US Power and Tech Firms Lament Difficulties Meeting AI Energy Demands

artificial intelligence

Executives at an energy conference this week highlighted the sluggish expansion of U.S. electrical systems, unable to keep pace with the rapidly growing power demands of technologies like Generative AI

Layers of regulations, permitting processes, and legal disputes have impeded new power projects from connecting to the grid, posing challenges to profits for traditional power companies such as regulated electric utilities.

Brad Stansberry, leading the financial management practice for the power and utility industry at KPMG, criticized the regulatory and permitting landscape in the United States as “abysmal” during the AI: Powering the New Energy Era summit in Washington.

These delays have compelled data center businesses to seek alternative solutions, including bypassing utilities and directly negotiating with power generators or constructing their own power supplies. Aligned, a major data center developer with 2.5 gigawatts of capacity, shifted its focus from land acquisition to rapidly securing power supplies due to these challenges.

Phill Lawson-Shanks, Chief Innovation Officer at Aligned, acknowledged the need to adapt to power constraints by exploring options like small modular reactors and collaborating with utilities when feasible.

Power companies echoed similar concerns, highlighting difficulties in meeting the electricity needs of tech companies supporting high-energy applications like ChatGPT. The slow regulatory process, especially concerning renewable energy integration, has prompted data centers and tech firms to pursue their own power solutions.

Michael Keyser, heading the National Renewables Cooperative Organization, emphasized the struggle to expedite construction projects, leading to tech companies increasingly procuring their own power.

Regulated power utilities, while facing obstacles in expanding their systems, expressed hope that the burgeoning demand from technology firms would contribute to their growth. Brian Bird, chief of NorthWestern Energy, suggested that tech companies driving power generation initiatives could facilitate utility growth.