The Capacity Hidden in Our Cities
The next great infrastructure opportunity may not be building more. It may be getting more from what we already have.
America is entering a new era of electricity demand.
AI. Data centers. Advanced manufacturing. Electrification. Economic development.
Each is creating enormous new requirements for power—often much faster than the infrastructure required to serve it can be planned, permitted and constructed. The resulting constraint is increasingly straightforward:
Demand can arrive in months. Grid infrastructure can take years.
That mismatch is beginning to change how we should think about infrastructure.
Capacity Is Becoming Infrastructure
For most of the last century, meeting electricity demand followed a familiar formula:
More demand → more generation → more transmission → more distribution infrastructure.
That model isn't disappearing. But it is no longer sufficient.
J.P. Morgan estimates approximately $1 trillion of U.S. grid investment could be required over the coming decade, while describing grid resilience as increasingly important to economic development, industrial competitiveness and national security.
Morgan Stanley reaches a similarly important conclusion: the coming "Great Grid Upgrade" will not be accomplished through wires and substations alone.
Software, flexible demand, storage, advanced controls and technologies capable of extracting additional performance from existing infrastructure will increasingly sit alongside traditional grid investment.
This suggests a broader principle:
Capacity itself is becoming a form of infrastructure.
And that capacity does not necessarily have to come from a new power plant, transmission line or substation. Some of it may already exist. We simply aren't using it intelligently enough.
The City Is Already an Energy System
Consider a major American city. Thousands of commercial buildings.
Government facilities. Universities. Hospitals. Convention centers. Hotels. Multifamily properties. Industrial facilities. Water and wastewater infrastructure.
Each is traditionally viewed as an individual electricity customer. But viewed collectively, they represent something much more interesting: a distributed network of energy assets.
Buildings consume enormous amounts of electricity, but much of that consumption has some degree of flexibility.
Cooling can be shifted. Thermal mass can store energy. Equipment schedules can be optimized. Loads can respond dynamically to grid conditions. Distributed resources can be coordinated.
Individually, these changes may appear incremental. Aggregated across dozens—or eventually hundreds—of buildings, they begin to look very different.
Kilowatts become megawatts.
And megawatts matter.
From Energy Efficiency to Capacity Creation
This requires an important change in vocabulary.
Traditional energy efficiency asks: How can this building use less energy?
The emerging capacity question asks: How can this portfolio of buildings use energy differently so the entire system has more capacity when it matters?
Those are not the same proposition. Efficiency primarily creates savings. Flexibility can create system value.
That value potentially includes lower peak demand, reduced congestion, greater resilience, improved utilization of existing infrastructure and the ability to defer certain capital investments.
Most importantly, it can create something increasingly scarce:
available megawatts.
The "No-Wires" Thesis Is Moving Into the Mainstream
There is growing evidence for this approach.
National Grid recently described the challenge clearly: electricity demand is increasing faster than conventional infrastructure can be built. Its response includes grid-enhancing technologies, flexible demand, distributed resources and other approaches designed to unlock more capability from the infrastructure already in place.
The utility describes maximizing existing assets through digital technologies as a "no regrets" strategy. Morgan Stanley similarly identifies grid flexibility—including demand response and virtual power plants—as an increasingly important source of capacity.
And OATI is taking the concept even further. Its PowerNow initiative proposes using software, dynamic operating capabilities and improved coordination to unlock an estimated 10–20% of additional transmission capacity from existing infrastructure without constructing new transmission infrastructure.
The technologies are different. The underlying philosophy is the same:
Before building the next increment of infrastructure, determine how much more performance can be extracted from the infrastructure already deployed.
That philosophy should not stop at the transmission grid. It should extend all the way to the buildings connected to it.
Aggregation Changes the Economics
One building reducing demand by 500 kilowatts is useful. Fifty buildings doing it simultaneously is infrastructure.
This is where the opportunity becomes particularly interesting for cities. A municipality does not need to own every participating asset. It can serve as the organizing layer connecting commercial real estate, public buildings, utilities, universities, hospitals, energy technology companies and capital providers around a common objective:
Find the capacity already inside the city.
Imagine identifying 20 MW, 50 MW or eventually 100 MW of flexible capacity across a metropolitan building portfolio. That capacity could potentially become a strategic resource.
Not generation. Not simply conservation.
Flexible, distributed capacity.
And unlike a new transmission project, much of the underlying infrastructure already exists.
The buildings are already there. The HVAC systems are already there. The meters are already there. The customers are already connected.
The opportunity is to make those assets more intelligent—and ultimately more coordinated.
The Constituencies Begin to Align
This is where the concept becomes more than an energy strategy. It becomes an economic development strategy.
Building owners can lower operating expenses and improve building performance.
Utilities can gain flexible demand and potentially defer portions of expensive infrastructure investment.
Cities can strengthen grid resilience and support economic development without relying exclusively on new generation and transmission.
Developers may gain access to capacity in markets where power availability increasingly determines whether projects move forward.
Ratepayers benefit when existing infrastructure can be utilized more efficiently before additional capital expenditures are passed through the system.
Everyone does not need the same incentive. They simply need incentives that point in the same direction.
A New Municipal Asset Class
Cities have historically thought about infrastructure in physical terms.
Roads. Bridges. Water. Buildings. Transmission. Distribution.
But the next generation of infrastructure may include something less visible: orchestrated capacity.
The ability to identify, aggregate and dynamically manage flexible demand across a city could eventually become an economic development asset in much the same way that transportation, broadband, water and available land are today.
A city capable of demonstrating available, controllable megawatts may possess an increasingly important competitive advantage.
That leads to a larger idea we will explore frequently at Parkwood:
Capacity as Infrastructure
America unquestionably needs to build more energy infrastructure.
But construction alone cannot solve a timing problem in which electricity demand is arriving considerably faster than infrastructure can be delivered. We therefore need two strategies operating simultaneously.
Build more capacity.
Unlock the capacity we already have.
The second opportunity may be particularly powerful inside America's cities.
Because hidden among thousands of buildings, mechanical systems, thermal mass, and distributed energy assets may be one of the largest untapped infrastructure resources we have yet to fully recognize.
The next megawatt may not have to be built.
It may already be there.
