The demand for electricity from AI is growing faster than the grid's bureaucratic capacity to expand. Doomberg predicts most new data centers will need to generate their own power, likely from natural gas, to bypass connection bottlenecks and avoid causing retail electricity price spikes for consumers.

The massive electricity demand from AI data centers is creating an urgent need for reliable power. This has caused a surge in demand for natural gas turbines—a market considered dead just years ago—as renewables alone cannot meet the new load.

While oil gets the headlines, disruptions to liquefied natural gas (LNG) supply are a more direct threat. LNG is a key energy source for data centers, so price spikes or shortages could derail the massive capital expenditures driving the AI buildout.

The massive energy demand from AI data centers provides political cover for the natural gas industry. They are framing the construction of new pipelines and plants—projects that have faced opposition for years—as essential for the U.S. to win the AI race, creating a "generational opportunity" to accomplish their strategic agenda.

To overcome energy bottlenecks, political opposition, and grid reliability issues, AI data center developers are building their own dedicated, 'behind-the-meter' power plants. This strategy, typically using natural gas, ensures a stable power supply for their massive operations without relying on the public grid.

The immense energy demand from AI is creating a new market for "trapped" natural gas reserves that are hard to transport. Energy companies can co-locate data centers with these reserves to harness cheap, reliable power, transforming a stranded asset into a highly valuable one.

Contrary to the renewables-focused narrative, the massive, stable energy needs of AI data centers are increasing reliance on natural gas. Underinvestment in grid infrastructure makes gas a critical balancing fuel, now expected to meet a fifth of the world's new power demand (excluding China).

The public power grid cannot support the massive energy needs of AI data centers. This will force a shift toward on-site, "behind-the-meter" power generation, likely using natural gas, where data centers generate their own power and only "sip" from the grid during off-peak times.

The urgent need for AI compute capacity is outpacing grid upgrade timelines, which can take 3-5 years. In response, hyperscalers are installing "behind the meter" power solutions—often less-efficient, simple-cycle natural gas generators—as a pragmatic way to get data centers operational years faster than waiting for utility connections.