From the Wall Street Journal, October 15:
Bypassing the grid, at least temporarily, tech companies are creating an energy Wild West; ‘grab yourself a couple of turbines’
Tech companies in the AI race need power, and lots of it. They aren’t waiting around for the archaic U.S. power grid to catch up.
In West Texas, natural-gas-fired power generation is under construction as part of the $500 billion Stargate project from OpenAI and Oracle. Gas turbines are in use at Colossus 1 and 2, the massive data centers Elon Musk’s xAI is building in Memphis, Tenn. More than a dozen Equinix data centers across the country are using fuel cells for power.
With the push for AI dominance at warp speed, the “Bring Your Own Power” boom is a quick fix for the gridlock of trying to get on the grid. It’s driving an energy Wild West that is reshaping American power.
Most tech titans would be happy to trade their DIY sourcing for the ability to plug into the electric grid. But supply-chain snarls and permitting challenges are complicating everything, and the U.S. isn’t building transmission infrastructure or power plants fast enough to meet the sudden surge in demand for electricity.
America should be adding about 80 gigawatts of new power generation capacity a year to keep pace with AI as well as cloud computing, crypto, industrial demand and electrification trends, according to consulting and technology firm ICF. It’s currently building less than 65 gigawatts. That gap alone is enough electricity to power two Manhattans during the hottest parts of summer.
Data centers have long taken power for granted, said KR Sridhar, founder and chief executive of Bloom Energy, which provides fuel cells to companies that need on-site power, often in a hurry. “You build the data center. Well, you just plug it in.”
That isn’t possible anymore given the city-sized amounts of electricity needed to train AI models. One data center can devour as much electricity as 1,000 Walmart stores, and an AI search can use 10 times the amount of energy as a google search.
The growth is intense, too. The U.S. had around 522 hyperscale data centers at the end of the second quarter, which account for around 55% of global capacity, according to Synergy Research Group. Another roughly 280 are expected to come online through 2028 in the U.S.
Data centers consumed less than 2% of U.S. electricity before about 2020, but by 2028 could use as much as 12% of U.S. electricity, according to the Energy Department and Lawrence Berkeley National Lab. Utility executives compare the skyrocketing demand with rural electrification efforts or the advent of air conditioning, though much of that work happened in the years after World War II when American industry was roaring.
President Trump in January declared a national energy emergency, in part to keep the U.S. from falling behind China in the AI race. He has issued a series of related executive orders including one that aims to fast-track data-center construction and needed power infrastructure.
The U.S. appears to have a lot of catching up to do.
China will invest twice as much as the U.S. this year in power plants, storage and the grid, according to the International Energy Agency. It added about 429 gigawatts of new power generation last year, according to the think tank Climate Energy Finance, while the U.S. built about 50 gigawatts.
The country has about four times the population of the U.S., but with centralized planning avoids many of the hangups in building everything from transmission lines to power plants. Most U.S. data-center developers cited grid access as their top concern.
Project developers and utilities are trying to pick up the pace. ICF forecasts the U.S. will deliver almost 80 gigawatts of new generation starting in 2027, doubling the average pace of the past five years.
Even so, in some locations, data centers won’t be able to plug into the power grid until the 2030s because of the sheer backlog of projects and the fact that the nation’s high-voltage electric wires are running out of room.
“If the grid doesn’t have power and you need to generate compute capacity, what are your alternatives?” asked Bill Stein, executive managing director and chief investment officer with Primary Digital Infrastructure, an advisory and data-center investment platform that’s part of a joint venture financing the construction of the West Texas Stargate site.
He expects the U.S. power shortage to last around three to five years....
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