The United States is pushing hard to lead the global artificial intelligence race, but a new regulatory move might throw a wrench in the works. A proposed change by the Federal Energy Regulatory Commission (FERC) threatens to make investment in America’s energy infrastructure more difficult, potentially slowing down the expansion of AI-driven data centers that require enormous amounts of power.
The AI Boom and Its Energy Hunger
AI isn’t just about software—it’s about hardware, and hardware needs energy. Lots of it. The AI boom has led to a surge in demand for data centers, which are already straining the power grid in many parts of the country.
The numbers are staggering. A single AI data center can consume as much electricity as a small city. Industry leaders, including major tech companies, are pouring billions into expanding these facilities, ensuring that America remains at the forefront of AI development. But all of that depends on a reliable, expanding energy grid—something that could be at risk if regulatory changes make it harder to invest in utilities.
What’s Changing and Why It Matters
Late last year, FERC signaled its intent to overhaul a rule that has been in place since 2006. The current framework grants “blanket authorizations” for investors and funds to acquire shares in public utilities up to $10 million without requiring a case-by-case review. The goal of this policy was to encourage investment while maintaining regulatory oversight.
FERC’s proposed changes are reportedly aimed at curbing excessive influence by index funds in the utility sector. But critics argue that tightening these restrictions will only make it harder to secure capital for vital infrastructure projects. Without steady investment, the energy grid may struggle to keep up with the surging demands of AI and other power-intensive technologies.
Big Tech and the White House Weigh In
The timing of this policy shift is particularly striking. On his first full day of his second term, President Trump stood alongside the leaders of three major tech companies to announce Stargate—a $500 billion private initiative aimed at building AI-focused data centers across the U.S. His administration has made it clear that winning the AI race is a national priority.
Just hours before the Stargate announcement, Trump issued an executive order declaring a national emergency over barriers to domestic energy production and infrastructure. The order underscores the urgency of ensuring a robust and well-funded energy grid to support the country’s AI ambitions.
The Risk to America’s AI Leadership
If the proposed rule change goes through, investors could be discouraged from putting money into utilities. That, in turn, could slow down energy infrastructure projects, leading to potential bottlenecks for AI development. The effects wouldn’t be felt immediately, but over time, an underfunded power grid could become a major roadblock to maintaining America’s AI dominance.
The U.S. is at a crossroads. On one hand, the government and private sector are pushing hard to cement the country’s leadership in AI. On the other, regulatory decisions like FERC’s proposed change could make it significantly harder to achieve that goal. With the stakes this high, energy policy can’t be an afterthought—it needs to be a top priority.
