The race to power the future

“Staggering.” That is the word Jason Bordoff, director of the Center on Global Energy Policy at Columbia, uses to describe China’s energy buildup.

“They’ve built more power generation capacity in the last four years than the entire U.S. grid combined,” he said.   

In just the last year alone, China added the equivalent of 40% of the electrical capacity of the entire United States, according to Brookings Institution senior fellow Kyle Chan. It’s nowhere near done.

“China is projected to double its wind capacity, probably triple its solar capacity, and 6x its battery capacity by 2030,” said Leslie Abrahams, a senior fellow at the Center for Strategic and International Studies. 

One cluster of solar farms in Western China, the Talatan Solar Park, covers 162 square miles of desert; that is 7 times the size of Manhattan for just one solar park.

China’s lead is not just in renewables. “They are also the top investors in other technologies like large-scale nuclear,” said Abrahams. “So they have almost 30 reactors currently under construction, which is about 50% of all global development.”

If energy is a race, the U.S. is losing it.

“The U.S. struggles to build out new energy,” said Brookings’ Kyle Chan. “It’s not a problem that the U.S. has really dealt with before, given that there wasn’t really that much growth and energy demand until now with AI.” 

China has been adding energy for many years to power its manufacturing base, and, if anything, is building more than necessary, analysts said. The U.S., by contrast, has experienced decades of demand stagnation and underinvestment that have made it hard to adjust.

“We lost muscle memory with how to build new power generation,” said Bordoff. “The poles and the wires in the system are old, and we haven't had to build new power in this country for a long time. It's difficult to get permits. There are all sorts of bottlenecks,” he said. 

Areas where the U.S. was surging, like renewables, have run into roadblocks. While the White House is trying to jumpstart nuclear power and is in favor of drilling, it’s also trying to end offshore wind entirely. Meanwhile, tariffs are making solar panels more expensive, and high interest rates have dragged down financing, said CSIS’s Leslie Abrahams.

“Our renewable growth will be about half of what we had previously thought it was going to be,” back when the Inflation Reduction Act was first passed, Abrahams said.   

Outside of renewables, natural gas prices are rising, albeit from very low levels. And there are challenges in the U.S. right now turning more gas into more power.

“There has been a shortage of the turbines that you need for those natural gas plants,” said Kelly Morgan, research director for data centers at S&P Global. It’s gotten so bad that AI companies are literally scouring the world for parts to build their own natural gas power plants.

“So they’re looking at airline engines, they’re looking at train engines, they’re looking at used engines — they’re looking all over the place,” she said.

AI companies in particular have a lot to lose, or gain, from the fate of the U.S. energy grid.

“The biggest risk that the U.S. might not win the race for leadership in AI is sufficient access to power at low cost,” said Bordoff.

And here is where the energy race with China becomes an everything race.  Because energy is not just for AI — it’s for cars, it’s for humanoid robots and industrial automation, it’s for AC on days that keep getting hotter. “It’s not just a matter of missing out on an energy opportunity but potentially missing out on a broader technology opportunity,” said Chan.

There are some important caveats.

“On any typical day, the United States only uses about half of the electricity that our grid is capable of producing,” said Bordoff. “We have a grid built for a couple of days of the year — like the close to zero temperatures in New York City, where I am right now — or heat waves in the summer,” he said. 

So there is an opportunity to do more with existing grid capacity, especially if data centers can be flexible about their usage and if there is more investment in energy storage infrastructure. 

And, as Bordoff qualified, “history would suggest that the straight line projections for power demand growth, in the end, may prove to be overstated. You can go back to the late 1990s, I remember an op-ed headline called ‘[Dig] more coal — the PCs are coming.’ And it was based on a paper that projected the internet would consume half of U.S. electricity. We saw that for cryptocurrency, too.”  

Technology improves, efficiency improves, and we may not need quite the exponential increases being projected.

But also, we might. And electrical grid operators in the U.S. are trying.

“We’re investing more than $1 trillion over the next five years in order to build that energy infrastructure and meet that growing demand,” said Drew Maloney, CEO of the Edison Electric Institute, which represents electrical companies. He said $1 trillion is a conservative estimate, and electric companies have already invested $200 billion over the past year.

The big question remains, though: Will all of that be enough?