Interconnection requests totaling 200 gigawatts, according to Oncor officials
In the ever-evolving world of energy, utility companies are responding to increased demands with significant investments and strategic moves.
San Diego Gas & Electric Strengthens Wildfire Defences
San Diego Gas & Electric (SDG&E) has taken a proactive approach to wildfire prevention, hardening 100% of its highest-risk transmission systems. This move comes after more than 18 years without a major wildfire incident.
Oncor Electric Delivery Faces Surge in Interconnection Demand
On the other side of the country, Oncor Electric Delivery is grappling with a surge in interconnection requests. The Texas-based utility company has over 200 GW of active requests, with 186 GW coming from data centers alone. In response, Oncor has revised its capital investment plan, expecting to add over $12 billion to its initial $36.1 billion plan for 2025–2029.
For 2025 specifically, Oncor has implemented a record $7.1 billion annual capital expenditure plan. This investment is focused on system resilience, expansion, and critical upgrades to support population and business growth. This includes building or upgrading about 590 circuit miles of transmission and distribution lines in the second quarter of 2025 alone, alongside adding nearly 20,000 new customer premises.
Oncor's Growth Drivers and Regulatory Challenges
The growth drivers behind this increased demand are diverse, with data centers, industrial load growth, oil and gas electrification, and crypto currency facilities all contributing. However, Oncor also faces regulatory and financial challenges related to the expansion. They have sought interim rate increases to address the delay between infrastructure investment and cost recovery, and expect approval of a final revenue requirement by late 2025 or early 2026.
Sempra's Shift Towards a Utility-Focused Business Model
Meanwhile, Sempra, the parent company of SDG&E, is pivoting towards a more utility-focused business model, inspired by the massive growth in electric demand in Oncor's service territory. This shift is expected to improve earnings and reduce risk for investors.
In a significant move, Sempra has signed a nonbinding letter of intent with global investment firm KKR for the sale of 15% to 30% equity depending on the company's valuation. The funds raised from the sale of Sempra's Ecogas Mexico and a stake in Sempra Infrastructure are intended to support Oncor's multibillion dollar expansion.
Oncor has also been successful in securing new interconnection agreements, with 9 GW already signed. About 20% of the potential demand from these interconnection requests has signed contracts or is considered "high-confidence load", with another 30 GW considered as such.
These developments were highlighted by Jeffrey Martin, chairman, CEO, and president of Sempra, during Thursday's earnings call. The Ecogas sale and the sale of Sempra Infrastructure's stake are expected to close in mid-2026.
As these companies navigate the challenges and opportunities of the future, they continue to invest in infrastructure, secure new agreements, and adapt to the changing energy landscape.
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