How Trump's AI ambitions are at odds with a wonky energy agency
Jan 31, 2025
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Catherine Morehouse, an energy reporter for POLITICO and author of Morning Energy, joins the discussion about Trump's ambitious plans for AI and energy regulation. They explore how Trump's desire for data centers to connect directly to coal power plants could clash with the Federal Energy Regulatory Commission (FERC). The conversation reveals the complexities of balancing industrial energy needs with consumer protection. Additionally, they highlight an innovative AI model from DeepSeek that could change the energy landscape amidst growing power demands.
Trump's proposal to connect data centers directly to power plants may face regulatory challenges from the Federal Energy Regulatory Commission.
The emergence of more energy-efficient AI models could significantly alter current energy consumption assumptions, impacting both utilities and consumer costs.
Deep dives
President Trump's Direct Power Proposal
President Trump's proposal aims to connect data centers directly to power plants instead of utilizing the traditional power grid. This connection could provide data centers with a more reliable power source, minimizing concerns about power outages. Additionally, power plant providers could benefit from charging a premium for this direct access, creating a win-win scenario for both sectors. However, this controversial approach has sparked debate regarding its implications on the wider power supply and customer rates.
FERC's Role and Regulatory Challenges
The Federal Energy Regulatory Commission (FERC) plays a crucial role in overseeing the power grid's reliability and cost efficiency. Its regulations are designed to ensure that changes in power agreements do not harm consumers or compromise grid reliability. Recent decisions by FERC have raised concerns among power providers and data center developers, especially after a proposal to increase capacity for an Amazon Web Services data center was rejected. This rejection highlighted the delicate balance FERC must maintain between supporting industry growth and protecting consumer interests.
Future Implications for AI and Energy Demand
The intersection of AI advancements and energy supply presents potential challenges for future power demands. New AI models that require significantly less energy to operate may disrupt current assumptions about power consumption growth. If these technologies reduce demand, overbuilding power plants could lead to financial losses for utilities and higher costs for consumers. Therefore, careful consideration is needed to navigate the implications for both the tech and energy sectors as they adapt to these changing dynamics.
In order to satisfy AI's big energy demands, President Donald Trump wants data centers to connect directly to power plants. But his plan could face problems because of a wonky federal energy regulatory agency: the Federal Energy Regulatory Commission. On POLITICO Tech, guest host Nirmal Mulaikal and POLITICO energy reporter Catherine Morehouse discuss why Trump could have trouble getting regulators on board with his plan and what’s at stake in the global AI race.
Catherine Morehouse is an energy reporter for POLITICO and the author of Morning Energy.