The Tennessee Valley Authority (TVA) released its preliminary 2026 integrated resource plan on Monday, revealing that electricity demand in its footprint is already outpacing reference case forecasts. The utility now sees incremental capacity needs for between 7 GW and 26 GW of natural gas between now and 2040.
TVA said its actual and forecasted electricity demand has increased relative to the draft IRP's Reference scenario and is approaching the Higher Growth Economy scenario, primarily driven by data center growth including artificial intelligence applications. The utility serves parts of seven southeastern states including Tennessee, Alabama, and Mississippi.
The planned gas expansion represents a significant infrastructure shift for the federally owned power producer, historically reliant on coal, nuclear, and hydropower. TVA's current generating fleet includes about 27 GW of fossil fuel capacity, 7 GW of nuclear, and 5 GW of hydroelectric and renewable sources combined.
The move aligns with a broader trend across the U.S. Southeast, where utilities are racing to add dispatchable gas generation to support hyperscale data center construction. Critics argue this locked-in fossil infrastructure could undermine regional carbon reduction targets and risk stranded assets as renewable costs continue declining.
While TVA has not released specific project timelines or costs, the plan signals that AI-driven electricity demand is fundamentally reshaping utility planning. The region's interconnection queue is already straining under the weight of data center interconnection requests, with some projects facing multi-year delays.