As states across the U.S. confront rising energy demands driven by artificial intelligence (AI) and advanced technologies, Arizona is taking a bold, forward-looking approach — one that balances rapid growth with reliability, sustainability and innovation.
National forecasts project electricity demand will outpace current capacity, with usage nationwide expected to grow by 25 percent by 2030 and 78 percent by 2050, according to a 2025 study conducted by research firm ICF. The surge in data centers and advanced manufacturing has fueled record capital investment nationwide, placing unprecedented pressure on energy infrastructure.
Arizona is meeting this challenge head-on. Through strategic planning, major infrastructure investments and strong public-private collaboration, the state’s energy leaders are modernizing the grid, diversifying energy sources and building long-term resilience. These efforts include expanding natural gas infrastructure, exploring advanced nuclear generation, investing in cutting-edge energy storage and accelerating clean energy growth.
Together, these initiatives are powering Arizona’s high-tech boom. The state leads the nation in semiconductor investment and is a top destination for data center development. With one of the most reliable energy grids in the country, Arizona is well-positioned to harness the AI revolution and usher in a new era of innovation and economic growth.
Arizona Delivers Reliability
For fast-growing industries, reliable energy isn’t optional — it’s essential. In this area, Arizona cannot be beat. Thanks to its stable climate and low risk of natural disasters, Arizona offers businesses a consistent and dependable electricity supply with minimal disruptions.
According to a recent U.S. Energy Information Administration (EIA) report, states including Texas, Florida, North Carolina and South Carolina each saw at least one major power outage last year, with customers averaging more than 24 hours of blackout.
In stark contrast, Arizona customers averaged less than 90 minutes of total outage for the entire year, placing the state among the most reliable in the nation.
A separate study by Climate Central found that, between 2000 and 2023, Arizona had just six weather-related outages, compared with Texas (210), Michigan (157), California (145), North Carolina (111) and Ohio (88).
Clean Energy, Powered by Nature
In addition to its exceptional reliability, Arizona offers abundant clean and renewable energy, an increasingly critical factor for environmentally conscious tech companies.
Today, more than 44 percent of Arizona’s electricity generation comes from sources classified as clean or renewable, including nuclear power. The state is home to the Palo Verde Nuclear Generating Station — one of the largest nuclear power plants in the U.S. — and has decades of experience in nuclear energy operations and innovation.
With over 300 days of sunshine each year, Arizona ranks among the top five states for total solar generating capacity, spanning both utility-scale and small-scale installations. The state now boasts nearly 9,000 megawatts of solar capacity, and in 2025 alone, four major solar farms came online, adding 960 megawatts to the grid, according to the U.S. EIA.
Arizona also ranks among the top five states for wind energy potential, further diversifying its clean energy portfolio and reinforcing its position as a national leader in sustainable power (EIA).
Bold New Investments
Arizona is making big investments to bring more capacity online. In August of 2025, the state’s utility leaders announced a new natural gas pipeline from the Permian Basin in West Texas to Arizona. The initiative gives the utilities priority delivery of low-cost natural gas to support Arizona’s rapid growth and the integration of clean energy technologies to the electric grid.
In October, Arizona Public Service (APS) announced plans for a new 2,000 megawatt natural gas power plant west of Phoenix. The Desert Sun Power Plant will be built in two phases, bolstering Arizona’s energy grid stability while also supporting data center growth via a new subscription model.
The state is also planning a host of renewable and emission-reducing energy projects. In 2024, Salt River Project (SRP) announced plans for a new pumped storage hydropower project near the existing Roosevelt Dam. The system will use excess solar energy to pump water uphill to a new reservoir and release it later to generate clean power, with the goal of providing 1,000-2,000 MW of storage.
Arizona utilities are continuing to modernize their energy infrastructure, with SRP and Tucson Electric Power (TEP) transitioning coal-fired generating stations to natural gas. These conversions are helping reduce emissions and support a cleaner energy future, while also strengthening rural economies and preserving local jobs.
In addition, APS, SRP and TEP are jointly exploring potential sites for new nuclear generation in Arizona, beyond the existing Palo Verde Generating Station, one of the nation’s largest sources of carbon-free energy.
To complement renewable energy sources, Arizona is also investing in advanced energy storage solutions. A prime example is TEP’s Roadrunner Reserve I, a 200-megawatt battery energy storage system capable of powering 42,000 homes for four hours. This project highlights how storage can stabilize the grid and ensure reliability, even when renewable generation fluctuates.
Energy Leadership Through Collaboration
Arizona’s continued energy leadership includes close collaboration among government, utility and industry leaders to advance new solutions. In September 2025, Governor Hobbs signed an Executive Order directing statewide energy stakeholders to help deliver lower energy costs for Arizonans. This initiative underscores the state’s commitment to affordability while preparing for long-term growth.
The order also established the Arizona Energy Promise Taskforce, bringing together leaders from utilities, advanced manufacturing and clean energy organizations to shape the state’s long-term energy future. The Taskforce’s mission includes facilitating large-scale energy growth and expanding Arizona’s clean energy economy, with a focus on affordability.
This collaborative approach ensures that Arizona’s energy infrastructure is positioned to support business growth and resident needs.
Arizona’s energy strategy is more than a response to rising demand — it’s a blueprint for sustainable growth. As industries evolve and technologies advance, Arizona’s reliable, resilient and forward-thinking energy ecosystem ensures that businesses and communities alike can thrive.
To learn more about Arizona’s infrastructure and energy strengths, visit azcommerce.com. T&ID
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