Author: Karita Licio

by Karita Licio, Customer Success Manager, REsurety

REsurety’s “Future of Power” webinar participants: Adam Reeve, SVP Commercial, REsurety (top left), Jesse Noffsinger, partner in McKinsey’s Energy Practice (top right), Mark O’Brien, Senior Director of Power Markets, REsurety (bottom left), and Kenneth Davies, Founder and CEO, Takanock (bottom right)

If you missed our recent webinar, you missed a timely discussion on how the race for Artificial Intelligence (AI) is fundamentally rewriting the rules of the U.S. power grid. REsurety’s Adam Reeve, (SVP Commercial) and Mark O’Brien (Senior Director of Power Markets) came together with experts from Takanock and McKinsey & Company to discuss how buyers and sellers can balance speed with value in an increasingly volatile market.

For 15 years, U.S. electricity consumption remained relatively flat due to energy efficiency gains. That era is over. Demand growth is now accelerating at a pace steeper than anything seen since World War II. Over half of the expected 160 GW increase in peak summer load by 2030 will come from data centers alone. 

Capacity is King

There is plenty of energy when the sun shines or wind blows, but there is a severe shortage of reliable capacity required to meet demand. In markets like Texas, the ‘effective load carrying capacity’ (ELCC) of adding more solar is decreasing substantially, meaning new thermal generation or long-duration storage is required for grid reliability. As a result, the need to secure firm capacity directly comes with a significant premium.

“Capacity is king. Data centers are increasingly willing to pay out-of-market prices to secure firm power because the cost of being late to the (AI) race is far higher than the cost of the energy itself” explained Kenneth Davies, Founder and CEO of Takanock.

Critical Infrastructure Choke Points

The physics of the grid are struggling to keep up with the speed of tech. As Jesse Noffsinger, partner in McKinsey’s Energy Practice put it, “We’ve reached a point where the life of a GPU (graphic processing unit) is measured in single-digit years, but the life of a transmission substation is measured in decades. This creates a massive mismatch between the rapid timelines of the tech industry and the physical realities of grid infrastructure.” 

Permitting bottlenecks aside, moving forward additional constraints will include Engineering, Procurement, and Construction (EPC) services and site availability. While economic models suggest specific solutions, the actual buildout is also constrained by politics and human decision-making, which often moves slower than the industry requires.

“While economic models often suggest the most cost-effective solutions, what’s difficult to model is the human factor. Humans don’t always make decisions quickly when there’s uncertainty, and the speed of buildout is often limited as much by permitting and policy as it is by supply chain.” added REsurety’s Senior Director of Power Markets, Mark O’Brien.

The Looming Gas Constraint

While much of the conversation centers on grid physics and permitting, Mark O’Brien highlights a critical, often-overlooked bottleneck: the natural gas supply chain. As hyperscalers turn to “behind-the-meter” gas units as a temporary bridge, they may be inadvertently setting the stage for a massive infrastructure crunch a decade down the line.

REsurety’s Senior Director of Power Markets Mark O’Brien explains why the shift from local generation to large-scale grid connections could push the natural gas pipeline system to its breaking point.

Behind-the-Meter (BTM) as a Bridge

Because data centers cannot wait years for a grid connection, many are turning to onsite gas generation as a temporary solution. Most operators use BTM gas to go live faster but still ultimately desire a traditional grid connection for long-term resiliency.

While there is a possibility that mid-to-long-term demand for AI power is overstated due to rapid improvements in chip efficiency, it’s clear the US power market has reached a tipping point where speed must meet scale. Successfully navigating the next decade will require bridging the gap between rapid tech timelines and the realities of physical infrastructure.

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