The Year Ahead: Challenges and Opportunities in the Utility Industry 2026

If 2025 was the Year of the Demand Supercycle, 2026 is shaping up to be the Year of Continued Disruption, where we will see either breakthroughs or breakdowns. The volume and velocity of recent changes in the power sector have not been seen before — and we see them intensifying in 2026 to drive new alliances, regulations and accelerate solutions for supply chains. While there are too many challenges to list here, Oracle Utilities experts identify what they see as the top three issues extending into 2026 that will keep utility executives up at night.  

1. Collaboration or Bust: Solving the Problem of Big Load

Before it can reach a breaking point, the tension between exponential demand growth from large industrial load — including AI-processing data centers — and the old ways of running electric systems will force collaborations (utilities, state and federal regulators, market monitors) among the usual suspects and a whole new cast of characters (AI leaders, data center developers, EPCs, oil & gas suppliers becoming merchant power providers, etc.). Just as necessity is the mother of invention, urgency makes for strange bedfellows. The more inexperienced players that are added, the more complex and challenging it becomes for utilities and their regulators to reach consensus among competing interests.

Hyperscale data centers are the equivalent of large power plants in terms of critical grid functions, and this physical mass requires the tech companies who run them to be recognized in the electricity sector as power market participants, not simply buyers. New market mechanisms are needed to facilitate their entry in productive ways, such as the possible creation of “flexibility markets,” in which data centers selling and buying power. Big Tech can use its heft to lobby for policy changes, but it will need to follow the same, new rules as all other market participants. The challenge for 2026 is accelerating regulatory change – historically a drawn-out deliberation – just to keep the lights on. Deadline: ASAP. The expiration date on reliability is coming fast.

2. Extreme Weather, Growing Customer Discontent: Utilities Risk Aversion to Grow

While 2025 has been a quiet storm season for the Lower 48, so far, don't expect extreme weather to fade in 2026 as an issue that keeps utilities up at night. Increasing risks of liability from wildfires and growing public impatience with storm recoveries will drive utilities to invest more in hardening their distribution grids and to choose actions, like shutoffs, to err on the side of caution. In this darned-if-you-do, darned-if-you-don't reality, the cost of inaction is viewed as higher than the cost of investment. Still, consumers don't want to pay for grid hardening, but they don't want to go without power, and utilities will struggle with this intensifying battle with their constituents

3. Overcoming Supply-Chain Disruptions: Tug of War over Trade 

Industrialists will push for — and in some instances prevail in obtaining — better trade deals to open vital supply chains for equipment and materials needed to build out critical energy infrastructure, from transformers to steel. With electric reliability on the line in industrialized countries, utilities and their corporate customers will demand governments reach agreements to foster trade efficiencies. The supply chain disruptions that began in 2020 were caused by a natural disaster. 2026 is the year that geopolitical disruptions could reach a breaking point due to the need to ensure economic expansion and electricity supply growth for surging demand.