AI’s Power Play: Congress Calls for Smart Energy Solutions to Fuel AI Growth

On Tuesday, June 4, 2024, the House Energy & Commerce Committee’s Subcommittee on Energy, Climate, and Grid Security held a hearing titled “Powering AI: Examining America’s Energy and Technology Future” to examine these trends. Committee Chair Cathy McMorris Rodgers (R-WA) emphasized the urgent need for action to meet growing demand, noting that “massive amounts of power around the clock” will be required. Subcommittee Chair Jeff Duncan (R-SC) echoed these themes, calling for streamlining of permitting and judicial review processes to facilitate this expansion.

House Energy & Commerce Committee Ranking Member Frank Pallone (D-NJ) advocated for regulators to expedite permitting and review processes for energy interconnections. The hearing focused on how utilities, technology and commercial industrial companies, all sharing clean energy goals, must collaborate to prioritize affordability and reliability in energy delivery. The consensus was that such partnerships are essential to meeting the rising energy demands while maintaining cost-effectiveness and stability for consumers.

National security was another prominent theme, with members highlighting that the United States is in a competitive race with China to lead in AI innovation. They stressed the need to treat these issues as matters of national security, particularly as supply chain challenges can impede efforts to build out additional generation resources and energy infrastructure assets.

The hearing underscored the growing importance of energy in the age of AI, reflecting a bipartisan consensus on many key points. Committee members encouraged technology and energy leaders to continue to engage with Congress, national labs, the Department of Energy (DOE), Federal Energy Regulatory Commission (FERC), state regulators and consumers to support the development of flexible and energy efficient demand and reliable low-carbon power generating solutions.

Key Takeaways

Growth in Energy Demand:

• The DOE forecasts a tenfold increase in data center energy demand growth rates due to the rise of AI applications and data centers.
• Data centers are reportedly projected to consume up to 9% of all U.S. electricity by the end of the decade, underscoring the urgent need for strategic energy planning.

Grid Reliability and Stability Challenges:

• The current electric grid faces significant challenges in meeting the rising demand, with concerns about reliability and stability.
• Intermittent renewable energy sources alone are insufficient to meet the high reliability requirements of data centers and AI technologies, necessitating a focus on a diverse generation mix that includes storage and firm dispatchable generation resources.

Regulatory and Policy Implications:

• Existing state and federal policies have led to retirements of reliable, dispatchable generation resources which, without adequate replacements, will impact grid stability.
• Immediate policy adaptations, including to address the significant backlog in the interconnection queue and streamline the permitting process, are necessary to ensure a stable and reliable energy supply to meet future demands, balancing environmental goals with energy reliability.

Highlights for Stakeholders

Infrastructure Investment:

• Significant investments in building and upgrading energy infrastructure are crucial to support the growing demands of AI and data centers.
• Prioritizing the development of dispatchable generation resources will complement renewable energy sources and ensure grid reliability and resiliency.

Economic and National Security Considerations:

• The growth of AI and data centers presents substantial economic benefits, including job creation and infrastructure development.
• Reliable energy is critical for national security, particularly for AI applications in defense, cybersecurity and critical infrastructure protection.

Public-Private Partnerships:

• Fostering partnerships between government and industry can ensure coordinated efforts in addressing energy needs for national security.
• Engaging in joint initiatives will enhance the resilience and security of energy infrastructure, supporting the strategic deployment of AI technologies.

Conclusion
The hearing highlighted the critical need to address the complex interplay between technological advancements in AI, the resulting increase in electricity demand and the necessity for a robust and reliable energy infrastructure. Immediate policy adaptations are essential to ensuring a stable and reliable energy supply to meet the future demands of AI-driven growth.

Stakeholders across the energy and technology sectors are encouraged to engage with policymakers to promote strategic investments in infrastructure, adaptive policies and robust public-private collaborations. Ensuring a reliable grid and stable energy supply will not only support the growth of AI but will fortify U.S. national security.

Pillsbury remains committed to keeping our clients informed about significant legislative and regulatory developments in AI and energy. For more information or guidance on how these issues may impact your business, please contact our team.