America's power grid can't keep up with AI demand

One word, small modular nuclear power generation. Enough said. Ok that's five words. Sue me.

A little context. Over 200 ships in the US Navy have been power for over two decades without incident by small nuclear reactors. This technology can and must be transferred for public use and data center use. This will take time and create logistical challenges. It's not easy but hypothetically doable over time. In the meantime it will be a rough road.

America's power grid can't keep up with AI demand

Grid engineers, utility executives, and regulators describe a system where permitting, supply chains, and queues can't match the speed of data center growth

By Ambia Staley, Quartz Media

Updated Sunday

The U.S. needs about 5,000 miles of high-voltage transmission per year to keep pace with electricity demand. In 2024, just 888 miles were completed, according to an analysis by Grid Strategies. That gap is widening even as data center developers race to bring tens of gigawatts of new load online. The result is a structural mismatch between the speed at which demand arrives and the speed at which the grid can absorb it.

Global electricity demand from data centers grew by 17% in 2025, according to the International Energy Agency, with AI-focused data center electricity consumption growing even faster, surging 50%. In the U.S., data centers now account for about half of the country's incremental demand growth, according to the IEA's global energy assessment.

The constraints that shape the AI-driven land rush are not mysteries. They are specific, identifiable, and for the most part well understood by the people who build and operate the grid. The question is whether they can be solved on the timeline the market demands.

The interconnection bottleneck

Before a new power plant or energy storage facility can connect to the grid, it must go through a series of impact studies and receive approval from a regional transmission operator or utility. As of the end of 2025, over 2,060 gigawatts of generation and storage capacity were seeking connection to the U.S. grid, according to Lawrence Berkeley National Laboratory's "Queued Up" report. For context, that figure is about double the capacity of the entire existing U.S. power plant fleet.

The queue is large, but most projects in it will never be built. Only 13% of the capacity that submitted interconnection requests from 2000 to 2019 had reached commercial operations by the end of 2024; 77% had been withdrawn. The projects that do get built take far longer than they once did. The time projects spend in queues before reaching commercial operation has doubled, from less than two years for projects built in 2000-2007 to over four years for those built in 2018-2024.

In PJM Interconnection, the regional transmission organization serving 13 states and the District of Columbia, the timeline is even worse. The average time from interconnection application to commercial operation has risen from less than two years in 2008 to over eight years in 2025, according to an analysis by RMI, the clean energy research organization.

PJM's 2025 long-term load forecast projects peak load growth of 32 gigawatts from 2024 to 2030, with about 30 gigawatts coming from data centers. That forecast has made PJM ground zero for the collision between demand velocity and grid constraints. PJM's independent market monitor, Monitoring Analytics, found that "data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices."

The Federal Energy Regulatory Commission has taken steps to address the backlog. In 2025, FERC implemented its Order No. 2023 generator interconnection reforms and accepted pathways to fast-track more than 50 gigawatts of new generation. Whether those reforms will compress timelines enough remains to be seen. It is too early to measure and assess their full impact, LBNL noted.

The equipment supply chain

Even after projects clear the interconnection queue, they face a physical constraint: the equipment needed to build the grid is not available in sufficient quantities.

Large power transformers, the devices that step voltage up for transmission and back down for distribution, are the most acute bottleneck. According to Wood Mackenzie, power and distribution transformers face supply shortfalls of 30% and 10%, respectively, in 2025. Lead times for large power transformers averaged 128 weeks in the second quarter of 2025, while those for generator step-up transformers averaged 144 weeks.

Since 2019, unit prices have increased 77% for power transformers and 45% for generator step-up units, with some categories of distribution transformers rising as much as 95%, according to Wood Mackenzie. Imports now account for an estimated 80% of the U.S. power transformer supply.

"This surging transformer demand has created a significant supply deficit, with domestic manufacturing capacity unable to keep pace," said Ben Boucher, senior analyst at Wood Mackenzie. The convergence of accelerating electricity demand, aging infrastructure, and supply chain vulnerabilities, he warned, "has created constraints that will persist well into the 2030s."

Trade policy compounds the problem. Tariffs are expected to further increase average transformer costs and lengthen lead times, as imports from certain high-tariff countries become cost-prohibitive, according to Wood Mackenzie.

The transmission gap

The pace of high-voltage transmission construction has slowed to a fraction of what it was a decade ago. According to a report from Grid Strategies and Americans for a Clean Energy Grid, in 2024, just 322 miles of high-voltage transmission lines were completed, marking the third-slowest year for such construction in the past 15 years. By comparison, nearly 4,000 miles were built in 2013 alone.

New interstate transmission lines typically take more than four years, and sometimes up to 11 years, to obtain all necessary permits before construction can commence, according to the Department of Energy. Building time adds to that. On average, it can take 10 years or more to build a high-voltage transmission line, including planning, environmental review, permitting, land acquisition, and construction, according to the Transmission Agency of Northern California.

The permitting challenge is both structural and political. A transmission line crossing state lines may require approvals from multiple state governments along its path, and critics argue that the current framework allows a single state to block a project supported by neighboring jurisdictions, according to the Congressional Research Service. FERC's Order No. 1920, adopted in May 2024, reformed regional transmission planning and cost allocation, but compliance deadlines for transmission providers have been extended, and new construction remains years away.

"As electricity demand climbs due to the onshoring of manufacturing, artificial intelligence, and electrification, the pace of transmission development isn't keeping up," said Christina Hayes, executive director of Americans for a Clean Energy Grid. "We're seeing a serious mismatch between where we are and where we need to be."

Where this leaves grid planners

The mismatch is not one problem but several, running in parallel: Queues that take years to clear. Equipment that takes years to procure. Transmission lines that take a decade to build. And demand that can materialize in a fraction of that time.

EPRI now projects U.S. data centers could consume 9% to 17% of national electricity by 2030. The range is wide, reflecting genuine uncertainty about AI adoption rates, efficiency gains, and the number of planned facilities that will actually be built. But even the low end represents a significant increase from about 4% in 2023.

Constrained by slow grid connections, data center developers are advancing a large number of projects with on-site natural gas-based power generation, largely in the United States, the IEA reported in April 2026. That workaround underscores a core tension: Data center demand moves at the speed of capital markets, while grid infrastructure moves at the speed of permitting, procurement, and construction.

FERC Chairman Mark Christie wrote in January 2026 that the commission is focused on ensuring "families and small businesses do not foot the bill for the grid upgrades needed to support large consumers, such as data centers and industrial facilities." That principle now competes with the physical reality that building the grid to serve those consumers takes time, and the market may not be willing to wait.