HOUSTON — Energy and technology leaders issued a warning on Monday to investors and regulators: the U.S. needs to generate far more electricity to power data centers and lead in the global race to develop artificial intelligence.
Energy Secretary Chris Wright told the thousands gathered at CERAWeek by S&P Global that the Trump administration’s “180-degree pivot” away from Biden-era clean energy policies means it will need to “work at warp speed” to both remain competitive in AI and keep the lights on as demand is projected to balloon.
“We have the talent, innovative spirit, and leading companies to win, but all that won’t matter if we can’t deliver the energy,” Wright said. “AI is an energy intensive manufacturing industry.”
The backdrop of the conference was a sharp downturn in the stock market as traders reacted to the uncertainty surrounding the Trump administration’s economic policies, including on-again, off-again tariffs that could drive up the cost of energy. The downturn affected many of the tech companies making a splash at the CERAWeek conference, with the so-called “Magnificent Seven” tech giants collectively losing more than $750 billion in value.
Large energy companies did not see stocks tumble, however, and the conference’s speakers kept the focus on AI and boosting fossil fuels — priorities for the Trump administration.
Power generators said they’re preparing for a major shift in demand. John Ketchum, president and CEO of power generation giant NextEra, said his company expects to see a 55 percent increase in power demand over the next 20 years, compared with a 9 percent increase over the past 20 years.
Ketchum said 17 percent of that increase would likely come from data centers. A federal study released in December found that data centers could account for as much as 12 percent of the country’s electricity demand by 2028, tripling their load from 2023.
Wright pitched natural gas as an obvious way to help meet that hunger for power — as did Chevron CEO Mike Wirth.
“As we’ve put a lot of intermittent generation into the grid, we’ve got issues now with reliable supply,” Wirth said. “And it’s increasingly a real worry to keep power supplied into the world today. You start to put all this new demand on top of that and we need some different solutions.”
Chevron in January announced it would partner with the Engine No. 1 investment firm to build natural-gas powered generators for data centers. Wirth said those power projects may not be connected to the grid and could provide private power to the data centers.
Data center developers have said that they need electricity around the clock to meet demand, meaning they may not be able to rely on weather-dependent wind and solar without accompanying battery storage or backup power.
Rising costs
But some power generators said renewable energy was often cheaper and quicker to build than natural gas plants.
Ketchum said the U.S. has built 175 gigawatts of renewables and only 13 GW of gas in the past five years. He said adding new gas generation faces two challenges: rising costs and the five-year lead time it can take to bring a new gas plant online.
Ketchum pointed to a natural gas plant NextEra subsidiary Florida Power & Light opened in Fort Lauderdale in 2022 that cost about $785 per kilowatt to build.
“If we wanted to build that same gas-fired combined cycle unit today it would cost $2,400 a kilowatt — the cost of gas-fired generation has gone up more than threefold,” he said. “And there are a number of factors that are driving that. One is just supply and demand. There’s a lot of demand for gas turbines right now.”
Ruth Porat, president and chief investment officer of Alphabet and its subsidiary Google, said tech companies are working to lower their energy footprints. She said from 2010 to 2018, data centers increased energy consumption by about 6 percent but increased their workloads by 550 percent.
Alphabet’s electricity demand will depend on two levers, she said: how much “economic upside is unlocked,” and how efficient the company can make its systems and data centers.
“So we can move workloads around by hour or by data center around a crisis to help with grid and grid stability, reliability, availability,” Porat said.
Larry Fink, founder and CEO of BlackRock investment advisers, said conversations he’s heard from tech companies have shifted away from a mandate to be powered by renewable energy only.
“Four years ago they would say, if we’re building a data center, it must be renewables. And about two years ago they said, we prefer to have renewables. And today they care about power,” Fink said. “I do believe we could be using a lot of dispatchable power.”
Wright said the best way to ensure power reliability, and affordability, was to produce more domestically.
“Natural gas is 25 percent of global primary energy, and in absolute terms, the fastest growing energy source on the planet,” Wright said. “So we want to grow America’s production of it, which grows jobs and economic activity in the United States and have the ability to ship that to our allies around the world.”
Wright noted the potential conflict between boosting exports of liquefied natural gas and the goal of burning more gas at home to support data centers and other load growth. Exports, he said, “are going to grow rapidly and demand for natural gas for electricity prices is going to grow rapidly.”
“We certainly don’t want to grow our export industry and penalize American citizens,” he said at a press conference Monday. “That is an unacceptable outcome.”
The solution, he said, was more production — and more infrastructure to support drilling and delivery. He said oil and gas companies would step up by boosting supply and “the marketplace will take care of that.”
‘Worrying’ signals
The conference came after the White House imposed — and then delayed — steep tariffs on Canada and Mexico. This weekend, Trump refused to rule out the possibility of a recession in an interview with Fox News, saying that the economy was going through a “period of transition.”
Early Monday, Wright waved off concerns that Trump’s trade policy would upset prices, telling reporters that he was “pretty optimistic” about how the economy would respond to the tariffs.
Concerns about the economy did creep into the conference, however.
Fink of BlackRock shared a gloomy short-term outlook, saying that “nationalistic” policies that include mass deportations mean that “over the course of the next six to nine months, we’re going to see a little more elevated inflation.” He added that the advent of AI and robotics that could make labor more efficient and drive deflation over the long term.
Ben Cahill, director of energy markets and policy at the University of Texas at Austin’s Center for Energy and Environmental Systems Analysis, said on Monday that oil and gas companies had been optimistic that the Trump administration’s deregulation would be a boon for the industry.
“But the macro signals are worrying from an oil demand perspective,” Cahill told POLITICO’s E&E News. “I think anything that suggests that macro signals and developed economies are not doing great, and that there could be an economic slowdown or even a recession, obviously has the market really worried.”
Oil futures contracts for a barrel of U.S. benchmark West Texas Intermediate crude traded at about $66.03 Monday afternoon, according to Bloomberg, down $1.01 from when trading began on Monday.
Correction: A previous version of this story misstated U.S. additions of renewables and gas in the past five years.
