Unprecedented electricity demand from data centers is straining the limits of regional power grids, slowing the pace of new development and driving concerns about rising power bills for consumers.

But according to a newly launched coalition, the solution to the data center power pinch isn’t adding capacity to overmatched power grids — it’s being smarter about using the capacity that’s already available.

The new industry group, Utilize, backed by technology and distributed energy giants such as Google and Tesla, is pushing for a new approach to powering the rapidly growing data center sector and other large industrial users.

The group aims to address what it says is a fundamental inefficiency underpinning the energy crisis: The grid is designed to withstand short periods of peak use, but, the vast majority of the time, only a small percentage of available power is actually being used.

Utilize plans to lobby state governments and utilities to adopt policies and technologies to increase utilization of existing grid capacity.

This would mean widespread adoption of “distributed generation” — the use of on-site power or battery storage at data centers and other large consumers to allow them to become “flexible loads,” capable of reducing their draw on the power grid when electricity demand threatens to exceed supply.

If this happens, Utilize Executive Director Ian Magruder said it will eliminate the need for utilities to invest hundreds of billions of dollars in new power plants and transmission infrastructure. This would reduce the risk of rising prices for consumers and make it easier and faster for data centers to access the power they are desperately seeking.

“For decades, we’ve built the grid to meet peak demand, even though large portions of it sit unused for most hours of the year,” Magruder said in a statement. “It’s like building an airplane that only flies with full passengers a few times a year. That excess capacity is hiding in plain sight, and new technologies give us the opportunity to unlock it.”

The coalition is backed by the companies that all produce or are poised to benefit from those technologies or from distributed generation. Among them, Tesla is the world’s largest producer of industrial battery storage, Carrier is a major generator producer, and Verrus specializes in developing grid-flexible data centers.

Still, the group says it is proposing solutions backed by a strong body of evidence. Utilize said it plans to publish a commissioned study from The Brattle Group showing that U.S. electricity customers would save more than $100B over 10 years on their utility bills due to system utilization improvements alone.

This isn't the first time that tech and power firms have teamed up to promote policy friendly to distributed generation and flexible data centers. A coalition with similar goals called DCFlex was launched in 2024 and is developing a number of demonstration data center projects across the U.S.