This week, the energy world convenes in New York for the United Nations Climate Week. The gathering will encompass the most vital sectors of the U.S. economy at present—technology firms and utilities will be well-represented, along with a host of consultants, suppliers, experts, and academics, who consistently attend these events.
UN Climate Week mirrors another widespread gathering, CERAWeek in Houston, Texas, which is also a “gathering place,” as founder Daniel Yergin describes it. In March, a palpable sense of optimism was evident throughout the George R. Brown Convention Center, with the newly minted Trump administration eager to remove regulatory impediments from the energy sector, while offering full-throated support for the artificial intelligence (AI) revolution. Technology companies and utilities were anxious to discuss their growing partnerships, while oil and gas majors began discussing openly how they would participate in the challenge of powering AI.
Shift the scene several months forward, and attitudes are still largely bullish, but significant challenges loom on the horizon amidst the endless cavalcade of panel conversations, networking opportunities, and other familiar milieus that accompany the gathering of so many powerful and wide-reaching sectors.
Power Prices Are Rising—and So Is the Finger-Pointing
The single biggest concern in New York this week will be power prices, not carbon emissions, workforce capabilities, or even geopolitical uncertainty. The rising price of power and the resulting outcry from customers and regulators are the top-of-mind issues for everyone in attendance.
Electricity prices, particularly in high-demand, fast-growing markets like Northern Virginia, Central Texas, and parts of the Pacific Northwest, have soared. The causes are well-known: capacity constraints, transmission bottlenecks, and an aging grid, all of which have been exacerbated by years of static load growth that has suddenly exploded.
However, in recent weeks, the tone has shifted, as regional concerns have continued to build into a national conversation. As one podcast stated, “electricity is the new price of eggs,” indicating the universal nature of the issue. Predictably, finger-pointing has already begun. Utilities are wary of being seen as the culprit and blame excessive federal and local regulation. Grid operators are warning of a capacity shortfall, pointing to supply chain challenges, aging equipment, and climate-driven storm events. And politicians—many of whom once celebrated data centers as economic wins—are now signaling concern over rising bills and equity impacts, particularly with an election year looming.
For AI developers and hyperscalers, this isn’t just a budgeting issue. It’s existential. Compute forecasts for 2026 and beyond, which rely on massive additions of power—dozens of gigawatts—flowing into already-congested regions; many of the biggest companies in the world have staked their sky-high stock prices on it. A change in seasons is unlikely to bring any relief, as a report from the National Energy Assistance Directors Association predicts a 7% increase in winter power bills—even amid recent federal cuts to LIHEAP (Low Income Home Energy Assistance Program).
Thus, expect affordability to be the primary starting point for conversations and pronouncements across the board, with the primary players citing the numerous efforts already launched to address the issue, including flexible capacity, local grants, charitable programs, and diversifying the energy mix.
Communities Express Concerns
Simultaneously, communities nationwide are beginning to push back against new data center developments, citing power affordability, as well as worries about water use and noise issues. While blaming data centers for the increase in power costs is understandable, it’s also largely flawed, and demonstrates a recurring challenge across the energy sector—customers are familiar with the equipment and processes involved, but don’t truly understand how it all works.
Hence, there’s a massive opportunity for the data center industry and its supporters to help customers and local regulators understand the critical role they already play in daily life—helping regulate everything from radio communications for schools and public safety organizations to distributing text messages and enabling video calls at home. While AI data centers present different challenges, they also serve as the infrastructure on which AI will run; success on both sides will lie in mitigating cost and resource impacts amidst the ongoing buildout.
Despite these challenges, a host of innovations are emerging to address issues ranging from water use to ambient noise and power consumption. Additionally, the need for data center construction and expansion has supercharged industries, like nuclear and geothermal, as the endless appetite for new energy has made investments in emerging industries move from theoretical to fully realized—with the federal government increasingly clearing the way. Even as these technologies take time to develop, battery storage investment and technologies are surging—thanks to their perfect sweet spot between providing additional energy and integrating into existing grid infrastructure.
Fossil Fuel Companies Loom
At CERAWeek, both Chevron and Exxon expressed interest in helping alleviate the AI-driven power crunch. Their inherent advantages are clear—a deep understanding of how to build massive projects on time and on budget, a capable workforce that could move from the oilfield to helping oversee the energy side of data centers, and across their holdings, a host of open land, natural gas reserves, and growing pipeline capacity.
Additionally, it has been well documented that much of the “easy” oil in the Permian Basin and elsewhere has already been extracted. With multiple CEOs pointing to either plateauing or declining production in the region, recent speculation has centered on the Permian as the next great boom area for data centers—akin to what has already happened in Northern Virginia. The comparison makes sense—produced water from fracking operations could cool the centers, there’s no shortage of land, and the Texas government is always willing to help the energy business. Yet again, however, it’s the lack of power infrastructure in the area that could hinder further development—a dynamic well-documented by Rice University’s Baker Institute in a recent paper.
New York Climate Week may not be the exact setting. Still, given the market incentive, expressed interest, and capability of the oil and gas industry to play a significant role, it seems prudent to expect an announcement along these lines very soon.
It’s unsurprising that the challenge around powering the AI revolution has grown more complicated since March. Press releases and photo opportunities are easy—building a generation of infrastructure akin to the modern transcontinental railroad is hard. Regardless, expect the energy and technology sectors to continue full speed ahead. Given the importance of winning the AI race globally, failure is not an option.
—Joe Brettell serves as Partner, Strategic Engagement for Prosody Consulting. When not attending New York Climate Week, he resides in Houston, Texas. www.prosodyconsulting.com.
