The data center industry stands at a crossroads, grappling with a power crisis fueled by surging demand for artificial intelligence (AI) infrastructure. As President-elect Donald Trump prepares to take office, his anticipated energy policies could drastically reshape the industry’s trajectory.
Amid the intense polarization of the 2024 election, data centers emerged as a surprising point of bipartisan agreement. Both Trump and Vice President Kamala Harris underscored the strategic importance of expanding AI-driven infrastructure. Trump championed energy policies designed to ensure “AI superiority,” while Harris emphasized building the AI infrastructure needed for America to outpace global competitors like China.
However, the alignment ends with the “why.” The “how” reveals stark differences between the outgoing Biden administration and Trump’s incoming leadership, particularly on the role of fossil fuels and regulatory oversight in expanding energy capacity to power data centers.
A Power Crisis in the AI Era
The AI revolution has catapulted data centers into the spotlight, with unprecedented demand pushing U.S. power grids to their limits. In 2023 alone, data centers added the equivalent of a second New York City’s worth of electricity demand to the grid. Bain & Co. predicts that by 2028, utilities must increase annual power generation by up to 26% to keep pace.
For the past two years, the Biden administration sought to address this crisis through a dual strategy: accelerating nuclear power expansion while transitioning away from coal and other fossil fuels. Initiatives such as the White House Task Force on AI Data Center Infrastructure and subsidies for next-generation nuclear technology have garnered industry support. Yet, the administration faced criticism for retiring coal plants at a time when stable “baseload” energy is desperately needed.
“The industry was supportive of Biden’s push for nuclear,” said Ali Greenwood, executive director of Cushman & Wakefield's data center group. “But the frustration is palpable—many utilities are now saying, ‘We shut down coal plants too soon, and now we’re struggling to keep up.’”
Trump’s Vision: Deregulation and Fossil Fuels
In contrast, Trump’s approach centers on rolling back environmental regulations and doubling down on fossil fuel production. From coal to natural gas, his administration aims to leverage traditional energy sources to meet the skyrocketing electricity demands of AI-driven data centers.
Trump has made his intentions clear, framing energy expansion as a national security imperative. The newly appointed National Energy Council, led by Doug Burgum, aims to “dramatically” increase the grid’s baseload power. Former Rep. Lee Zeldin, Trump’s nominee to lead the Environmental Protection Agency, has vowed to “unleash U.S. energy dominance” to ensure America’s AI leadership.
These policies are expected to extend the life of coal plants and expedite natural gas infrastructure, offering immediate relief to energy-constrained developers. Southern Co., a major utility provider, has already signaled plans to extend the operation of its coal assets, citing Trump’s election as a key factor.
“You’ll probably see lighter permitting processes and coal sticking around longer under Trump,” said Ali Fenn, president of data center developer Lancium. “From an environmental perspective, this may not be ideal, but it addresses the urgent need for more power to fuel AI growth.”
Natural Gas: A Transitional Powerhouse
Natural gas has emerged as the linchpin in the transition to a more robust energy grid. Under Biden, gas generators became a stopgap measure, providing reliable on-site power for data centers while awaiting the completion of nuclear plants or renewable projects.
Trump’s administration is expected to accelerate this trend. Moody’s economist Ermengarde Jabir predicts reduced regulatory barriers for gas turbines and pipelines, allowing data centers to incorporate natural gas more seamlessly.
“This creates an opening for natural gas to lead the way,” Jabir said. “Nuclear plants take years to build, but gas infrastructure can scale much faster.”
Industry Expectations
Within the data center industry, there’s cautious optimism about Trump’s policies. Developers believe that deregulation and fossil fuel expansion will alleviate bottlenecks and accelerate project timelines.
“There’s a general sense that the Trump administration will broaden the scope of acceptable energy solutions,” said Michael Rechtin of DLA Piper. “This could help the industry move faster in delivering the infrastructure needed to support AI.”
Yet, the environmental trade-offs remain contentious. Critics argue that relying on fossil fuels risks exacerbating climate change, even as AI technologies promise to revolutionize global economies.
The Road Ahead
As Trump takes the reins, the future of U.S. energy policy—and its impact on the data center industry—hinges on balancing speed with sustainability. While his policies may provide immediate relief to developers, long-term success will depend on investments in cleaner, scalable energy solutions.
The stakes have never been higher for the data center industry. The race to build the infrastructure of the AI era is more than an economic imperative—it’s a battle for global leadership in technology and innovation.
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