Trump is leading America into an energy crisis

The US is in danger of losing the global AI race for the most banal and careless of reasons: it is critically short of electricity.

The country is sitting on a neglected pre-modern grid that cannot meet surging power demand for data centres, cryptocurrencies, the reshoring of semiconductor plants and the proclaimed revival of the American industrial base.

Nor can it meet the needs for air conditioning through hotter and more humid summers. While we all talk about AI, the chief cause of rising electricity use last year was for cooling. Bitcoin mining took another 2 per cent of US power, for no productive purpose.

The electrotech revolution is already shaping the contours of global economic and strategic dominance for the next half-century. Right now, the US is losing. Trump’s tariff war and his energy culture war are together an unmitigated disaster.

The US Energy Department said in its Resource Adequacy Report in July that the planned increase in firm electricity supply is a fifth of what is needed by 2030.

“Absent intervention, it is impossible for the nation’s bulk power system to meet AI growth while maintaining a reliable power grid,” it said.

“A failure to power the data centres needed to win the AI arms race could result in adversary nations shaping digital norms and controlling digital infrastructure. The situation necessitates a radical change.”

The Sino-American fight over these “digital norms” will be won or lost within the next five to eight years.

The Texas grid operator Ercot expects peak power demand in its region to soar from 87 gigawatts (GW) this year to 138 GW by 2030. This is physically impossible.

Texas passed a law in June giving the state the emergency authority to cut off power to data centres. Ercot is already having to deploy “mobile generation plants” at exorbitant cost to avert blackouts, even today.

The National Infrastructure Advisory Council (NIAC) says the average age of America’s 60 million large power transformers is 38 years. Many are beyond their design life.

The US supply chain is not capable of delivering the 12 million new transformers needed each year to keep the show on the road. The backlog has risen to four years. The cost of transformers has jumped 80 per cent since the pandemic.

There is an acute shortage of electrical steel needed to make them. This comes mostly from China, Japan, Korea or Germany. In his infinite wisdom, Trump has imposed 50 per cent tariffs on steel, aluminium and copper. That cost shock has yet to feed through.

Hitachi will be building a new transformer plant in Virginia, but this will not move the needle before the end of the decade.

The NIAC says it is a similar tale for “other critical grid components such as conduit, smart meters, switchgear and high-voltage circuit breakers”.

The US power industry has lost its ecosystem of suppliers and forgotten how to expand after 20 years of flat demand. It needs to find another half a million skilled workers within four years.

The quickest way to generate more power is to roll out wind and solar. Trump is actively intervening to obstruct this. MAGA wants coal instead.

This week the administration announced $US625 million ($947 million) of taxpayer subsidy to “expand and reinvigorate” the coal industry. It will open new federal lands, slash the royalty fees for extracting coal, and lift curbs on mercury pollution.

“In addition to drill, baby drill, we need to mine, baby, mine,” said Doug Burgum, the interior secretary.

It is one thing to keep eight obsolete coal plants on life support to plug immediate gaps, it is another to wager America’s AI future on this culture war banter.

It takes seven years to build a new coal plant, and longer in the US. There is a four-year waiting list for steam turbines. Nothing of scale is going to be ready before China has already run away with the AI prize.

Nuclear power is going to take even longer. “The US talks the talk on nuclear but no new reactors have actually been started,” said Chris Gadomski, BNEF’s nuclear guru and a professor at New York University.

“The Chinese build six reactors at a time on the same site. They can do it in five years and at a fifth of the price for data centres,” he said.

It is odd that Donald Trump cannot see the looming danger to his own political brand.

America has built just two reactors since 1969: the Vogtle 3 and 4 twins in Georgia – $17bn over budget and seven years late. “They were the most expensive reactors in the world until Hinkley Point and Sizewell C,” he said.

The new wave of advanced “Gen 4” small modular reactors is a good fit for data centres, but they do not yet exist in the US, and they will not make much difference until the late-2030s.

What America needs is every form of power it can get its hands on this decade, whether green, brown, grey or any colour. Trump’s attempt to stop the near-completed Revolution Wind farm off New England – due to come on stream next year – tops the charts for culture war silliness, though it is hard to beat the copper tariffs.

Ditto for the Lava Ridge wind project in Idaho that was blocked in August. Ditto too for this week’s move to quash the Atlantic Shores South project off New Jersey.

Trump suspended new permits and leases on all wind projects on federal land and water in January.

His Big, Beautiful Bill was supposed to halt tax credits for wind and solar projects that produce power after 2027. But he has since gone further, subverting contracts and the intent of Congress by trying to pull forward the date in breach of a compromise with pro-renewable Republicans.

Trump has mobilised six US federal agencies to harass the renewable industry. He has lengthened the review process for all wind and solar permits. He is scaring away capital and erecting a giant sign on American soil telling clean energy funds to get lost.

Trump told the UN General Assembly last week that the Chinese were flooding the world with turbines but “barely use them” at home.

Somebody should whisper in his ear that China has installed 500GW of wind and 1,000GW of solar, nearly half the entire renewable capacity in the world.

It plans to continue rolling out renewables at a galactic scale for years to come. China is doing so because it is the cheapest and quickest way both to beat America to AI hegemony and to wean itself off seaborne fossil fuel imports forever.

It is odd that Donald Trump cannot see the looming danger to his own political brand.

Wholesale power prices have more than doubled since early 2020 in areas close to data hubs. The average price paid by households across US cities has jumped by 40 per cent to $0.19 a kilowatt-hour. It is ratcheting higher for structural reasons.

The cost is still less than the $0.36 or so paid in the UK, Germany and Italy – and far less than the wild spike in Europe at the outset of the Ukraine war – but the political damage may soon be comparable.

Americans consume three times as much power per capita as Britons – 12,701 kWh a year versus 4,069, according to data from Ember and the Energy Institute.

Over 20 million American households have fallen behind on their electricity bills. Rising numbers are being disconnected. We are starting to hear the same sort of stories about energy poverty that have been a staple of British headlines for four years.

Trump cannot keep blaming Joe Biden for much longer. It will soon be MAGA’s energy crisis.

Telegraph, London

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