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Almost a year ago, President Donald Trump declared that the United States was experiencing an “energy emergency.”
At the time, the U.S. was beating national and world-historical records for oil and gas production, as well as for wind and solar generation. But since then, the threat of an energy emergency really has emerged, in large part thanks to Trump’s own interventions in the power sector.
The Trump administration has blocked construction of renewable power sources, rescinded billions of dollars allocated by Congress to expand the grid and clean energy, and helped pass a law that vaporized federal tax credits for wind and solar projects.
These actions have compounded long-running challenges in connecting projects to the grid. All the while, the AI arms race — an avowed Trump priority — has pushed the need for new power production to dizzying heights.
Electricity demand will clearly outpace supply in the coming years, and concerted federal efforts are further reducing that supply. So, does that mean we are inevitably headed for an energy crisis? Nearly everyone I spoke with for this story believed the crisis was coming, if not already upon us.
“The mismatch just grows every day, with every new project cancellation and every new data center,” said Jesse Lee, a senior adviser at Climate Power, which advocates for action on climate change. “When you mismatch supply and demand that way, you get prices going through the roof.”
Indeed, residential electric utility rates rose by 13% from January to September of last year, and pressure on consumers became a major electoral issue in November’s gubernatorial elections in New Jersey and Virginia.
Longer term, the mismatch could result in regional energy shortfalls and threaten hundreds of billions of dollars in AI investment if the grid simply can’t keep up.
“Many parts of the country will have rolling blackouts in the next few years if we aren’t intentional about solving this crisis,” said Costa Samaras, who directs the Wilton E. Scott Institute for Energy Innovation at Carnegie Mellon University and worked on clean energy innovation in the Biden White House.
Somewhat dire stuff to kick off the new year with. But the very recognition of the problem is laying the groundwork for tackling it. And the looming menace of AI’s energy consumption just might deliver our best bet to convert energy scarcity into abundance.
This current energy predicament stands out from its predecessors because so many of the decisions constraining U.S. energy supply are being made domestically rather than by foreign adversaries.
Since resuming office, Trump has overseen continual supply-reducing moves, including:
“There is a crisis. It’s like we’re back in the ’70s, but instead of OPEC squeezing us, it’s us squeezing us,” said Armond Cohen, executive director of the Clean Air Task Force.
All told, 266 gigawatts of planned electricity generation projects fell through in 2025, according to analyst Michael Thomas. Thomas’ data platform, Cleanview, tracks more than 10,000 clean energy projects — a tricky task because developers often advance speculative projects to see if they can win a grid connection. But offshore wind tends to involve less speculation, given the hurdles to secure rights, Thomas said, and there’s been a clear trend of offshore wind cancellations this year in response to the administration’s hostility.
Other cancellations stem from issues that precede Trump’s directives, such as regional grid operators asking developers to pay exorbitant rates to connect to the network and local opposition blocking a project.
“So many of these challenges of how we build the necessary infrastructure to make the world better,” Thomas said, are “playing out county by county in these little battles of ‘Do we build a wind farm here, do we build a solar farm here?’”
Not all clean energy developments are under threat. The budget law Trump signed in July preserved Biden-era tax credits to install on-demand clean energy sources like batteries, geothermal, and nuclear, even as it did away with credits for wind and solar generation.
A Department of Energy spokesperson did not respond to questions about what the administration is doing about the declared energy crisis. The DOE has made some moves to expand electricity supply: It loaned $1 billion to help restart a nuclear reactor at Three Mile Island, and it kicked off a challenge to build new modular reactor designs by July 2026 — though these nascent technologies will take many years to secure regulatory approvals and enter commercial deployment.
Most intriguingly, Trump Media & Technology, the parent company of Trump’s own social media platform, Truth Social, announced in December that it would pursue a merger with nuclear fusion startup TAE Technologies. TAE hopes to generate clean baseload power in the early 2030s, though scientists consider cracking commercially viable fusion to be more technically challenging than running a niche and unprofitable social media platform.
Meanwhile, tech giants’ ambitions for AI computing construction have ballooned. Thomas said that while 20 to 30 gigawatts of data centers are operating today, 100 gigawatts are trying to connect in the next five years. Analysts at BloombergNEF predicted in December that data centers will consume 106 gigawatts by 2035; that number grew by 36% from the company’s tally just seven months prior.
Rep. Sean Casten, an Illinois Democrat and a leading energy wonk in Congress, said he worries about the current federal leadership’s capacity to respond to a full-blown energy crisis.
“Tell me how much volatility is coming down the pike, and it’s sort of like you’ve got a JV baseball team that’s working the ER shift tonight — if nobody checks into the ER, we’re gonna be fine,” he said.
Even so, Casten thinks widespread blackouts are a low-probability outcome because energy regulators have such a bias toward protecting reliability.
“The state utility commissions, the regional transmission organizations, they don’t always make good decisions, but they generally do prioritize reliability,” he said. “Having said that, the energy crisis that I think we should be super concerned about is on the price side.”
The Trump administration has raised the cost of energy not just by reducing supply. The delays it has caused for offshore wind projects have racked up hundreds of millions of dollars of unforeseen expenses, even before the most recent attempt to stop them from finishing construction. The interruptions also signal to foreign investors that billion-dollar projects in the U.S. are susceptible to extralegal disruption by the government, chilling future investment. Trump’s DOE has repeatedly invoked emergency powers to force old coal-fired plants to keep running beyond their planned retirement, leaving customers to foot the bill for tens, if not hundreds, of millions of dollars.
Those are system-level cost increases. On a more individual scale, when Republicans demolished the Inflation Reduction Act, they removed incentives for families to upgrade household energy efficiency, the Scott Institute’s Samaras noted. “Those save the homeowner money, but they also reduce the peak electricity demand when you really need it.”
The Trump administration could tackle the crisis by simply allowing American energy, including clean technologies, to flourish.
“Just get out of the way and stop blocking solar and wind permits,” said Shannon Baker-Branstetter, senior director of domestic climate and energy policy at the Center for American Progress. “If they believe in all of the above, really let it be all of the above.”
But that seems unlikely. Instead, the Trump administration is promoting gas power, though it has not taken steps to deal with the five-or-more-year waitlists to even buy gas turbines or their rapidly inflating costs. Its exotic nuclear bets won’t pay off for years, if ever.
Americans will have to look elsewhere for a remedy, and after so many pessimistic conversations, I finally found someone who was not only unfazed by recent developments but also optimistic about the future.
Pier LaFarge hails from Alabama and runs a startup called Sparkfund, which works with utilities to tap the benefits of clean and distributed energy. He speaks the language of the cleantech world but sees things differently than many in that cohort do.
We won’t crash headlong into an energy crisis, LaFarge assured me, precisely because everyone’s talking so much about crashing headlong into an energy crisis. This point recalled the Heisenberg uncertainty principle from my high school chemistry days: The act of observing something changes the thing that is observed.
Utilities and data center developers, LaFarge said, are coalescing around the understanding that demand during a relatively small number of hours in the year is constraining the AI buildout.
For decades, utilities built out the grid to meet the few hours of the year when demand peaks. That leaves capacity — in terms of power plants and transmission and distribution lines — wildly underutilized much of the time. The energy crisis won’t materialize, LaFarge argues, because it will catalyze the power sector to improve utilization of the existing grid.
Solve for a few moments of stress, and AI’s voluminous consumption of kilowatt-hours can support the fixed costs of running the grid for everyone else.
“Cheap batteries and data centers solve all of it,” he said. “You charge up when there’s excess, you drop it on the transmission and distribution corridors, you serve the data centers, downward pressure on rates, you win the future.”
In Oregon, an AI customer is already directly paying for grid batteries that will be used to benefit all of Portland General Electric’s customers. LaFarge said he has seen other confidential AI energy service agreements that will put multiple billions of dollars of downward pressure on utility rates for regular customers.
That’s more or less what Energy Secretary Chris Wright was talking about on his December publicity tour, though he attracts skepticism from clean-energy analysts when his idea for smart capacity investment amounts to forcing aging coal plants to stay open and hemorrhage money that other people have to pay for.
But if AI companies procure batteries, or portfolios of distributed energy and controllable demand, the economics change drastically. This would, in fact, achieve the cleantech sector’s long-held dream of an interactive and decentralized energy system.
This rosy scenario could fail to materialize for myriad reasons — states and regions failing to build grid infrastructure, regulators letting utilities dump billions of dollars into gas-plant construction at inflated costs instead of targeted battery investments, local leaders giving data centers sweetheart deals instead of demanding they pitch in.
But if batteries are allowed to play, the AI-fueled energy crisis could join the long list of energy crises that never came about. It’s comforting to know that’s at least a possibility.
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