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: electricity.
“The biggest issue we are now having is not a compute glut, but it’s the power and...the ability to get the builds done fast enough close to power,” Microsoft CEO Satya Nadella acknowledged on a recent podcast with OpenAI chief Sam Altman.
“So if you can’t do that, you may actually have a bunch of chips sitting in inventory that I can’t plug in,” Nadella added.
Echoing the 1990s dotcom frenzy to build internet infrastructure, today’s tech giants are spending unprecedented sums to construct the silicon backbone of the revolution in artificial intelligence.
Google, Microsoft, AWS (Amazon), and Meta (Facebook) are drawing on their massive cash reserves to spend roughly $400 billion in 2025 and even more in 2026 — backed for now by enthusiastic investors.
All this cash has helped alleviate one initial bottleneck: acquiring the millions of chips needed for the computing power race. The tech giants are accelerating their in-house processor production as they seek to catch up with global leader Nvidia. These will go into the racks that fill the massive data centers, which also consume enormous amounts of water for cooling.
Building the massive information warehouses takes an average of two years in the United States; bringing new high-voltage power lines into service takes five to 10 years.
Energy wall
The “hyperscalers,” as major tech companies are called in Silicon Valley, saw the energy wall coming.
A year ago, Virginia’s main utility provider, Dominion Energy, already had a data-center order book of 40 gigawatts — equivalent to the output of 40 nuclear reactors.
The capacity it must deploy in Virginia, the world’s largest cloud computing hub, has since risen to 47 gigawatts, the company announced recently.
Already blamed for inflating household electricity bills, data centers in the United States could account for 7 percent to 12 percent of national consumption by 2030, up from 4 percent today, according to various studies.
But some experts say the projections could be overblown.
“Both the utilities and the tech companies have an incentive to embrace the rapid growth forecast for electricity use,” Jonathan Koomey, a renowned expert from UC Berkeley, warned in September.
As with the late 1990s internet bubble, “many data centers that are talked about and proposed and in some cases even announced will never get built.”
Emergency coal
If the projected growth does materialise, it could create a 45-gigawatt shortage by 2028 — equivalent to the consumption of 33 million American households, according to Morgan Stanley.
Several US utilities have already delayed the closure of coal plants, despite coal being the most climate-polluting energy source.
And natural gas, which powers 40 percent of data centers worldwide, according to the International Energy Agency, is experiencing renewed favor because it can be deployed quickly.
In the US state of Georgia, where data centers are multiplying, one utility has requested authorization to install 10 gigawatts of gas-powered generators.
Published in Dawn, November 11th, 2025
