MARCH 2025
The Electricity Supply
Bottleneck on U.S.
AI Dominance
By Cy McGeady, Joseph Majkut, Barath Harithas, and Karl Smith
I
t is now well understood that the rapid technological progress of articial intelligence (AI) has
profound enery sector implications. AI technoloy is eectively the result of three inputs: chips,
data, and electricity. This paper focuses on electricity on the basic premise that electricity supply
is the most acutely binding constraint on expanded U.S. computational capacity and, therefore,
U.S. AI dominance.
This paper starts with a survey of demand-side forecasts. It then highlights data on the geographic
distribution of data center development currently underway in the United States, the supply-side
dynamics underway in response to demand growth, and challenges to meeting this new demand.
The role of coal, gas, renewables, and nuclear power in meeting new demand are each assessed. The
central principle for understanding these developments is speed-to-power, or the measure of how fast a
potential data center site can access the electricity needed to power its stock of chips.
Speed-to-power should likewise be used to organize federal policymakers’ approach to permitting
policy and use of emergency authorities in the near term. On the other hand, ve years from now is
tomorrow in the power sector. A severe near-term supply crunch must not distract policymakers from
the need for long-term thinking in the electricity sector. Numerous long-standing policy challenges in
the power sector deserve renewed attention, including gas-electric coordination, interregional seams
management, and improved cost eciency in transmission planning. This paper closes by proposing
several new policies and authorities that contribute to these issues, but which are primarily organized
around establishing U.S. electricity supply dominance in a bid to advance U.S. AI leadership. A new
era of electricity-intensive economic growth has arrived, and the need for strategic thinking in the
electricity sector has never been greater.
