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The writer, a former American secretary of the Treasury, presides over the Paulson Institute
One of the most urgent and underestimated energy challenges in the United States is the breed of artificial intelligence with China. America is in the lead, but Beijing invests massively to fill the gap. Can the question for Washington: Can the United States stay in advance without a national energy strategy to feed it?
The energy landscape has radically changed in recent years. The invasion of Ukraine by Russia reshaped him overnight. Prices have skyrocketed and governments rushed to reduce dependence on Russian gas. Energy security has become essential. Like Europe and other regions that are not independent of energy seek to approach these vulnerabilities, they are turning more and more on solar and wind energy to reduce dependence on fossil fuels.
China advances, combining a long -term industrial strategy with massive investments in AI infrastructure and energy to support it. Its data centers market should grow almost $275bn Between 2025 and 2029. He invested more in renewable energies in 2024 than the United States, the EU and the United Kingdom. Beijing’s Claire Ambition is to dominate technologies for the future, understanding that energy policy will be the key.
Meanwhile, in the United States, as AI models become more complex and are deployed on a larger scale and the power of clouds increases, the demand for electricity increases more quickly than public services cannot strengthen capacity. Some data centers are now consuming as much power as medium -sized cities. In Virginia, they consumed roughly a quarter of the state electricity load in 2023. This has increased concern concerning the strains on the system and higher residential invoices, leading to new regulations and an efficiency moratorium on the construction of data centers in the state.
The United States must develop and deploy a national energy strategy with clear eyes which favors speed, flexibility and profitability. Since the demand for electricity considerably exceeds the supply, it is logical to consider clean electricity as an “addition” to existing energy supplies. In fact, almost all additional electricity in the United States has come from solar and wind energy – traditional energy sources cannot meet the need.
Gas cannot fill the short or medium term vacuum due to turbine shortages. Coal will not solve the problem, as embodied public services cannot be raised quickly enough to meet urgent needs (and atmospheric pollution harmful). The expansion of nuclear energy is an essential element of the solution, but the United States is late and China is far in the development of advanced nuclear energy.
Given the abundance of natural gas in America, many data centers will always be based on it, but smarter and faster models emerge. For example, a hybrid model that uses solar and battery storage or a peak gas backup in high demand periods is faster to increase, due to the order of equipment and lead times, air permits and interconnection. These also require less initial investment and “all costs” are comparable to basic gas.
This model is not without risks. A short -term shock for solar or storage ecosystems would leave a big hole, as is the power needs of AI increased. Without existing solar incentives, which led to significant importance in creating a fair playground with China, and with the pricing regime of the US administration, the all-in-in-the-level costs of the hybrid model will increase. But to stick to gas would be to sacrifice the speed of development and to bet against the rapid decline in solar storage and battery costs, which has dropped approximately 20% last year and more than 80% in the last decade.
The right answer is not to choose an energy source compared to another, but to quickly create the conditions to increase what works. This means the low-tax and light regulatory environment that allowed the boom to renewable energies in the United States during the first Trump administration. We also have to exempt technologies such as long-term batteries from import rates, while doubled supporting the United States-based solutions in public services storage. As for the way public services to recover Costs, we must encourage investment in technologies that reduce energy prices for all.
AI is a major engine of electricity demand. But it also has the potential to unlock substantial supply gains. We cannot afford to miss this moment. More capacities, lower costs and greater energy security are within our reach.
The United States has always built an advantage of energy independence. The test is whether we can meet the energy needs of the next era of innovation. If this is the case, we will be in a stronger position in AI than any other nation for the decades to come.
