America’s Energy Bottleneck: The Hidden Constraint on AI, Industry, and National Competitiveness

The global demand for energy is accelerating, driven by a combination of electrification and the power demands of artificial intelligence and the rapid expansion of advanced technologies. Although estimates vary widely, there is broad consensus that electricity demands are, and will continue, to rise dramatically. Some forecasts suggest that AI alone could drive a 165% increase in power demand by 2030. While today’s largest AI data centers already use about as much electricity as 100,000 households, the industry is actively working on efficiency improvements. Even as newer facilities are expected to use more energy, ongoing advances in hardware, cooling, and clean power aim to keep this growth manageable and sustainable. 

The problem is not production, it is permitting and infrastructure. While American projects are slowed by regulatory delays and aging transmission systems, China is surging ahead. In 2025, China will invest $300 billion more in energy than the United States, accounting for one-fourth of all global energy investment. China already generates twice as much power as the U.S. and is on track to add 60% more capacity by 2040. 

Lack of energy resources is not the core challenge facing the United States. When considering industries like oil and gas, the picture becomes clear: since 2018 the U.S. has been the world’s top oil producer, surpassing Saudi Arabia, with vast reserves in regions such as the Permian Basin and the Bakken Formation that have transformed the country into an energy superpower. The U.S. has also been the world’s largest natural gas producer since 2009, and in 2023 it became the leading LNG exporter, ahead of Qatar and Australia. 

Some interest groups argue for restricting or even halting the construction of new data centers, treating them as if they were the root cause of rising energy consumption. But this view ignores reality. Growth in energy demand is driven not only by AI, but also by electric vehicles, a potential resurgence in U.S. manufacturing, population growth, and the expanding needs of modern life. Energy consumption will increase inevitably. 

The true strategic question is not how to resist this increase, but whether America will secure the power needed to lead in the next technological era. AI leadership now hinges on the nation’s ability to supply electricity. Exploding demand will strain an aging grid at the very moment China is racing forward with massive new generation and transmission. Without urgent upgrades, America’s AI ambitions will be constrained by energy limits long before they reach technological limits. 

This challenge directly intersects with the broader national goal of reindustrialization. As Jensen Huang, CEO of NVIDIA, stated at CSIS: 

“Chip factories, supercomputer factories, and AI factories, they all require energy, every single one of them. And so, on the one hand, we want to reindustrialize the United States. How do you do that without energy?”
He further emphasized that recognizing the centrality of energy to growth is among the most significant contributions of recent national leadership:
“President Trump’s helping the country realize that energy is necessary for our growth is one of the greatest things he’s done.” 

The resources and the technologies exist. What is needed now is a policy shift that reduces unnecessary red tape and addresses the role of true monopolies, particularly utilities, that can offload investment risk onto captive customers while profiting if the investment succeeds. America’s ability to build, innovate, and compete depends on confronting these structural barriers. 

If the United States wants to lead in AI, reindustrialize its economy, and maintain global competitiveness, it must modernize its energy infrastructure.  

Mario Ottero is an Emerging Technologies Policy Analyst at Americans for Prosperity.