The AI Renaissance Cannot Escape Its Power Needs

There is an Artificial Intelligence (AI) bonanza taking place in America. To grow and thrive, AI needs data. Data centers need to be constructed to marshal this resource. Northern Virginia, for example, is becoming a parking lot for data centers. In turn, data centers need energy. The AI and data center explosion is on top of ongoing power needs required by heavy industry targeted for a reshoring resurgence. As onshoring and re-industrialization take off with the Trump administration, energy demands will only increase. These sectors require constant duty energy. Cloudy days or lack of winds egregiously undermine the perceived value of “green energy.”

The Green Energy slogan may be well intended, but it miserably fails the math test of reality. Solar and wind, unless an unforeseen innovation occurs, deliver under 15 percent of the nation's growing energy requirements. With an incoming administration that intends to unleash American Energy, sanity and adult leadership freed from the religion of green energy can be applied to the urgent problem of satisfying America's energy demand spike.

After many years of neglect from environmentalists, nuclear energy is suddenly in vogue due to the advent of small modular reactors (SMRs). There is a potentially great opportunity with SMRs. However, the simple issue upfront is that SMRs won’t be operational for another ten to fifteen years, and that is being generous. There is only one logical answer to bridging this growing energy demand canyon—gas turbines or re-opening (and ceasing to shut down) coal and large, legacy nuclear plants. Announced plans, despite the present power shortage, call for the closure of another eighty GW of more baseload U.S. coal capacity by 2028.

The power generation and utility industry knew about this demand spike and recognized that shuttering (or planning to shutter) some 169 Gigawatts (GW) of baseload coal and nuclear between 2010 and 2026 was a bad idea. Attempting to replace this massive GW deficit with solar and wind, which can only produce power during certain hours of the day, would encourage little new electrification and, worse yet, prove far less reliable for the existing grid. 

Virtually no new baseload, combined cycle gas-fired generation, or coal has been added since 2018, and there has been a six-year time out in adding energy generation. Because of this moratorium on new energy plants, the authors estimate that the nation will be 250 GWs short by 2033 with the current solar/wind/battery energy storage-only strategy, and this does not even take into account data center energy demand and re-industrialization into account. The shortfall is roughly equivalent to 120 two-GW powerplants that run twenty-four hours a day. Two GWs is the same size as the latest nuclear power plant, Georgia’s Vogtle Plant, whose third and fourth units came online in 2023 and 2024. As a result, numerous coal plants scheduled for closure are suddenly receiving life extensions.

The national electricity shortage has spread. The most recent 2024 wholesale power price auctions from the generation sources in the PJM and MISO consortiums (collectively covering twenty-two states) have now risen by factors of ten times and three times, respectively. The North American Electric Reliability Corporation (NERC), in its annual 2024 summer reliability assessment, assessed 133 million U.S. citizens living in operating areas that have “potential for insufficient operating reserves in normal peak conditions.” The NERC winter 2024/2025 survey shows that about half of the population of North America is affected by inadequate energy reserves.

The tech industry values coal, nuclear, and gas because they provide reliable sources of power. Restart discussions are underway at the Nextera Duane Arnold plant in Iowa, the Holtec Industries-owned Palisades nuclear plant in Michigan, and possibly even VC Summer reactors in South Carolina. Moreover, it now appears Pacific Gas and Electric’s Diablo Canyon nuclear plant in California may be indefinitely extended in its operation.

There is no way around coal and natural gas to meet the immediate needs of the energy demand spike. Large, super-efficient gas-fired combined cycle plants are the easiest to deploy in the current environment. Though little advertised over the past eight months, a gas-fired power renaissance is in bloom. Some sixty GWs of proven and demonstrated technology high-efficiency combustion turbines have been ordered by utilities deeply concerned with the regional power shortages now being forecast. This has been made more clearly visible through forward wholesale power auction prices moving upward in recent auctions by a factor of up to ten times. Vernova/GE, Mitsubishi, and Siemens gas-fired turbines are sold out through 2027 and are about to be sold out through 2029.

These combined cycle gas plants are the best way to provide the immediate need for power using proven advanced technology. The energy need is now, not in ten to fifteen years, when SMRs may ultimately be cost-effective and ready.

John R. Mills is a retired U.S. Army Colonel and Former Director of Cybersecurity Policy, Strategy, and International Affairs in the Office of the Secretary of Defense. John served over the last forty years, from the Cold War to the era of Great Power Competition. This service has been in uniform and as a senior civilian for the Department of Defense. John is a regular contributor to multiple print and broadcast media companies.

Dave Walsh is the former President and CEO of Mitsubishi Power Systems Americas. He is an energy advisor to industry clients and a national commentator on global energy markets and related technology.

Image: LIVEK / Shutterstock.com.