What's slowing down the AI buildout
9 hours ago
- #energy policy
- #AI infrastructure
- #electric grid
- The AI buildout is slowed by the bottleneck of connecting new data centers and power plants to the electric grid, not by an overall energy shortage.
- Grid interconnection processes are backlogged, with wait times increasing from less than 20 months in 2005 to 55 months in 2023, due to outdated first-come, first-served systems.
- Demand for electricity is rising due to AI, electrification trends, and technologies like EVs, straining grids and causing congestion costs of $11.5 billion in 2023 in the U.S.
- Energy markets and price signals help balance supply and demand, but regulatory interventions and fixed consumer rates can lead to inefficiencies and irrational energy use.
- Reforms like auctioning grid capacity, adopting connect-and-manage approaches for flexible data centers, and promoting demand response can speed up connections and reduce costs.