The American power industry is racing to keep up with the AI boom. Microsoft, xAI, OpenAI, and Meta have all announced ambitious data-center projects that have sent utility stocks soaring. The need to meet this soaring demand gives Donald Trump the chance to go down in history as the energy president. He campaigned on cheap power prices and “energy dominance,” and installed a highly capable engineer, Chris Wright, as energy secretary.
However, a combination of inherited problems and severe missteps have instead jeopardized America’s position as the global energy titan, posing a significant, but so far widely unacknowledged, threat to the administration’s agenda.
Before Trump took office, America’s grid had already entered into a period of decline. In 2021, winter storm Uri killed hundreds in Texas as the Lone Star State blacked out. Just a year later, blackouts hit the southeast over Christmas, and Manhattan lost almost all gas pressure in its pipeline system. Our grid reliability watchdog, the North American Electric Reliability Corporation, and grid operators like the Midcontinent Independent System Operator have warned that our current energy pathway is making the power system dangerously fragile.
Across the country, states have been losing reliable power plants to retirement while turning to just-in-time natural gas, wind and solar, and the hope of imports from their neighbors. And now we have to accommodate levels of demand we haven’t seen since the postwar boom in the mid-20th century.
America was already struggling simply to keep the lights on, never mind win a global race for AI supremacy. New energy projects idle in long queues to connect to the grid, natural-gas turbines (which convert gas to electricity) have five-year wait lists, natural-gas plants now take years to come online and cost three times what they used to just a couple years ago. Meanwhile, America’s short on workers in the power sector, including electrical engineers, who are getting scooped up by the hyperscalers. We’re tilting toward increased demand just as supply is falling.
“Trump’s tariffs have worsened the picture.”
Trump’s tariffs have worsened the picture. The president’s unpredictable approach to waging his trade war has chilled the investment environment, especially for heavy infrastructure projects with long horizons. And his 25 percent aluminum and steel tariffs will drive costs up for all inputs into the power sector, costs that will be passed on to consumers, wholesale or otherwise.
Even worse, he seems to misunderstand the nature of the fossil fuel industry. For years he has demanded lower oil prices and now he’s gotten his wish as the price of a barrel has plunged south of $60. About $50 a barrel is break-even, meaning that low prices discourage new drilling. But nearly 40 percent of our natural gas supply comes from oil drilling. So, if we’re not drilling for new oil, we’re not getting new gas. Thus, low oil prices could trigger an increase in natural gas prices, which would mean an increase in power prices because so much of our power now comes from gas plants.
Trump isn’t alone in these kinds of misunderstandings. Elon Musk, the don of DOGE, recently posted on X that “Solar + battery” can meet data-center demand, allowing America to compete with China in the AI race. However, his own company, xAI, has been relying on 35 portable gas turbines to satisfy the power needs at its gargantuan data center in Memphis.
Meanwhile, China just approved construction on 10 more new nuclear reactors using designs premised on our AP-1000, most recently debuted at the Vogtle plant in Georgia. The two reactors at Vogtle cost $35 billion, whereas China’s recently commissioned plants are projected to cost $27 billion total. By repping out reactors of the same design, China has been able to bring down the cost curve. Meanwhile, Huawei is forging ahead on chips that could become competitive with Nvidia.
The worst-case outcome of all this is American energy sinking in quicksand for the next few years as China outpaces us on power output and catches up to our chip design capabilities. Luckily, the private sector is adapting to conditions. The power markets are quickening their interconnection processes and utilities are exploring out how to get the most out of the power we have. At the same time, turbine manufacturers like GE Vernova and Mitsubishi, intend to expand their production capabilities over the next 24 months by 35 percent and 30 percent, respectively. Many within the power industry expect more engineers and other workers to fill their thinning ranks as demand for the services rises.
But there’s more the administration can do, especially when it comes to nuclear power. Trump, through Secretary Wright, has wisely maintained continuity with the previous administration on policies like restarting the Palisades nuclear plant in Michigan, stripping out wasteful programs, and enabling the next wave of advanced reactors.
Trump should take it a step further and issue an executive order linking nuclear power to the national purpose—as Eisenhower did for the highway system and Kennedy the space program. To that effect, the administration should further streamline the process for approving new nuclear plants by stripping away the Nuclear Regulatory Commission’s automatic NEPA environmental impact statement and pushing through a general environmental impact statement for new nuclear plants.
This deregulatory move should be paired with the financing needed for long term infrastructure projects like nuclear. As part of the EO, Trump should make providing low-interest bridge loans for nuclear power plants the official mission of the DOE’s bank, the Loans Program Office.
It is only by climbing the energy ladder to more potent forms of power generation that America will win the AI race, and only nuclear can provide that edge. If the Trump administration is able to correct its early missteps, it has the opportunity to deliver energy dominance not just in the near term, but for generations.