Having spent most of my career at the nexus of power generation and industrial infrastructure, I can safely say that few things have stressed the American electric grid quite like the explosive growth in AI-driven data centers. At Industrial Info Resources, we are currently tracking more than $2.7 trillion in data center projects worldwide, including more than $1 trillion in new US investment in just nine short months.
It is not only technology that faces a skyrocketing demand; it’s about electricity. With its voracious power appetite, artificial intelligence is making plain just how unprepared the aging US power grid is for the next major step in technological evolution.
AI’s Appetite for Power
The amount of computational power AI requires is astonishing. More than 700 million new users have gone online in the past year alone, and according to estimates by OpenAI, global compute demand could soon require a gigawatt of new capacity every week. That is roughly one big power station every seven days.
We are already seeing the ramifications in our project data at IIR Energy. A large number of the biggest hyperscale projects are reaching major capacity bottlenecks: utilities in some areas are telling data center operators they won’t be able to provide additional megawatts until as late as 2032. A few years ago, that kind of delay was unthinkable.
Limits like these are forcing developers to think out of the box when considering data center construction locations. No longer are they concentrating on central metro areas, but they are gravitating towards areas around transmission interconnections, wind or solar parks, or even existing industrial areas that are already served by substations.
The New York Independent System Operator’s Comprehensive Reliability Plan, or CRP, predicts impending power shortages across the state. It identifies three key challenges that are occurring at once: an older generation fleet, fast-rising loads from data centers and chip plants, and new hurdles to building supply. It’s a confluence of threats that are straining reliability planning to its limits.
An Outdated Grid Meets a $40 Trillion Market
With electricity demand having been stagnant for the past few years, improvements to the country’s collective power grid have not been prioritized. This recent rebound in load is meeting a grid that’s already congestion-prone and aging. Some regions face record-breaking congestion pricing and curtailment. Last week, PJM (the largest regional electricity transmission organization in the United States) saw wholesale capacity auction power prices jump roughly 800%.
This serves as a powerful reminder that while the digital economy proceeds at light speed, physical infrastructure doesn’t. Transmission upgrades require years to approve and construct, and generation projects may be held back by supply chains or local policy barriers. AI’s future, as grand as it is, now hinges on how fast we will upgrade physical systems that enable it.
Behind the Meter: The New Energy Strategy
Confronted with delayed delivery schedules and lengthy interconnection queues, data center builders are taking control themselves. Increasingly, they are making investments in “behind-the-meter” options to guarantee access to the power they require. They are considering natural gas turbines, high-end fuel cells, as well as extended renewable contracts that come with a direct path to generation independent of having to wait for upgrades from utilities. Technologies for liquid cooling are helping data center operators decrease freshwater consumption as they improve efficiency.
Data centers are no longer simple consumers of power. Increasingly, they are becoming power collaborators, in some instances, power generators. Utilities are adapting by teaming with developers to co-develop generation assets or reassessing baseload integrity. Next-generation designs are on track to reach a megawatt or more per rack by 2029.
Why Reliable Intelligence Matters
In a market changing this rapidly, it’s crucial to have reliable information. And that’s where IIR Energy offers a distinct edge. We follow projects from initial planning to evaluation and refinement, tracking every milestone and closely watching the power fundamentals that influence success.
This transparency allows utilities, investors, and developers to discern actual development from rumors. For example, whereas some reports indicate that big builds for data centers are decreasing, our intelligence indicates just the opposite. The buildout continues to accelerate and spread, transitioning to different areas and different forms of power delivery.
Reliable, corroborated information allows decision-makers to know exactly where expansion is occurring as well as the limitations that will hinder it. This is the basis of business at IIR Energy. We offer insight capable of piercing the din to predict how AI, energy, and infrastructure will continue to develop side by side by side.
All in all, this goes to remind us of a simple yet powerful reality: the AI power race will not just be about smarter algorithms. We’ll need smarter infrastructure to match.
# # #
About the Author
Britt Burt is the Vice President of Power Industry Research at IIR Energy, bringing nearly 40 years of expertise across the power, energy, and data center sectors. He leads IIR’s power research team, overseeing the identification and verification of data on operational and proposed power plants worldwide. Known for his deep industry insight, Britt plays a key role in keeping global energy intelligence accurate and up to date.
