America’s Energy Crossroads: Powering the AI Boom and the Grid of the Future

The United States is entering an era of unprecedented electricity demand, with the twin forces of artificial intelligence (AI) adoption and widespread building electrification driving a surge in consumption not seen in decades.

Bank of America Institute forecasts U.S. electrical demand to rise at a 2.5% compound annual growth rate (CAGR) from 2024 through 2035 — five times faster than the 0.5% growth recorded between 2014 and 2024. While AI and data centers have been at the forefront of public debate, analysts say the largest driver is actually residential building electrification, which could require the average U.S. household to consume 220% more electricity if converted to all-electric systems.

The Investment Rush in America’s Interior Growth equity firm Mercato Partners sees this energy demand boom as one of the decade’s most compelling opportunities — especially in America’s heartland. “We focus on the interior part of the country,” said Joe Kaiser, CEO and Managing Director of Mercato, pointing to states like Utah, Minnesota, Texas, and Pennsylvania as key growth corridors.

Mercato’s latest focus is on energy infrastructure investments that can power the AI revolution. Estimates suggest the U.S. will need 150–170 gigawatts of new power over the next decade — equivalent to building about 30 new 500-megawatt natural gas plants — simply to keep up with AI’s computing needs.

Balancing the Grid — With AI Itself Kaiser emphasizes that generating electricity is only half the challenge; maintaining a constant supply-demand balance is equally critical. If demand overshoots supply, the result is rolling blackouts. Mercato has invested in companies like Torus, which deploys AI-driven flywheels that act like supercapacitors, instantly pushing power onto the grid when data centers face sudden surges.

Near-Term and Long-Term Energy Strategies In the short term, Kaiser sees the quickest returns in upgrading existing energy assets — particularly refurbishing nuclear and natural gas plants — a strategy already being pursued by companies like Meta and Microsoft in partnership with utilities.

Over the long term, he predicts small modular reactors and geothermal energy will play larger roles. Closed-loop geothermal systems, championed by firms like Fervo Energy and Sage, are showing promise but remain largely private investments for now.

Geopolitics, Resources, and Domestic Advantage Energy investment decisions are also shaped by geopolitical considerations. Kaiser notes that nuclear power’s reliance on uranium — most of which is imported from Canada, Russia, or China — poses supply risks, as do rare earth elements required for fusion. While the U.S. has reserves in states like Utah and Nevada, regulatory and logistical hurdles slow domestic production. Natural gas, by contrast, offers a fully domestic supply chain.

Public-Private Collaboration as a Catalyst Policy cooperation is emerging as a critical enabler of growth. In Utah, state officials have told utilities and data center owners they may innovate “behind the meter” as long as homeowners’ bills remain unaffected — a model Kaiser believes could be replicated nationwide.

A Defining Decade Ahead With AI and electrification pushing the grid toward gigawatt-scale growth, investors, policymakers, and utilities face a defining challenge: bring massive amounts of power online quickly, reliably, and sustainably.

“We’re in the very earliest innings,” Kaiser said. “A lot of power has to be brought online — and quickly.”

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