AI’s energy crunch: The boom that could blow the grid

America may not have enough power to sustain the AI boom without massive new investment in energy infrastructure.

“AI growth will soon be limited by energy,” wrote The Kobeissi Letter, a markets newsletter led by economist Adam Kobeissi, warning that electricity, not chips, could become the next big bottleneck for the industry.

We need more electricity:

AI data centers are set to consume 1,600 terawatt-hours of power demand by 2035, equal to 4.4% of global electricity.

In other words, power demand from AI data centers is set to QUADRUPLE over the next 10 years.

If counted as a country, AI data… pic.twitter.com/IZMaOtcQke

undefined The Kobeissi Letter (@KobeissiLetter) October 4, 2025

Citing data from BloombergNEF, the report noted that AI data centers are projected to consume 1,600 terawatt-hours of electricity annually within the next decade — roughly 4.4% of global power demand.

“In other words, power demand from AI data centers is set to quadruple over the next ten years,” Kobeissi said.

He added that if AI data centers were a country, they’d rank fourth in electricity consumption behind only China, the U.S., and India.

The figures underscore how AI is rapidly evolving from a technology story into a macro-scale energy challenge.

Without massive investments in new power generation, particularly clean energy, and modernized grids, analysts warn that the AI expansion could soon hit physical limits.

Meanwhile, Big Tech is racing ahead, committing hundreds of billions of dollars this year alone to build new AI data infrastructure.

As energy constraints tighten, the most immediate pressure point is rising costs across the board for businesses and households.

Rising electricity costs emerge as a major threat

Even as inflation pressures remain high, American households are being hit by another growing burden: soaring utility bills.

According to Fed data analyzed by the Institute for Progress, the average U.S. electricity price has climbed from roughly $0.14 per kilowatt-hour in 2021 to nearly $0.19 today — a 35% increase in just three years.

Over the past year alone, electricity prices have risen at more than twice the pace of overall inflation, underscoring household strain.

“This is the biggest financial problem our society faces,” warned Spencer Hakimian, founder of Tolou Capital Management.

Chris Womack, CEO of utility giant Southern Co., issued an even starker warning: “If we don’t get affordability right, there will be a revolution in this country.”

The concern is shared across the energy sector.

Jon Gordon, an executive at Advanced Energy United, said that “the average person is really concerned about the price of electricity,” adding, “there’s nothing on the horizon that’s going to make prices go lower.”

Ed Crooks, vice chair at Wood Mackenzie, noted that the surge in power prices has become a major policy challenge, complicating efforts to fulfill campaign promises, including President Trump’s pledge to cut energy costs in half.