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US AI AMBITIONS THREATENED BY POWER BOTTLENECKS: GOLDMAN SACHS

Tight power supply bottlenecks could leave the United States trailing China in the race for global AI and data center dominance by 2030, say Goldman Sachs analysts.

Eight out of the 13 U.S. regional power markets - the backbone for American data center infrastructure - are already at or below critical spare capacity levels, the brokerage said.

U.S. peak summer effective spare power generation capacity - Goldman Sachs' summary measure of power availability and reliability - has fallen from 26% five years ago to 19%, and is fast approaching the "critical" 15% threshold.

And that is with data centers accounting for only 6% of U.S. power demand.

Goldman Sachs expects that share to rise to 11% by early 2030. If overall demand keeps growing at the pace seen in the last couple of years, many regional power markets would turn critically tight by 2030, capping future data center growth.

Much of the shortage is due to growing power demand, insufficient investment in renewable energy capacity and limited power storage.

The stakes are high. The U.S. currently hosts 44% of the world's data centers, in line with the combined capacity of mainland China, the EU, Japan, Korea, and India, said Goldman Sachs.

Global energy and power supply companies, including giants such as Siemens Energy ENR1n.DE, NextEra Energy NEE.N and Duke Energy DUK.N are already seeing a significant upside from the surging demand to power and cool data centers.

China, by contrast, has substantial spare power capacity and is planning to boost supply. The No. 2 economy is expected to have effective spare capacity equivalent to roughly three times the world's expected data center power demand by 2030, analysts estimate.

The surge in demand has revived nuclear power, with companies and countries turning to small modular reactors (SMRs) for energy security. Shares of nuclear player Oklo OKLO.N have gained about 400% so far this year.

(Purvi Agarwal and Johann M Cherian)

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