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US energy expansion held back as grid constraints, permitting delays, and rising costs intensify

February 10, 2026 – The global energy sector is facing mounting pressure as accelerating demand collides with grid constraints, rising project costs, and shifting government policies, according to the Energy Outlook 2026, the fifth edition of global energy sector research published today by international law firm Womble Bond Dickinson (WBD).

Based on insights from more than 650 senior leaders across energy companies, investors, service providers, and energy-intensive consumers worldwide, the research highlights the difficulty of delivering reliable energy to keep pace with the surging demand driven by electrification, AI, data centers, manufacturing growth, and extreme weather. 

Global survey findings: 

  • Grid constraints and policy uncertainty are delaying new energy production: Nearly a quarter of new capacity worldwide is being held back by grid bottlenecks, permitting delays, and regulatory uncertainty, with 65% of respondents citing grid and infrastructure constraints as the single biggest barrier to expansion.
     
  • Rising costs and delays are reshaping project economics: Project costs have jumped between 20% and 23% from quotation to construction, depending on the energy subsector, forcing more than half of firms to renegotiate contracts. Across all regions and business types, delays are costing companies an average of US$325m per year.
     
  • Self-generation becomes a strategic response to supply risk: Large energy users, including data centers and industrial manufacturers, expect to self-generate around 23% of their power within the next one to three years.
     
  • Technology is becoming vital for demand management: As physical projects stall, companies pivot to extracting more output from existing assets: tech budgets for energy supply optimization – including using AI or digital twins – are expected to rise approximately 16% in 2026.
     
  • Early regulatory and community engagement is key: While early regulatory engagement is now widely recognized as essential, community engagement continues to lag, representing a missed opportunity to reduce opposition, avoid disputes and accelerate approvals.

US in focus:

  • Despite strong demand growth, production expansion is low: While US operators say they can expand capacity by around 15% under current conditions, they estimate growth could reach 23% or more if grid congestion, permitting delays, and regulatory uncertainty were alleviated. The widening gap between planned and potential output underscores the scale of infrastructure and policy barriers limiting the nation’s ability to meet accelerating demand.

    Companies report that they could expand energy production by an average of 24% if obstacles were removed, with companies operating in the nuclear (28.6%) and offshore wind subsectors (27.5%) among those reporting the largest constraints.
     
  • US firms are grappling most with grid connection and capacity issues: More than 70% of US companies, spanning oil and gas, power generation, and other major subsectors, identify grid and infrastructure limitations as their most significant barrier, the highest level of concern recorded globally. These challenges include interconnection delays, limits on intermittent integration, and pipeline capacity shortfalls. With most US firms planning to expand supply through new greenfield developments (58%, also among the highest worldwide), these cumulative constraints pose a fundamental hurdle to delivering the capacity growth the market requires.
     
  • Cross-jurisdictional complexities are adding to project pressures: Contractor disputes, cost escalation, and force majeure related challenges are the most common contractual pain points, affecting a majority of US firms — including 79% reporting contractor related issues and 75% facing cost driven renegotiations. Certain subsectors experience even sharper impacts, with 94% of nuclear operators citing contractor disruption.

    Cross jurisdictional arbitration and permitting conflicts further complicate delivery, with 70% of companies pointing to shifting regulatory requirements as a major planning obstacle. Many view greater regulatory alignment across states as the most effective pathway to reducing these disputes. US companies are among the most proactive globally in mitigating these risks, with 82% prioritizing early regulatory engagement and 72% building strong in house legal and compliance capabilities to stay ahead of multi state complexity.

Recommendations

In addition to its findings, the report sets out practical recommendations to help energy companies accelerate project delivery and reduce risk. These include early collaborative planning with regulators and communities; building agile systems for policy and regulatory change; designing projects with investment attractiveness in mind; structuring projects to allow for effective dispute mitigation; and deploying AI to optimize assets and decision-making, underpinned by strong governance and accountability frameworks.

Jeffrey Whittle, Partner and Global Sector Leader for Energy and Natural Resources at WBD, commented:

“The findings of our report point to a demanding decade ahead for energy players worldwide. The challenges are clear: modest capacity growth despite rampant energy needs, grid bottlenecks and connection delays, rising project costs, high project abandonment, and persistent policy and regulatory uncertainty. The constraints are real, but they also can yield to companies willing to make the right strategic choices.

“Developers and operators can diversify routes to market, engage early with communities and regulators, adopt smarter project structures, invest in dispute avoidance and optimization technologies, and rigorously allocate and price risk. Taking these steps positions them to turn today’s friction into a platform for cleaner, more resilient power and tomorrow’s competitive advantage.”

Chris Towner, Partner and UK Energy Sector Leader at WBD, added:

“The findings from our UK survey respondents make for worrying reading amid the rapidly approaching 2030 energy decarbonisation target. However, they will be no surprise to those in the industry: grid connection delays, rising project costs, and community opposition are consistently holding back capacity growth. 

“Fortunately, we are sitting on significant untapped efficiency. Smarter use of our existing infrastructure, combined with better data insights and AI-driven optimisation – including by energy-intensive consumers themselves – could transform how we balance the grid and unlock new capacity. Through agile project structures, early stakeholder engagement, and strategic use of technology, UK developers have a clear opportunity to transform these challenges into cleaner, more resilient, and investable energy.”

Tom Dougherty, a Partner and leader of WBD’s Nuclear team, says:

“The nuclear sector faces unique issues. These might be overcome by a more supportive regulatory environment, the use of AI to streamline permitting and construction, and potential commitments for multiple reactors. Technological and manufacturing developments associated with small modular reactors and microreactors may also facilitate broader nuclear energy deployment.”

Lisa Rushton, Partner and US Energy Sector Co-Leader at WBD, says that:

“When capital costs climb, lenders reassess the finances and contracts get strained. For developers this means greater breach risk if revised debt-service tests can’t be met.

If scope changes alter environmental impacts or interconnection capacity, developers may need amended permits or supplemental NEPA reviews, which can erode the intended time-to-market advantage. Reducing scope often requires revisions to EPC agreements, performance guarantees, and liquidated damages provisions. Failure to align these revisions with lenders’ security packages can create enforceability gaps.”

Belton Zeigler, Partner and US Energy Sector Co-Leader at WBD, adds:

“The pressure to deliver new electric and gas resources is forcing a rethink of outdated processes, made tougher by 50 different state regulatory regimes. Those who speed up energy delivery will win the race for AI and manufacturing investment. In a business where speed to market is now everything, data center developers are rushing to snap up available power, transmission and natural gas delivery assets while utilities, pipelines and regulators are rushing to streamline siting and bring new capacity to market more rapidly.”

About the Energy Outlook 2026 

The survey was conducted in autumn 2025. It gathered 650 respondents across the US, UK, Europe, Asia Pacific (APAC), Latin America (LATAM), the Middle East, and Africa, evenly split between energy companies, investors, EPC/service providers, and energy-intensive consumers (data centers and industrial manufacturers). Respondents spanned multiple subsectors and revenue sizes, in roles that included executives and leaders in legal, strategy, planning, and project development roles.