With the U.S. presidential election concluded, the incoming administration is poised to enact policies that will have profound impacts on the power utility sector. Going forward, environmental restrictions on new power plants are likely to be lifted, making cost and supply security the two primary factors in determining the construction of new power stations. From this perspective, the United States’ abundant natural gas supply positions it as the clear choice for new power generation, while nuclear power will likely emerge as the “loser.”
Here are four key themes shaping the future of U.S. power utilities during the Trump administration: environmental regulations, the outlook for natural gas, power generation approaches, and the development trends for new nuclear power.
The Trump administration has already expressed skepticism toward climate change, casting doubt on its significance as a pressing issue. This signals that the Environmental Protection Agency (EPA) will likely see its authority significantly curtailed. Regulations at risk of being weakened or eliminated include CO2 emission standards and controls on methane emissions during natural gas extraction. Even without significant regulatory changes, the industry has already shown a shift toward lower reliance on strict environmental rules, as utility companies demonstrate strong demand for natural gas power plant construction.
Globally, the energy sector faces a “trilemma”—balancing cost, supply security, and sustainability. With environmental concerns deprioritized by the incoming administration, new power plant construction will focus solely on cost and supply security. As a result, natural gas, which is both cost-effective and secure, is expected to dominate new plant construction. This trend is likely to accelerate further under the Trump administration.
The U.S. is well-positioned to capitalize on this shift. According to the latest 2024 data from the UK’s Energy Institute (EI), the U.S. produced 1.35 trillion cubic meters of natural gas in 2023, making it the world’s largest natural gas producer—buoyed particularly by increased shale gas production. However, limited gas pipeline capacity has constrained growth. The new administration’s promise to revive stalled projects, such as the Keystone Pipeline, could unlock significant production potential in the future.
Under the Biden administration, fossil fuel power projects were permitted but subjected to strict requirements, including carbon offsets. In contrast, the Trump administration is expected to remove many of these environmental constraints. This may create opportunities for coal-fired power plants to be considered as backup options to natural gas.
Nonetheless, nuclear power’s economic disadvantages are likely to make it the hardest hit. The cost of constructing a new nuclear power plant is about four times that of a natural gas plant. Without environmental sustainability as a key driver, it is unlikely that investors will choose to fund such expensive projects to produce a commodity—electricity—that has a highly competitive market price. However, nuclear power has its unique advantage: its role in ensuring “energy security” during periods of heightened international tension.
In summary, the new administration is expected to deliver on the power industry’s long-standing desire for transformation: a shift from baseload coal to baseload natural gas, free from the constraints of strict environmental regulations. Within this policy environment, both utility companies and power equipment manufacturers are likely to ramp up investments and expand gas and power project development at full speed. Natural gas emerges as the biggest winner in this policy shift, heralding a new era of accelerated growth for the U.S. energy sector.
