America’s Electric Grid Could Throw Wrench In Big Tech’s AI Dreams

America’s power grid may not be able to keep pace with Big Tech’s race to build artificial intelligence data centers.

Private spending on data center construction jumped about 64.5 percent after inflation from Aug. 2025 to Aug. 2026, to an annual rate of roughly $85 billion, according to an analysis of Census Bureau data by economist Jason Furman shared in an Oct. 7 post on X. Industry leaders say the power needed to run data centers may be slower to arrive.

“If you want to go buy a gas turbine today, you can’t get one for 2032 because they’ve all been reserved,” National Rural Electric Cooperative Association CEO Jim Matheson told the Daily Caller News Foundation. “So everyone’s betting on natural gas, and everyone’s looking to build right now.”

Matheson said the grid can handle current demand for most of the year but will need more power plants as AI data center developments grow.

“I think there’s enough to meet it today,” he said. “If we’re looking forward, we’re going to need more generation.”

“I think access to electricity is likely to be the biggest constraint for new projects in the most crowded markets over the next one to three years,” Christopher Johnson, president of the American Energy Leadership Institute, told the DCNF. “Investment will increasingly follow the places that can build,” he added, referring to areas able to add new power plants and grid connections quickly.

Texas shows how quickly demand is piling up.

The Electric Reliability Council of Texas (ERCOT), which runs most of the Lone Star State’s grid, was tracking about 474 gigawatts of requests from large power users as of June 2026, roughly 90 percent of them data centers, an ERCOT spokesperson told the DCNF. That is up from 63 gigawatts in Dec. 2024, ERCOT data from 2025 shows.

The 474-gigawatt total is more than five times the state’s all-time peak demand, according to Republican Texas Gov. Greg Abbott’s office.

ERCOT paused connecting new large data centers until a state-ordered audit and community impact review are finished, according to a Sept. 15 board presentation.

Abbott ordered the audit on Aug. 3, saying projects that fail to meet state requirements “must be denied connection to the Texas grid.”

Abbott’s office referred the DCNF to the governor’s data center directives when reached for comment.

Matheson further warned that utilities could be stuck paying for power plants.

“When you build a whole power plant to serve 1,000 megawatt data center and the data center goes away, that’s a problem,” he said, noting power plants are built to run for up to 80 years.

“I don’t think there’s a single industry standard way to address that risk today,” he added.

Matheson, a moderate-to-conservative Democrat, represented Utah in the U.S. House for seven terms and served on the House Energy and Commerce Committee.

PJM Interconnection, the nation’s largest grid operator, serves about 67 million people across 13 states and Washington, D.C.

Data centers accounted for about $6.5 billion, or 40 percent, of the $16.4 billion price tag from PJM’s Dec. 2025 power auction, a January report from Monitoring Analytics, the grid operator’s independent market monitor, found.

The data center industry disputes that it is behind rising household electricity bills.

The Data Center Coalition released research from consulting firm E3 in May that found no historical evidence that data centers increased costs for residential electricity.

The E3 study found no clear connection between rising power demand and higher electricity rates. Demand has surged in Texas and Virginia, yet rates there climbed less than in most states, while California and New York were hit with some of the steepest rate increases despite decreasing demand.

Edison Electric Institute President and CEO Drew Maloney said utilities are spending heavily to keep up with growing demand for electricity.

“We need more steel in the ground and electrons on the grid,” Maloney told the DCNF in a statement. “To build faster, we need to eliminate barriers to building, including regulatory certainty and market reforms in regions like PJM.”

Johnson said permitting rules should give energy projects a clear route toward approval and assurance that they won’t be reversed after the next election.

“Blocking new power while demand grows is how you turn an economic opportunity into an affordability problem,” he told the DCNF.

Private spending on power construction grew about 4.1 percent after inflation from Aug. 2025 to Aug. 2026, according to Furman’s analysis. That figure also includes oil and gas projects.

The gap between data center and power construction growth “raises the risk that we’ll have data centers waiting on electricity before they can open,” Johnson added.

Furman cautioned against treating the slower growth in power construction as a sign of trouble.

“I would not read anything into power growing less than data centers,” Furman said. Twice as many data centers would not require twice as many power plants, he added.

Investor-owned electric utilities have steadily ramped up spending on the grid and power plants, from about $104 billion in 2015 to about $178 billion in 2024, according to Edison Electric Institute data. The trade group projected that spending would top $220 billion in 2026.

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