Powering AI: The Untapped Energy Investment Boom in America’s Heartland

WATCH: AI's Secret Power Source? You Won't Believe Where It's Hiding!

As the artificial intelligence (AI) revolution pushes computing demand to unprecedented levels, a less-heralded region of the country is quietly becoming a hotbed for growth investing: the interior U.S. From Utah to Minnesota and Texas to Pennsylvania, growth equity firm Mercato Partners is zeroing in on energy infrastructure as a defining investment theme for the coming decade.

“We focus on the interior part of the country,” said Joe Kaiser, CEO and Managing Director of Mercato. “We provide late-stage venture capital to disruptive companies,” primarily in the Series B to Series D range, with the goal of scaling companies that have already achieved product-market fit.

Among the firm’s recent success stories is ad tech company Mountain (MNTN), which recently went public. But increasingly, Kaiser and his team are turning their attention to energy—the kind needed to power AI, data centers, and the electric grid of tomorrow.

“One of the big veins of opportunity from our point of view is infrastructure,” said Kaiser. “And a big chunk of infrastructure is energy—the energy required to power the future of AI in the United States”.

Estimates suggest the U.S. will require 150 to 170 gigawatts of new power over the next decade, equivalent to building 30 new natural gas power plants, each at 500 megawatts. And that’s just to keep up with AI’s demands, Kaiser said.

But meeting this demand is more complex than simply generating electricity. It’s about balance.

“Electricity has to stay in constant supply-demand balance 24/7,” Kaiser explained. “If supply exceeds demand, power is wasted. If demand exceeds supply, you get rolling blackouts. That’s where we see opportunity—solving AI’s power problems with AI”.

Mercato has backed Torus, a company coupled with AI to stabilize the grid. “Flywheels provide both a cleansing capability for electricity and storage. They can act like a supercapacitor, instantly pushing power onto the grid when data centers experience demand spikes,” Kaiser said.

For near-term investment returns, Kaiser points to upgrading existing energy assets. “The two quickest to market opportunities are using assets that already exist—refurbing nuclear or natural gas. No new technology needs to be developed,” he noted. Companies like Meta and Microsoft have recently partnered with utilities to bring nuclear plants back online.

Over the longer term, small modular reactors and geothermal energy could play a larger role. “Meta and Bill Gates have both invested in geothermal production in the Rocky Mountain area,” said Kaiser, who added that closed-loop geothermal systems—being pioneered by companies like Fervo Energy and Sage —show promise but remain private for now.

Public-private partnerships will likely be essential to meeting energy needs without burdening consumers, Kaiser emphasized. “In Utah, the government told data center owners and utilities: do what you want behind the meter, but don’t impact homeowners’ bills,” he said. “It’s this kind of collaboration that can help avoid passing the buck to the consumer”.

Kaiser is also paying close attention to the geopolitical and cost implications of energy sources. When evaluating energy investments, he advises looking at two things: the total cost of ownership from construction to decommissioning, and the reliance on foreign components.

“Nuclear uses uranium, and most of our uranium comes from Canada, Russia, or China. Fusion depends on rare earths, which come from China. That’s the beauty of natural gas—it’s domestic,” he said.

Uranium, in particular, has seen rising prices due to both increasing demand and the geopolitical risk surrounding its sources. “The U.S. sources only a small percentage of the uranium it uses—low single digits,” Kaiser said. While there are known reserves in Utah and Nevada, regulatory hurdles and long development timelines have kept production low.

Rare earth elements pose similar challenges. “Utah has 40 of the 50 rare earths and they’re now being mined,” Kaiser noted. “But the process takes time, and we still don’t have the quantities we need. Finding synthetic alternatives is a tremendous long-term investment opportunity”.

While Mercato isn’t currently invested in rare earth mining, Kaiser said it's "always on the hunt." The firm’s growth equity strategy, however, means it's cautious about ultra-long-horizon plays. “Our investment horizon is shorter than what a lot of these large infrastructure or materials projects require,” he said.

Still, with energy becoming the new bottleneck for AI, the next decade is shaping up to be a defining era for investors who understand the interplay of infrastructure, policy, and innovation.

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