POLITICO Energy Why the AI boom could make or break U.S. utilities
Aug 6, 2025
Debra Kahn, Editor of POLITICO's California Climate newsletter, dives into how the AI boom creates both challenges and opportunities for U.S. utilities. She discusses the surge in electricity demand fueled by tech partnerships, highlighting the financial prospects for power companies amid rising data center needs. Kahn also addresses political hurdles affecting renewable energy initiatives and the implications of a potential $7 billion cut to solar funding for low-income communities, underscoring the complexities of navigating this evolving landscape.
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AI's Growing Electricity Demand
- AI and data center electricity demand is concentrated in specific U.S. regions like Virginia and Texas. - While data centers use 4.4% of U.S. electricity, overall electricity demand grew only 2% last year despite AI growth.
Utilities Benefit from Customer Growth
- Utilities often earn by spreading investment costs across more customers, not necessarily by selling more electricity. - New tech customers like data centers help utilities fund essential infrastructure like transmission lines.
Policy Uncertainty Hinders Utilities
- Regulatory uncertainty and policy changes make it difficult for utilities to plan renewable energy projects. - Recent government memos and cancellations hinder solar, wind, and transmission line development.