Power Is the New Oil

On the afternoon of September 4, 1882, Thomas Edison's Pearl Street station in lower Manhattan began delivering electricity to paying customers. It served fewer than 90 customers and about 400 lamps on the first day. Within a year it served 513 customers and about 10,000 lamps.¹

The light bulb already existed. The power plant and the wires made it useful. More than 140 years later, artificial intelligence runs into the same limit. The chips exist. The electricity to run them is scarce.

Demand arrives faster than supply

U.S. data centers used 58 terawatt-hours of electricity in 2014 and 176 terawatt-hours in 2023, about 4.4 percent of the nation's total. A terawatt-hour equals one billion kilowatt-hours. The Department of Energy projects 325 to 580 terawatt-hours by 2028, or 6.7 to 12 percent of all U.S. electricity.²

A company can buy all the accelerators it wants. If it cannot energize them, they sit in a warehouse as inventory, not capacity.

The line to connect

New power plants face their own wait. Before a plant can connect to the grid, the grid operator must study what the connection will do to the system. At the end of 2022, more than 10,000 projects representing over 2,000 gigawatts of generation and storage waited in U.S. interconnection queues, and 68 percent of the 2,179 studies completed that year came in late. The Federal Energy Regulatory Commission issued Order No. 2023 on July 28, 2023 to speed the process.³

Prices show the strain. PJM, the grid operator for a large part of the eastern United States, runs an auction that pays power plants to stand ready for peak demand. In July 2024, the price for most of its region jumped from $28.92 per megawatt-day to $269.92 for the year beginning June 2025. PJM pointed to about 6,600 megawatts of generation that had retired or signaled plans to retire, and to a higher forecast for peak demand.⁴

The lesson of Pearl Street

Edison's first service area, the First District, covered about one quarter of a square mile.¹ His customers were the offices and shops close enough for his wires to reach. Distance from the power source decided who got the new technology first.

AI data centers follow the same rule. The sites that open first are the ones with power already in place: an existing grid connection, room on the transmission lines and generation nearby. Permits for new lines and plants take years, and existing electrical capacity gains value with every month of delay.

Capital is moving toward power the way it once moved toward oil. The companies that understand the shift ask where the electricity will come from before they ask how many chips to buy.