Industry Focus: Power industry outlook and impacts on water management strategies

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In recent years, the power industry has been challenged to meet a steadily growing demand, while also finding ways to operate more sustainably. These trends are expected to continue into 2025 and beyond, while some additional developments will add further complexity to a rapidly changing sector.

Electrical generation uses a lot of water, so it’s no wonder that water management is a big concern for the power industry. Here, we’ll look at how some key power industry trends might impact water management strategies for plant operators both within the energy sector and across related industries as well.

Oil gas refinery or petrochemical plant.

Rising electrical demand

The Energy Information Administration (EIA) projects a 2% growth in US energy demand each year through 2026.[i] Driving factors behind this growth include:

More data centers: More data center facilities are popping up across the US due to increased use of AI as well as crypto mining According to a US Department of Energy (DOE) report, data centers consumed 176 TWh of electricity in 2023—a figure that represents 4.4% of total electrical consumption in the US.[ii] Analysts expect that this figure will continue to grow rapidly, with projections suggesting that data center consumption will double or even triple by 2028.
Growth in domestic manufacturing: Onshoring is on the rise in the US[iii], particularly in the semiconductor, battery, plastics, metal, and solar industries. As these new industrial facilities are brought online, they will place additional demand on localized energy systems and will likely drive up overall consumption for the domestic manufacturing sector.
Electrification: Electrification is the conversion of energy-consuming equipment to technologies that use electricity instead of other forms of fuel, such as by replacing gas-powered cars and equipment with electronic vehicles. Electrification is also taking place broadly across industrial facilities, as well as commercial and residential buildings as these facilities replace oil-, gas-, or coal-powered equipment, appliances, and systems with electric alternatives. Since we first took a look at the trend in 2022, decarbonization projects have continued to ramp up globally. The International Energy Agency (IEA) projects moderate but steady growth of 1% in electrical demand in over 2025 and 2026,[iv] which it mostly attributes to electrification and data centers.

Energy consumption in the US has risen substantially over the last several decades, and production has tended to rise right along with it. But over the last 20 years energy production has grown somewhat faster than consumption, with the EIA noting that the US reached a turning point in 2019 when it produced more energy than it consumed for the first time in 60 years.[v] It’s clear that the energy sector has been taking steps to stay ahead of rising demand, and that trend is expected to continue into future years.

How rising demand affects water use

Scaling up power generation is challenging for many reasons, but a significant limiting factor is water. This is because thermoelectric generation requires water for steam generation, cooling, and emissions control, not to mention all of the water resources used to extract and produce fuels. As looming water scarcity has made it more difficult and expensive to source water, the energy sector has been doubly challenged to cut water use while increasing production. Even so, there has been progress on this front, with EIA data showing that the power sector is becoming more water-efficient,[vi] largely thanks to the declining use of water-intensive coal with energy sources like wind and photovoltaic solar. Other contributing factors include adoption of water conservation strategies by individual power generation facilities and regions, which can include converting cooling systems to more efficient closed-loop cooling systems and dry or hybrid cooling systems, water reuse strategies, and advanced sensors and AI-driven analytics systems to optimize efficiency, and reduce water waste.

Changing energy mix

As a major producer and consumer of energy, the US relies on a variety of energy sources, including fossil fuels, renewables, and nuclear energy. The relative share of each of these fuel types has fluctuated over time[vii] due to regulatory and policy decisions, investor attitudes, emerging technologies, and community support and partnership, among many other factors. Below, we’ll look at some key trends in the changing energy mix and explore their relationship to water.

Fossil fuels remain a major source of energy

For several decades now, the US has been shifting away from oil and coal in favor of natural gas. In the US, coal use peaked in 2007.[viii] Since then, there have been some ups and downs in coal consumption from year to year, but the long-term pattern has been one of significant decline. According to the EIA, coal accounted for 16.2% of net electricity generation in the US in 2023,[ix] and domestic coal consumption is expected to continue its decline as it is replaced by natural gas and renewables.

By comparison, natural gas consumption has more than doubled since 1950, and it currently accounts for 42% of net generation in the US, according to EIA data.[x] This growth can be attributed to advances in drilling technology that have made it easier to extract natural gas, as well as perceptions around natural gas as a “cleaner” alternative to coal. Natural gas will continue to be a major fuel source for electrical generation in both the short and long term, although the EIA predicts that increasing competition from renewables and rising fuel costs will temper growth in natural gas consumption through 2026.[xi]

How changes in fossil fuel use will impact water use

The large water footprint of fossil fuels stems in part from all the processes used to extract, refine, and transport useable fuel products. Once the fuel arrives at a power facility, lots more water is needed for both steam generation and cooling in thermoelectric generation processes. Compared to most other major energy sources, fossil fuels generally consume more water per unit of electricity produced, although there is some variation from one fuel type to the next. For example, water consumption estimates for coal and oil range around 2300 to 4000 L/MWh,[xii] which places them at the top of the list in comparison to other major types of fuels used within the energy sector.

Interestingly, natural gas has a smaller water footprint compared to other fossil fuels. On average, natural gas generation requires about a third the amount of water to produce the same amount of electricity as coal.[xiii] This is because natural gas requires less water for extraction compared to other fossil fuels. Additionally, natural gas power plants tend to be younger than coal-fired plants, meaning that they tend to use more water-efficient combined-cycle technologies.

Even while natural gas use continues to replace coal as a major source of energy, resulting water savings will likely not make up for production increases that are needed to keep up with demand. As such, it is likely that those in the energy sector will need to stay vigilant regarding water management in the coming years, and continue to look at ways to build efficiencies into their processes to stay ahead of environmental regulations, water availability challenges, and rising costs associated with drawing water, and discharging wastewater.

Continued growth in wind and solar

The EIA reports that renewables made up 21.4% of utility-scale electrical generation in 2023.[xiv] Of course, it’s important to note that renewables constitute a complex group. The use of some renewables, like biomass, wood, and geothermal energy all contracted in recent years, while use of solar, wind, and conventional hydropower grew. Wind is currently the decisive leader among renewables, with net generation totaling nearly 41 TWh in 2024, putting it just behind coal.[xv] And wind is still growing too, as the EIA reported a rise of 12% in net generation from wind during 2023-2024.[xvi] While this growth confirmed previous projections, Deloitte analysts point out that wind capacity additions took a dip in 2024 due to ongoing supply chain, permitting, and financing issues that have slowed progress in building wind energy infrastructure.[xvii]

Solar energy accounts for just under 14 TWh of net generation in the US,[xviii] equating to only about a third of the net power generated by either coal or wind. Despite its comparatively limited implementation at this point, solar has the strongest potential for growth among any renewable, with EIA data showing an increase of over 32% in solar generation at utility scale facilities from 2023 to 2024.[xix]

How growth in wind and solar will impact water use

Wind, photovoltaic (PV) solar, and conventional hydropower all differ from thermoelectric processes in that they do not require water for cooling, thus resulting in much lower water consumption by comparison. Wind has the lowest water impacts compared to all other sources of energy, with measured values ranging from negligible amounts of water to around 300 L/MWh, while solar PV sits just above it. [xx] Water impacts for these clean energy sources are largely attributed to manufacturing and cleaning of components, and like any energy source, actual water impacts will vary from one installation the next. While growth in wind and solar will help to reduce water use in the energy sector, actual impacts may be negligible until wind and solar begin to make up a larger share of the energy mix.

Nuclear energy is poised for growth

Nuclear energy has remained flat for the past few decades, accounting for about 20% of total electricity generation in the US.[xxi] But some analysts believe this could change. In its most recent industry outlook, for example, Deloitte analysts noted that utilities are beginning to expand their use of nuclear power.[xxii] While this hasn’t led to meaningful increases in nuclear generation capacity quite yet, Deloitte analysts see further investment in nuclear power on the horizon, especially as emerging technologies, like small modular reactors (SMRs), are making nuclear power viable in a wider range of locations.[xxiii] Another idea that is gaining traction is the conversion of retired coal power plants into nuclear facilities. This approach was promoted in a 2024 report by the DOE[xxiv] and researchers are continuing to evaluate the viability of coal plant conversion projects across the US.[xxv]

How growth in nuclear energy will impact water use

Nuclear energy is an appealing solution for keeping up with rising demand while still meeting decarbonization goals. But as a thermoelectric process, nuclear power generation typically requires water for heat transfer and cooling applications, both of which demand high-quality water for safe and effective performance in high temperature and high pressure conditions. To achieve this, facilities generally need to draw in large volumes of water to ensure an adequate supply following treatment. For these reasons, nuclear power generation is a thirsty process, falling just below coal and oil in terms of overall water consumption.[xxvi] As such, any increases in nuclear generating capacity will likely drive up water consumption in the energy sector as well. Utilities looking to implement nuclear energy generation will need to consider water impacts as part of their planning processes, which may well influence site selection, as well as the decision to adopt water-efficient technologies as part of the overall plant design.

How can SAMCO help?

SAMCO has over 40 years’ experience custom-designing and manufacturing water treatment systems designed to conserve water and energy resources, so please feel free to reach out to us with your questions.

If you’re interested in learning about the best water treatment technologies for energy generation applications, we invite you to contact us. Our engineers will walk you through the process of developing a water treatment solution to meet your specific objectives. You can also request a quote to help you develop a realistic budget.

You can also check out our blog to learn more about industrial filtration and process separation technology. Some articles that might be of specific interest to you include:

[i] T. Hess and K. Tsai, “EIA extends five key energy forecasts through December 2026,” Energy Information Agency (EIA), Jan. 15, 2025. Retrieved Jan. 20, 2025.

[ii] US Department of Energy (DOE), “DOE releases new report evaluating increase in electricity demand from data centers,” Energy.gov, Dec. 20, 2024. Retrieved Jan. 17, 2025.

[iii] S. Dalfen, “The resurgence of U.S. manufacturing: Onshoring and nearshoring trends,” Forbes, Sep. 26, 2024. Retrieved Jan. 20, 2025.

[iv] International Energy Agency (IEA), Electricity 2024, IEA, Paris. Jan. 2024. Retrieved Jan. 17, 2025.

[v] EIA, “US energy facts explained: Imports and exports,” Jul. 15, 2024. Retrieved Jan. 17, 2025.

[vi] P. McArdle, “U.S. electric power sector continues water efficiency gains,” EIA, Jun. 14, 2023. Retrieved Jan. 17, 2025.

[vii] M. Francis and O. Comstock, “How has energy use changed throughout U.S. history?” EIA, Jul. 3, 2024. Retrieved Jan. 20, 2025.

[viii] EIA, Table 6.2, Monthly Energy Review, Jun. 2023. Retrieved Jan. 20, 2025.

[ix] EIA, “Electricity explained: Electricity generation, capacity, and sales in the United States,” Jul. 16, 2024. Retrieved Jan. 20, 2025.

[x] EIA, “Table ES1.A Total electric power industry summary statistics, 2024 and 2023,” Electric Power Monthly. Retrieved Jan. 17, 2025.

[xi] EIA, “Electricity, coal, and renewables,” Short-term energy outlook, Feb. 11, 2025. Retrieved Jan. 20, 2025.

[xii] C. Cleveland, “What methods of electricity generation use the most water?” Visualizing Energy, Feb. 12, 2024. Retrieved Jan. 17, 2025.

[xiii] Ibid.

[xiv] EIA, “What is U.S. electricity generation by energy source?” Feb. 29. 2024. Retrieved Jan. 17, 2025.

[xv] EIA, “Table ES1.A Total electric power industry summary statistics, 2024 and 2023,” Electric Power Monthly. Retrieved Jan. 17, 2025.

[xvi] Ibid.

[xvii] M. Motyka, T. Keefe, K. Hardin, and C. Amon, “2025 Renewable Energy Industry Outlook,” Deloitte Insights, Dec. 9, 2024. Retrieved Jan. 17, 2025.

[xviii] EIA, “Table ES1.A Total electric power industry summary statistics, 2024 and 2023,” Electric Power Monthly. Retrieved Jan. 17, 2025.

[xix] Ibid.

[xx] C. Cleveland, “What methods of electricity generation use the most water?” Visualizing Energy, Feb. 12, 2024. Retrieved Jan. 17, 2025.

[xxi] EIA, “Electricity explained: Electricity generation, capacity, and sales in the United States,” Jul. 16, 2024. Retrieved Jan. 20, 2025.

[xxii] T. Keefe, K. Hardin, and J. Nagdeo, “2025 power and utilities industry outlook,” Deloitte Insights, Dec. 9, 2024. Retrieved Jan. 17, 2025.

[xxiii] Ibid.

[xxiv] Office of Nuclear Energy, “DOE Study Finds Replacing Coal Plants with Nuclear Plants Could Bring Hundreds More Local Jobs and Millions in Added Income and Revenue to Energy Communities,” Energy.gov, Apr. 1, 2024. Retrieved Jan 20, 2025.

[xxv] J. Jacobs and J. Murray, “Momentum grows to repower retiring coal plants with nuclear,” Bipartisan Policy Center, Nov. 19, 2024. Retrieved Jan. 20, 2025.

[xxvi] C. Cleveland, “What methods of electricity generation use the most water?” Visualizing Energy, Feb. 12, 2024. Retrieved Jan. 17, 2025.