How AI and Electrification Are Reshaping the Electrical Industry’s Future

At the 2025 NEMA Annual Meeting, Trade Hounds sat down with Donald Leavens, Senior Vice President and Chief Economist at the National Electrical Manufacturers Association (NEMA), to talk about what’s really driving the electrical industry right now—and where it’s headed next.

In this conversation, Leavens shares what trends are shaping demand across the sector, and why the surge in energy consumption tied to AI and electrification could redefine the industry for years to come.

What are the key industry trends you’re seeing right now across the electrical sector?

Our industry is so broad, and there are different market drivers for it. We're heavily into electrical construction. That goes into buildings, from systems, from lighting, from the wiring — anything that transfers electricity in any form or controls electricity. Our member companies make that.

Lately, the nonresidential construction sector, which is the commercial side and the building side, has been very weak. We came out of the COVID period, where people aren't working in offices. We're doing e-commerce, so we don't need that level of concrete, brick-and-mortar stores. So, we've really been in a flat line on nonresidential construction, which is the bulk of where many of our products go.

Housing has also been very difficult because mortgage rates are high and home prices are high. On top of everything else, the abundant jobs for young people emerging out of universities are not there. That is also dampening demand for housing. So, the demand is high; the affordability is not—that's the problem. So that's one aspect of a weaker market.

Then there's this other side that's tied to data center growth, to electrification, and to energy consumption. There's this upswell demand for more power, more juice, and we don't have the transmission and the distribution of those transmissions. That's where a lot of the growth is.

That's all part of why people are so excited here. If you're feeding into that and you have an angle on that, you're doing really well.

What guidance are you giving NEMA members as they navigate grid constraints and rising demand?

We did a study last year looking at grid flexibility. We could see it coming. You can't build transmission and distribution overnight. There's a lot of permitting regulations required. You're kind of stuck in the short term with what you have. There's infrastructure involved and investment there, but this is how you can carry more power, work with what we have, and meet this soaring demand.

Our study was about the coming surge in demand. It's real because we went through 20 years of flat demand for electricity, because many of the companies in this room developed so many energy-efficient products. That's what drove down the demand and kept it flat, despite our GDP growth and organic growth in population demographics. It was flat because we had all this great energy efficiency.

Now we're looking at other ways. So, it's really an exciting time for all of our members here. It has implications for who's doing well, for diversification of their business, and also for quality, because one of the things that we stand for here is safety standards for quality.

That's what makes this a mixed market where there are a lot of imports that are coming in for many of these products. Our organization works very hard on standards and quality, and that's one of the things our data center customers are demanding. I heard yesterday that many of the data center folks are having to buy two components of everything, and they have to be 24/7. Nothing can go down.

So the ask from the hyperscalers is: what can you do to make your equipment even more robust than it is, so we can be sure we don't have to duplicate? It's twice the cost to build these just because we have to have that redundancy.

How are you thinking about long-term forecasting and the biggest shifts shaping the future of energy demand?

I think that's what we found in this study that we conducted last year looking at the demand for power and what EVs and data centers are going to consume.

One of the things that was surprising in our study: we knew AI and data centers were growing. But what was undercounted was the extent to which we'd have this frontier training for large language models, and that there'd be so many large language models competing.

I showed a chart this morning when I was sharing my forecast on the demand for electricity from data centers. AI alone, by 2030—in just four years—will consume as much power as data centers consumed just two years ago.

Just the AI portion of energy demand will equal data center demand in 2023. These are huge numbers. This is why we're seeing hundreds of billions of dollars in investment committed.

So these are going to be very exciting times. Everybody's asking, is this real? Is this going to last? And how long? What's going to happen?

I think it's a very exciting time to get a grip on that.

Is the current AI and data center buildout a bubble or a long-term boom?

I've talked to a lot of people who are very close to it, and they say this time is different. My ears perk up when I hear "this time is different." As economists know, things tend to repeat, and very few unique patterns exist.

There are a lot of mixed messages, and you have to be at the forefront of owning that narrative and providing good information for people. And so that's our year ahead.

Final Thoughts

The rise of data centers and AI-driven energy demand is reshaping infrastructure, investment, and long-term planning across the electrical industry—and forcing manufacturers and distributors to rethink how they prepare for what comes next.

Want to hear more from Donald Leavens?

Watch the full conversation to get deeper insights into the trends shaping the future of the electrical industry.