SAN FRANCISCO: In the race for AI dominance, American tech giants have the money and the chips, but their ambitions have hit a new obstacle: electric power.
“The biggest problem we’re having now is not over-computing, but power and… the ability to get builds done fast enough and close to power,” Microsoft CEO Satya Nadella acknowledged in a recent podcast with OpenAI head Sam Altman.
“So if you can’t do that, you might have a bunch of chips in inventory that I can’t plug in,” Nadella added.
Echoing the 1990s dot-com frenzy to build Internet infrastructure, today’s tech giants are spending unprecedented sums to build the silicon backbone of the artificial intelligence revolution.
Google, Microsoft, AWS (Amazon), and Meta (Facebook) are tapping into their huge cash reserves to spend roughly $400 billion in 2025 and even more in 2026, backed for now by eager investors.
All this money has helped alleviate an initial bottleneck – acquiring the millions of chips needed in the race for computing power – and the tech giants are accelerating their internal production of processors as they seek to chase world leader Nvidia.
These will go into the racks that fill the huge data centers, which also consume enormous amounts of water to cool.
Building huge information stores takes an average of two years in the United States; Commissioning new high-voltage power lines takes five to ten years.
energy wall
The “hyperscalers,” as the major tech companies in Silicon Valley are called, saw the energy wall coming.
A year ago, Virginia’s largest utility provider, Dominion Energy, already had a data center order book of 40 gigawatts, equivalent to the output of 40 nuclear reactors.
The capacity to be deployed in Virginia, the world’s largest cloud computing center, has since increased to 47 gigawatts, the company recently announced.
Already blamed for inflating household electricity bills, data centers in the United States could account for between 7% and 12% of national consumption by 2030, up from 4% today, according to several studies.
But some experts say the projections could be exaggerated.
“Both utilities and technology companies have an incentive to accept the forecast of rapid growth in electricity use,” Jonathan Koomey, a renowned expert at the University of California at Berkeley, warned in September.
As with the Internet bubble of the late 1990s, “many data centers that are talked about, proposed, and in some cases even announced, will never be built.”
emergency coal
If the projected growth materializes, it could create a shortage of 45 gigawatts by 2028, equivalent to the consumption of 33 million American homes, according to Morgan Stanley.
Several US utilities have already delayed closing coal plants, even though coal is the most climate-polluting energy source.
And natural gas, which powers 40% of data centers worldwide, according to the International Energy Agency, is seeing renewed favor because it can be deployed quickly.
In the US state of Georgia, where data centers are mushrooming, a utility company has requested permission to install 10 gigawatts of gas generators.
Some suppliers, as well as Elon Musk’s xAI startup, have rushed to buy used turbines abroad to quickly build capacity. Even recycling aircraft turbines, a former niche solution, is gaining ground.
“The real existential threat right now is not the degree of climate change. It’s the fact that we could lose the AI arms race if we don’t have enough power,” Interior Secretary Doug Burgum argued in October.
Nuclear, solar and space?
Tech giants are quietly downplaying their climate commitments. Google, for example, promised net-zero carbon emissions by 2030, but removed that promise from its website in June.
Instead, companies are promoting long-term projects.
Amazon is advocating a nuclear restart through small modular reactors (SMR), a still experimental technology that would be easier to build than conventional reactors.
Google plans to restart a reactor in Iowa in 2029. And the Trump administration announced in late October an investment of $80 billion to begin construction of ten conventional reactors by 2030.
Hyperscalers are also investing heavily in solar energy and battery storage, particularly in California and Texas.
The Texas grid operator plans to add approximately 100 gigawatts of capacity by 2030 with these technologies alone.
Finally, both Elon Musk, through his Starlink program, and Google have proposed putting chips into orbit in space, powered by solar energy. Google plans to conduct tests in 2027.
