Unlocking Opportunities in AI Through Power Demand, Administration’s Initiatives

The U.S. is bracing for a reality where artificial intelligence and data centers overwhelm the power grid, and rightfully so, as America seeks to lead the global AI race. But this push is coming at the same time that the federal government is reshuffling fiscal priorities and prioritizing energy independence. While that dynamic may seem like a challenging juxtaposition, one thing is clear: regardless of political affiliation or preferred priority, if the U.S. wants to lead the world in AI, it must power it first.

COMMENTARY

This moment offers the Trump administration a clear strategic opening. As federal priorities pivot toward energy dominance and grid resilience, advanced energy technologies that were once the darlings of the Biden administration are now being cast in a negative light. But the explosion of AI offers these technologies a fundamentally new role. What was once environmental policy is now tied to billions of dollars in funding from the existing Infrastructure Investment Jobs Act (IIJA) that the administration has the opportunity to redirect in support of energy dominance and grid modernization. If this funding also supports power infrastructure needed to accelerate AI data center proliferation in the U.S., it creates a trifecta for securing significant federal investment: (1) a genuine need, (2) alignment with high-profile policies, namely energy and AI, and (3) readily available capital. The bottom line: Climate tech innovation should now be framed as essential infrastructure for AI expansion in the U.S., delivering speed, scalability and real-world impact.

Climate tech and advanced energy companies now have a rare, mission-critical opportunity to rebrand themselves as AI-grid infrastructure enablers. The International Energy Agency (IEA) forecasts that global renewable electricity generation will climb to more than 17k TWh by 2030, a nearly 90% increase from today, enough to match the combined power demand of China and the U.S. Yet, in the U.S., the next wave of federal funding is infrastructure-first and performance-based, channeled through entities like the Department of Energy (DOE) and Department of Defense (DoD). In addition, energy firms working with AI/data center builders, such as microgrids or on-site small modular reactors (SMRs), may have a pathway to access existing IIJA and repurposed Inflation Reduction Act (IRA) funding pools, if they can strategically frame their solutions as enabling AI infrastructure. Companies that demonstrate how their solutions relieve AI grid bottlenecks are best positioned to fit within this evolving framework. More importantly, those who act now, clearly and strategically, stand to play a decisive role in enabling America’s AI-powered future.

AI Power Demand is Massive, and Our Grid Isn’t Ready

For years, the U.S. power grid has been struggling with growing power demands. AI is only set to turn up the pressure. Gartner forecasts that AI-focused data centers will consume more then 500 terawatt hours (TWh) annually by 2027. That’s a staggering 2.6x jump from 2023’s power needs. Worse, Gartner also expects that 40% of data centers could face power constraints as early as 2026, as utilities struggle to build infrastructure fast enough to meet load growth.

This isn’t a distant problem. Major tech players are already delaying or rerouting data center deployments due to energy shortages in regions like Northern Virginia and Texas. As AI models get exponentially more powerful, their energy appetites are scaling just as fast, if not faster. Without aggressive upgrades to transmission and distribution networks, streamlined permitting processes for power plants and better demand management, the U.S. won’t fall behind on the technology-front of the AI battlefield; it will fall behind on power availability.

This is where clean energy and other advanced energy technology companies can step in as a game-changing-fix, with cutting-edge solutions that help to strengthen power production and delivery across the U.S. Solutions like geothermal, long-duration energy storage, fuel cell-powered microgrids, on-site SMRs and advanced transmission line solutions to upgrade the power grid’s capacity are all game-changers for AI data center expansion, in addition to benefiting the climate. Once operational, these technologies often emerge as the most cost-effective energy sources, offering reliable power with minimal technical risk.

New Opportunities With the New Administration and AI

The Trump administration has made clear that AI, domestic manufacturing and infrastructure resilience will be top priorities moving forward. Running in parallel, there’s a distinct and strategic push to deploy advanced power solutions alongside grid capacity and tap into federal funding. On-site SMRs have the potential to be deployed quicker than full-scale plants; upgrading existing transmission lines with new advanced conductor lines can multiply transmission capacity within months, compared to the years required to build new transmission corridors; and microgrids can support AI sites with smart, responsive on-site power. As long as these technologies can enable faster data center expansion, while also justifying that they are clean enough to qualify under the guidelines set by Congress for existing IIJA and IRA funding programs, they are fair game.

Federal agencies are acting on this shift, with the DOE and DoD looking to push solutions to address AI energy bottlenecks and maintain American leadership in AI capabilities. For example, the DOE has noted that the Office of Electricity (OE) and Grid Deployment Office (GDO) are shifting their focus toward infrastructure-strengthening, rural access and private-sector partnerships, which are all areas where renewables and other advanced energy technologies are already operating.

With broad-based tax credits likely to be limited, infrastructure-first, performance-based funding is emerging as the go-to model. Companies that position their clean-energy-infrastructure solutions as part of the AI energy ecosystem, working hand-in-glove with data-center developers, are best placed to capture federal dollars and lead the charge in deploying scalable, AI-aligned energy systems.

Pivoting Messaging and Seizing the Moment

While many people see President Trump’s position regarding DOE and renewable energy as a sign that the federal funding boom of the Biden Era is over, that’s not the case. As we’ve laid out, the AI-driven surge in power demand has matched step with shifting federal priorities. This creates a unique moment for clean energy and infrastructure firms: if they position their technology as critical AI-energy solutions, they can access the same performance-driven, link-to-infrastructure funding pools that the Trump administration wants to fund, but as an “AI-related company” rather than a “cleantech-related company.”

Clean energy and other advanced energy technologies aren’t sidelined; they’re central as resilient, domestic solutions to support exponential growth in power demand, and can play a role in shaping how the Administration chooses to deploy new funds. By engaging with the new administration early and offering credible, expert input, advanced energy firms can help define what qualifies as “critical AI-enabling infrastructure”, and ensure their technologies are part of that definition.

In this context, the narrative for cleantech and advanced energy technology companies becomes compelling. Rebrand as mission-critical AI infrastructure providers. Likewise, energy companies that work directly with AI and datacenters should champion their clean-energy integration to be at the ready for any possible AI-focused federal funding that may become available down the line. By doing this, both sectors position themselves to help define how the administration deploys the billions of dollars in remaining IIJA and IRA funding, to ensure they are in the best position to win those funds if and when they become available. More importantly, they can establish themselves as leaders in the AI-industry, helping the U.S. not just lead the AI race, but win it.

—Steve Empedocles is CEO of Clark Street Associates.