Patrick Kent
Energy is required for real growth in any economy. If AI-driven energy demand inflates electricity prices, it could strain household and business budgets, reducing investment and consumption. This may offset AI’s productivity gains, ultimately slowing economic growth and the adoption of AI technologies.
In the past month both Meta and Google have announced plans to build enormous data center capacity for Artificial Intelligence applications. The most optimistic projections for AI-driven productivity suggest that artificial intelligence will spark one of the greatest economic booms in history. Some forecast that AI could boost global GDP by $7 trillion or more within a decade, with annual U.S. GDP growth accelerating by up to 1.5 percentage points as AI automates routine tasks and transforms business operations across nearly every industry. McKinsey estimates that the widespread adoption of generative AI and automation could contribute up to $4.4 trillion in annual productivity gains for businesses globally.
As a result, in recent years, there has been a race to build up the capacity for this productivity revolution. Data center investments have reached unprecedented scales, driven by the rapid expansion of artificial intelligence and cloud computing. Global capital expenditures for data centers reached $430 billion in 2024, with the U.S. planning to surpass $1 trillion in investments over the next five years. Major technology firms alone are channeling more than $300 billion into data center infrastructure this year, while planned global investments to keep pace with compute demand through 2030 total nearly $6.7 trillion. Hyperscale projects and government-backed initiatives—such as the $500 billion Stargate joint venture—underscore this surge.
What is not clear is how the power grid will support this added demand without massive cost increases.
