Humanity’s mission to leave fossil fuels behind could be in jeopardy. Elon Musk thinks we may be running out of electricity (yes, really) in just two years’ time, and powering your electric vehicles (EV) could become more difficult… and expensive.

• Over the past 20 years, US electricity demand has grown 1% each year — but Musk thinks demand could triple by 2045.
• While others have forecasts coming in slightly lower, PG&E expects electricity demand to rise 70% over the next 20 years.

More power, or else: Blackouts from electricity shortages could become a reality in the next 24 months amid record heat waves and demand spikes. But it’s not just boiling temperatures straining power grids.

EVs, data centers, home devices and AI are expected to be the main drivers of additional demand. To bring more power to the grid, large US electric companies are expected to spend $1.8T by 2030.

Electrifying the economy isn’t just Musk’s dream — it’s part of a larger government mandate to create a greener economy. President Biden has committed to a 100% carbon pollution-free power sector by 2030, and 14 states have also set net-zero emission targets by 2050.

What this means (and costs) for you

While no US state has a carbon tax yet, the White House has previously supported taxing big polluters — which, ultimately, could trickle down to consumers through higher prices. The electrification of the economy will be expensive in the short term, with McKinsey estimating it costs ~7% of GDP today and 8.8% of GDP between 2026-2030.

• For most, this could raise energy and transportation bills and increase costs for everyday items to offset the carbon cost of shipping your favorite pair of sneakers.
• New power grid investments are expected to result in higher electricity rates — EVs alone could result in a 12% rate increase in energy bills, per Boston Consulting Group’s Thomas Baker.

It’s hard to imagine the US running out of electricity, but not so hard to envision rising prices — something we’re all too familiar with by now.