Goldman Sachs: U.S. state elections add uncertainty to data center electricity-demand growth

Why do state elections affect electricity demand?

Data center development is tied to local electricity demand, prices, and utility investment, while the affordability of residential electricity bills has also become a key policy issue. Goldman Sachs believes Democratic candidates’ victories could add uncertainty to near-term data center development, especially in Texas and Georgia.
The bank continues to view both states as important markets for long-term load growth, but changes in project connections and commissioning timelines could affect when electricity-demand growth accelerates.

Democrat Gina Hinojosa won the gubernatorial election. She had called for a pause in data center development until the state legislature establishes additional safeguards in 2027; Goldman Sachs therefore believes timing risks for projects have increased, but remains positive on Texas’s long-term opportunities.
If the point at which electricity-load growth accelerates is delayed, prices in Texas’s ERCOT market and capital spending by regulated utilities could both be affected. Goldman Sachs believes companies such as NRG and Vistra, whose Texas operations are driven by data center demand, have significant exposure, and is watching for the results of a data center audit study to be announced before 10 December.

After the Georgia Public Service Commission election, Democrats became the majority among its members. Newly elected member Shelia Edwards had previously supported pausing data center development in the state; Goldman Sachs believes the election result adds uncertainty to investment related to large electricity loads.
Goldman Sachs believes Southern Company has the greatest exposure: 56% of its rate-base assets are in Georgia, and a pipeline of more than 75 gigawatts of potential large-load projects and related infrastructure investment could be affected. However, the company says views on data center development are relatively balanced across the two parties, and has outlined ways to gain more support.
In Ohio, Goldman Sachs expects about 8 gigawatts of data center load to be in service by 2030. The bank believes the new administration may propose stricter requirements for projects to enter service and pay greater attention to community impacts, making the development outlook somewhat more uncertain; at the same time, greater clarity after the election is also favorable for companies advancing local data center demand.

California failed to pass comprehensive wildfire liability reform during its last legislative session. Goldman Sachs is watching to see whether the governor calls a special legislative session before 15 November; if so, the outcome could benefit PG&E, Sempra, and Edison International.
Newly elected Governor Xavier Becerra said more work remains to be done on the state’s wildfire policy. Goldman Sachs believes reform will remain a priority, but the timing and scope of the new administration’s efforts to advance it are still unclear.