Energy sector transformation spurred by the advent of artificial intelligence

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2025 September 13 . 2:13 PM

2 min read

Artificial intelligence is driving transformation in the energy industry

Energy sector transformation spurred by the advent of artificial intelligence

In the world of technology, AI data centers are experiencing an exponential growth rate, a trend that was the focus of discussions at the Transition-AI 2025 conference in Boston. Companies like Leegle.ai, led by Dr. Anne Greul, joined experts to deliberate on the management of this growth and the future development of infrastructure planning.

The growth of AI is not only impacting the technology sector, but also the energy sector. Hyperscalers, such as Google, are moving towards investing directly in capacity and flexibility to build a holistic energy strategy. This shift is aimed at meeting the increasing power demand from data centers.

However, this growth presents a challenge. Regulators, utility planners, data center and energy project developers, and customers will have to adapt to the increased complexity. The current regulatory patchwork is not sufficient to protect ratepayers from paying for infrastructure devoted to data centers.

The US administration, through Reggie Singh from the US State Department, has shown support for nuclear and geothermal power. However, a top-down requirement for clean firm power is not a priority. Dawn Owens of Fervo Energy values clean firm power at between $15 and $20 per megawatt hour.

Infrastructure investors are responding to this challenge by combining digital and energy teams and capital to approach AI infrastructure as a unique market challenge. Jigar Shah, former DOE Loan Programs Office director, notes that there is an abundance of capital in the market for energy projects.

The future of AI and energy is one that values massive data centers while planning for a more nimble, distributed, and flexible approach. Speakers at the Transition-AI 2025 conference agreed that the industry needs to do things differently than in the last 50 years. They consistently swung between the need for new regulations and a wholesale change to the entire culture of regulation.

Peter Nulsen of Generate Capital highlights the complexity of managing both massive data centers and energy projects simultaneously. Mike Kramer, VP of data economy strategy at Constellation Energy, plans to bring back the Three Mile Island site for operation at its previous capacity or better.

In conclusion, the growth of AI is a forcing function in the power sector, making change inevitable. As we move forward, it is crucial for all stakeholders to adapt and evolve to meet the challenges and opportunities presented by this shift. A version of this story was published in the AI-Energy Nexus newsletter on June 18.