Macro

The United States plans to build up to 250 new nuclear reactors over coming decades to meet surging electricity demand from AI, data centers, and manufacturing. The push revives nuclear power as a low-carbon alternative, focusing on advanced reactors and small modular reactors with passive safety systems. Federal programs like the DOE's Launch Pad support development, with companies such as TerraPower, Kairos Power, and X-energy building demonstration reactors backed by the Advanced Reactor Demonstration Program. Tech giants Google and Meta have signed power purchase agreements. Critics cite unresolved safety, cost, and waste challenges, while experts stress the need for extensive testing and regulatory review of new designs.

Global data center demand could nearly triple from 82 to 220 gigawatts between 2025 and 2030, driven by AI. AI-related demand is expected to grow 3.5 times to 155 gigawatts, accounting for 70% of total demand, while non-AI demand rises 1.7 times to 64 gigawatts. Cumulative global investment in data center infrastructure (excluding IT hardware) may exceed $1.7 trillion through 2030. The United States leads in investment, with Northern Virginia a major hub, followed by China, where expansion shifts west under the 'Eastern Data, Western Computing' strategy. Europe sees growth in the UK, France, and Nordic countries, while Singapore expands into Malaysia. Levelized costs vary from ~$200 per MWh in Chinese demand centers to ~$380 in London, with electricity prices and cooling needs as key drivers. Export controls on advanced chips affect China's energy efficiency.

Data centers drove half of all new U.S. electricity demand growth in 2025, making them the single largest contributor to the country's rising power appetite, according to the International Energy Agency. Overall U.S. energy demand grew 2% in 2025, the second-highest rate since 2000. The IEA expects data centers to account for about half of demand growth through 2030. Goldman Sachs projects U.S. data center power demand will more than double from 31 gigawatts in 2025 to 66 gigawatts in 2027, with AI-driven servers consuming roughly 60% of facility electricity. However, only 50-60% of planned capacity is expected to come online on schedule, creating reliability risks in the Mid-Atlantic, Mid-Continent, and Northwest. Over $61 billion was invested globally in data center construction in 2025, but community opposition over power and water use is mounting, with a Pew survey showing mixed public sentiment.

US data center electricity demand could more than double by 2030, rising from 167 terawatt-hours in 2023 to about 376 TWh, an increase sufficient to power 20 million average US homes for a year. This shift is turning power from a background cost into a frontline constraint for AI, making battery storage a critical component of AI infrastructure. Storage acts as a buffer between energy producers and consumers, moving power through time to meet demand spikes. Developers plan to add 24 GW of utility-scale battery storage in 2026, second only to solar, as storage becomes a reliability tool for the AI age.

The Federal Energy Regulatory Commission voted unanimously on Thursday to order six regional grid operators serving nearly two-thirds of the U.S. to fast-track interconnection requests from AI data centers and other large electricity users, mandating that they justify or rewrite tariffs within 60 days using Section 206 of the Federal Power Act. Grid operators have 30 days to report spare generating capacity and 60 days to defend or revise rates, with FERC Chair Laura Swett calling the vote 'historic' and saying 'This FERC is not the old sleepy agency that it has been in the past. We can’t afford to be, and our country cannot afford for us to be.' The order requires data centers to pay full grid upgrade costs and, to qualify for fast-track processing, to bring their own power or curtail demand during high-stress periods. It also directs operators to consider 'alternative transmission technologies' like solid-state transformers or superconducting lines and to be more accommodating to behind-the-meter power. Energy Secretary Chris Wright, who had urged the action eight months ago to compete with China, hailed the move to 'remove barriers, accelerate development and ensure America has the affordable, reliable and secure energy needed to power a new era of prosperity,' aligning with President Donald Trump’s AI Action Plan. The order follows a December step allowing direct power plant connections. Concerns persist about rising electricity prices, water use, and environmental impacts as data centers now account for about 5% of U.S. electricity demand, potentially tripling by 2035. Wholesale electricity rates are up as much as 267% compared with five years ago, according to Bloomberg. PJM Interconnection raised power costs by 75.5%, largely blamed on AI data centers, and Maryland filed a complaint with FERC over a $2 billion charge for infrastructure upgrades not directly benefiting the state. At the end of 2023, grid connection requests for power plants exceeded the total capacity of the existing power plant fleet. Tech companies and developers, unable to connect in a timely manner, have been turning to on-site power out of desperation. FERC emphasized it does not intrude on state authority over siting, generation, or retail rates, leaving states to protect residential and small-business customers from cost shifts. Texas, outside FERC’s jurisdiction, approved ERCOT’s 'Batch Zero' process on the same day to speed large-load studies for projects of at least 75 MW, with ERCOT tracking over 438,000 MW of large-load requests, nearly 89% from data centers. Tech giants including xAI, Google, Microsoft, Meta, Amazon, Oracle, and OpenAI have signed a pledge to build new power sources and cover infrastructure costs. Over 4,000 data centers operate in the U.S., with 3,000 more planned, though construction lags due to permitting and supply delays. A J.P. Morgan report last month, based on satellite imagery, found that over 60% of planned data center capacity scheduled for 2027 has not yet broken ground, with another 7% already delayed. The Trump administration on Wednesday said it would pay $765 million to wind developer Invenergy to cancel offshore wind leases near California, Maine, and New York, with the company saying it would use the money to build natural gas plants in the Midwest and geothermal projects in the West; one of Invenergy’s wind projects would have generated as much as 2.4 gigawatts of power. Altogether, the Trump administration has now spent about $2.6 billion to scuttle offshore wind developments. Communities increasingly resist data center developments in drought zones and quiet rural areas, citing water shortages and noise pollution. FERC’s order requires data centers to pay full grid upgrade costs and, to qualify for fast-track processing, to bring their own power or curtail demand during high-stress periods. It also directs grid operators to consider 'alternative transmission technologies' like solid-state transformers or superconducting lines, and to be more accommodating to behind-the-meter power. The order builds on a December step allowing direct power plant connections. Tech companies and developers welcomed the faster connection process, but utilities, states, and clean energy advocates had worried about loss of authority, though FERC said it leaves states in control of retail rates and terms. Robert Montejo, a lawyer representing data centers, said AI 'has fundamentally changed the electricity landscape.' The Edison Electric Institute said the order builds on existing processes while supporting flexibility. Jeff Dennis of the Electricity Customer Alliance said it responds to big power users and state regulators. Rob Gramlich, an energy consultant, said states should quickly develop rules to prevent cost shifts to residential and business customers, warning FERC could assert broader jurisdiction if states don’t act. Texas, outside FERC’s jurisdiction, approved ERCOT’s 'Batch Zero' process on the same day to speed large-load studies for projects of at least 75 MW, with ERCOT tracking over 438,000 MW of large-load requests, nearly 89% from data centers. Tech giants including xAI, Google, and Microsoft have signed a pledge to build new power sources and cover infrastructure costs. The Trump administration on Wednesday said it would pay $765 million to wind developer Invenergy to cancel offshore wind leases near California, Maine, and New York, with the company saying it would use the money to build natural gas plants in the Midwest and geothermal projects in the West; one of Invenergy’s wind projects would have generated as much as 2.4 gigawatts of power. Altogether, the Trump administration has now spent about $2.6 billion to scuttle offshore wind developments. Communities increasingly resist data center developments in drought zones and quiet rural areas, citing water shortages and noise pollution. FERC’s order requires data centers to pay full grid upgrade costs and, to qualify for fast-track processing, to bring their own power or curtail demand during high-stress periods. It also directs grid operators to consider 'alternative transmission technologies' like solid-state transformers or superconducting lines, and to be more accommodating to behind-the-meter power. The order builds on a December step allowing direct power plant connections. Tech companies and developers welcomed the faster connection process, but utilities, states, and clean energy advocates had worried about loss of authority, though FERC said it leaves states in control of retail rates and terms. Robert Montejo, a lawyer representing data centers, said AI 'has fundamentally changed the electricity landscape.' The Edison Electric Institute said the order builds on existing processes while supporting flexibility. Jeff Dennis of the Electricity Customer Alliance said it responds to big power users and state regulators. Rob Gramlich, an energy consultant, said states should quickly develop rules to prevent cost shifts to residential and business customers, warning FERC could assert broader jurisdiction if states don’t act. Texas, outside FERC’s jurisdiction, approved ERCOT’s 'Batch Zero' process on the same day to speed large-load studies for projects of at least 75 MW, with ERCOT tracking over 438,000 MW of large-load requests, nearly 89% from data centers. Tech giants including xAI, Google, and Microsoft have signed a pledge to build new power sources and cover infrastructure costs. The Trump administration on Wednesday said it would pay $765 million to wind developer Invenergy to cancel offshore wind leases near California, Maine, and New York, with the company saying it would use the money to build natural gas plants in the Midwest and geothermal projects in the West; one of Invenergy’s wind projects would have generated as much as 2.4 gigawatts of power. Altogether, the Trump administration has now spent about $2.6 billion to scuttle offshore wind developments. Communities increasingly resist data center developments in drought zones and quiet rural areas, citing water shortages and noise pollution.

Global AI data centre power demand is straining electricity grids, with consumption reaching 415 TWh in 2024 and projected to exceed 945 TWh by 2030. The surge, driven by GPU-optimized facilities requiring up to 200 kW per rack, creates continuous baseload stress on local transmission nodes. In response, New York imposed a moratorium on hyperscale permits, the EU mandates annual energy and water reporting for data centres over 500 kW, Ireland requires on-site backup and demand reduction obligations, and Australia plans to require large operators to act as net-generators, underwriting new power supply.

The U.S. electrical grid must add capacity equivalent to over 20 New York Cities by the early 2030s to meet surging demand, primarily from AI data centers now up to 50 times larger than previous generations. A 10-percentage point increase in agentic AI adoption could boost power needs by another 25% by 2035, with leading AI companies' requirements expected to double by 2027 per IEA estimates. This has transformed utilities from a low-growth sector into a high-growth investment theme, with $600 billion in transmission and distribution spending projected through 2030. However, the grid faces severe hurdles: regulatory delays, equipment shortages, political opposition, and a lack of skilled labor. A key example is PJM Interconnection, where capacity auction prices surged over 1,000% in two years to a record $329.17 per megawatt-day in July 2025, driven by data center demand that could reach one-fifth of regional load. This has sparked price volatility, affordability concerns, and calls for price caps from governors. Investors see opportunities in power generators, engineering firms, and equipment manufacturers, but outcomes depend on local regulations and market constraints. The demand shock may be prolonged through the decade due to underinvestment since 1999, though efficiency gains in AI could temper growth. Data center operators are increasingly building their own dedicated power plants to ease grid strain and reduce consumer cost impacts, but still face multi-year waits for permits and approvals. The power sector has experienced about $3 trillion in underinvestment since 1999, and the cycle may be long-lived as the grid grows linearly while AI computing scales exponentially. Regulators are stepping in with transitional planning and emergency procurement mechanisms, but a clear path forward remains uncertain. Price volatility, demand-supply imbalance, and popular dissent are all visible at PJM, where governors push for price caps and the operator has sped up its interconnection queue. Investors also see opportunities in fast-start generation, storage for intermittent renewables, and grid build-out services, but selectivity is key as outcomes vary widely by local constraints.

NextEra Energy and Brookfield Corporation, alongside three smaller power companies, are building a $100 billion AI data center campus at a former Cold War-era uranium enrichment site in Paducah, Kentucky—the largest economic investment in the state's history. The project targets over 1.2 gigawatts of computing capacity by 2032, with NextEra supplying up to 2 gigawatts of natural gas-fired power and 2.6 gigawatts of battery storage in stages to protect local ratepayers. Brookfield, leasing land from the U.S. Department of Energy, will manage the campus and leverage existing transmission, water, and fiber infrastructure. The initiative aligns with the Trump administration’s ratepayer protection pledge and underscores surging AI-driven electricity demand. For NextEra, it supports a base case of 15 gigawatts of data center hubs by 2035, while Brookfield uses it as a seed for its $100 billion AI infrastructure fund backed by Nvidia and the Kuwait Investment Authority. Both companies aim for significant earnings growth, though the project remains subject to final agreements.

PJM Interconnection, the largest US power grid serving 67 million people across 13 states and DC, faces its first-ever capacity shortfall as AI data centers drive unprecedented electricity demand. The grid's capacity auction failed to secure sufficient supply for June 2027–May 2028, with data centers projected to add over 30 gigawatts of peak demand by 2030—equivalent to 30 nuclear plants. Capacity prices surged tenfold from $28.92 to $329.17 per megawatt-day. In response, the Department of Energy issued a May 2026 emergency order allowing PJM to curtail power to data centers with backup generation during emergencies. PJM also approved a $6.7 billion transmission investment plan targeting Northern Virginia congestion and plans a reliability backstop auction for Autumn 2026. The capacity price increases could cost consumers over $100 billion through 2033.

Global data center power demand is set to triple over the next decade, with CO2 emissions projected to double, driven by the AI boom. Grid interconnection delays are pushing short-term reliance on off-grid gas turbines, as seen with xAI's Colossus 2, but long-term solutions include solar-plus-storage microgrids, enhanced geothermal systems (e.g., Sage Geosystems' partnership with Meta), hydrogen fuel cells (Ballard and Plug Power with Microsoft and Vertiv), and even orbital data centers (SpaceX, Blue Origin, Starcloud). At grid scale, wind, solar, and nuclear power will deliver the most low-carbon electricity, with small modular nuclear reactors (SMRs) potentially supplying up to 15% of data center power by 2037. Energy efficiency improvements, such as liquid cooling and 800VDC architecture, are being adopted to manage rising rack densities, with component-level gains from NVIDIA, AMD, and Infineon. Scope 3 supply chain emissions remain the largest source of data center CO2, forecast to exceed 0.8 gigatonnes annually by 2036, prompting strategies like carbon credits, low-carbon construction materials (green concrete, steel, timber), and lower-embodied-carbon IT hardware.

The United States faces a potential power deficit of 30 to 55 gigawatts by 2030, driven primarily by AI data center expansion, which McKinsey & Company projects will account for 75 percent of US power demand growth over the next decade. Data centers require nearly 30 GW of new capacity annually, with 20 GW for IT chips and 10 GW for cooling. A Bain & Company report warns US data center electricity demand could double to 409 terawatt-hours by 2030, consuming 9 percent of total electricity. Despite risks of an AI bubble, analysts argue the infrastructure investment is safe, as modernized power assets can support electrification of manufacturing and electric vehicles. This buildout is also driving tech capital toward regions with stable renewable power, like Kenya's geothermal fields.

Global AI infrastructure investment is surging, with hyperscalers committing roughly $700 billion in 2026, up from $400 billion in 2025, and Goldman Sachs projecting $7.6 trillion in cumulative spending through 2031. However, this boom is constrained by energy supply: the International Energy Agency reports grid investment will reach $550 billion in 2026, yet Deloitte estimates US AI data center power demand could grow thirtyfold to 123 gigawatts. Next-generation data centers now cost $15–$20 million per megawatt to build, double the cost of traditional facilities. Hyperscalers are signing direct power deals and building private generation to bypass grid bottlenecks, but this fragments infrastructure investment. The energy bottleneck—driven by grid upgrades, permitting delays, and labor shortages—is the central factor limiting the pace and cost of AI deployment.

AI data centers are rapidly shifting from traditional facilities to purpose-built 'AI factories' designed for high-density AI training and inference, a transformation expected to continue through 2030. Goldman Sachs Research projects global data center power demand will rise 165% by 2030 versus 2023, while the IEA forecasts electricity use reaching ~945 terawatt-hours. New campuses now operate between 100 and 750 megawatts, with some projects targeting 500 megawatts to 2 gigawatts. Liquid cooling is critical as AI racks exceed 100 kilowatts, with the liquid cooling market projected to grow from $5.7 billion in 2026 to $29.2 billion in 2033. Power availability remains the biggest challenge, driving investment in natural gas, battery storage, solar, and microgrids.

Nvidia CEO Jensen Huang stated in March 2026 that AI will require 1,000 times more energy than current levels, framing it as an infrastructure issue. He argued energy sets the ceiling on intelligence production. U.S. Energy Secretary Chris Wright echoed the need for grid expansion to avoid slowing AI progress. Bank of America data projects the U.S. will need over 230 GW of new generating capacity by 2031, but utilities will only add 93 GW, leaving a 100 GW gap. Experts warn of bottlenecks in electricity generation, transmission, and semiconductors. Texas Governor Greg Abbott halted new data centers in August 2026 for grid audits, highlighting regulatory tensions.

Oil prices are rising, with West Texas Intermediate crude at $82.47 a barrel and Brent near $88.44, while the national average for regular gasoline remains at $4.01 a gallon after a $1.29 jump in four weeks. This threatens a fragile reprieve in inflation, as the Consumer Price Index cooled slightly in June to 333.952 after months of increases. A more severe risk looms in natural gas: analyst Matt Smith predicts a U.S. natural gas shortage by 2028 and potential storage depletion by 2030, driven by rising LNG exports and AI data center demand colliding with limited pipeline capacity. This could spike electricity prices, which are already forecast to rise 5% in 2026, hitting consumers hard. The political stakes are high for President Trump, who has sought assurances from AI companies about data center power use. The July CPI release and Henry Hub futures will be key indicators of whether this energy squeeze materializes.