with Onsite Power?
Against this backdrop, developer behavior is shifting.
When grid timelines slip, what do developers do? Data center operators want to remain within their chosen utility territories and are actively deploying alternative strategies. In fact, nearly two-thirds of developers surveyed cite onsite power as their primary response when grid access is delayed. Only a small fraction would consider relocating to another market. The implication for utilities is clear: onsite power generation is increasingly being used to hold load in place, not divert it elsewhere.
Why Are Utilities Turning to Onsite Power as a Permanent Long-Term Strategy?
The shift is not limited to developers. Utility perspectives are also evolving.
The most telling finding from the report is how utility perspectives have adapted. Rather than interpreting BTM power as a lost rate base or competitive threat, 80% of utilities now view onsite power as permanent infrastructure. Utilities expect behind-the-meter generation to serve a significant share of large-load demand by 2030, and an even greater share by 2035. Detailed projections for BTM demand share by 2030 and 2035, broken down by utility type and region, are available in the full report.
- 44% of utility leaders categorize distributed power as permanent baseload generation — a foundational shift in long-term energy infrastructure planning.
- 36% view distributed power as vital supplemental capacity for peak shaving and grid backup, cementing onsite generation as an integral part of grid management.
- Only 5% of utility leaders believe distributed power is unviable — a clear signal that industry consensus has shifted decisively toward hybrid energy models.
Speed to Market and Beyond: The Strategic Benefits
As adoption increases, the advantage extends beyond timing.
While faster time to power remains the most immediate driver, onsite generation yields broader operational benefits that complement the macro grid:
- Capital Expenditure Relief: A notable share of survey respondents value onsite power for its ability to reduce or defer expensive T&D upgrade costs.
- System Flexibility: Localized generation can help defend the regional grid during peak-demand constraints. Depending on the asset mix, it can support critical ancillary services like frequency regulation, voltage control, and dispatchable reactive power.
- New Commercial Models: Unregulated utility subsidiaries and investor-owned utilities (IOUs) are discovering revenue upside through direct asset ownership, tolling, or structured co-development partnerships.
“Ultimately, utilities will provide integrated front-of-the-meter and behind-the-meter power solutions as part of a single package. That’s increasingly the structure behind many of the major deals being announced today.”
— Senior Development Manager, Regulated IOU
Moving Toward a Hybrid Energy Future
Taken together, these shifts point in a clear direction.
The energy landscape is transitioning from rigid, centralized distribution toward integrated, hybrid ecosystems. Onsite generation is no longer an indicator of grid failure; it is a mechanism for grid optimization.
By leaning into behind-the-meter fuel cell systems and microgrids, utilities can serve large-load customers on accelerated timelines, alleviate stress on existing T&D systems, and foster regional economic growth.
Is BTM Power the Same as Going Off-Grid?
Not exactly — and the distinction is critical for utilities. BTM power refers to generation assets located on the customer’s side of the utility meter, designed to operate in parallel with the grid. Off-grid systems, by contrast, operate in complete isolation from grid infrastructure. When utilities partner with Bloom Energy to deploy BTM solutions, the goal is to complement grid supply, not replace it. Bloom’s fuel cell platforms allow large-load customers to draw reliable onsite power while maintaining full grid interconnection — giving utilities a practical path to serve new demand without waiting years for T&D buildout.
Want to explore the complete benchmark data and utility engagement strategies? The full report covers how regulated and unregulated utilities are approaching onsite power differently, and the commercial structures emerging as a result. Download the Full 2026 Utilities Insights Report To Gain Insights Now.
[1] Source: Bloom Energy, 2026 Utilities Insights Report (2026). Findings based on a double-blind survey of senior decision-makers at U.S. utilities.
