Trump's AI Power Plans Could Reshape Data Center Building Boom

As the data center industry navigates a power crisis, the stark change in federal energy policy expected under President-elect Donald Trump could have a dramatic impact on the industry's development. 

In the months leading up to the presidential election, data centers emerged as a campaign trail talking point and policy priority. In a race marked by vitriolic rhetoric and vast ideological divides, Trump and Vice President Kamala Harris advocated for the development of new data centers to support artificial intelligence and the expansion of the energy infrastructure needed to power them.

It was a rare point of consensus between the two camps, with both candidates framing accelerated data center development as a key element of national security and economic policy. Trump touted infrastructure policies designed to maintain “AI superiority,” while Harris promised to support AI infrastructure to ensure that “America, not China, wins the competition for the 21st century.” 

While there may be alignment between the outgoing Biden-Harris White House and the incoming Trump administration on the importance of building more AI data centers, there are vast differences in how the two administrations want to reach that goal. The divide is particularly stark on ramping up power production and shoring up overwhelmed transmission infrastructure required to keep building data centers fast enough to keep pace with unprecedented demand. 

Since the success of ChatGPT kicked off Big Tech’s AI data center arms race in late 2022, the Biden administration has sought to balance the expansion of power generation and transmission infrastructure to support the unexpected surge in electricity demand with its competing priority of transitioning U.S. energy production away from fossil fuels and toward renewable energy. It has leaned heavily into nuclear power as a short-term answer to the increasingly acute power pinch. 

Trump intends to take a very different approach.

The president-elect has said he will promote the expansion of fossil fuel generation like coal and natural gas, as well as nuclear energy. And he has promised to strip away environmental protections and other regulations he says are preventing or slowing the development of new energy resources required to meet the data center industry’s rapidly growing needs. 

This anticipated shift in federal policy has environmental groups dismayed over the potential climate impacts. But within the data center industry, several executives told Bisnow there is a widespread expectation that the Trump administration’s approach will move the needle on alleviating the power constraints limiting growth and will ultimately help bring AI data centers to market faster. 

“The general attitude is that there's lots of different ways to power data centers, and it feels like the administration that's coming in is going to broaden the scope of what is acceptable,” said Michael Rechtin, a partner in the data center practice at DLA Piper. “The industry is going to be happy about that.”

Over the past two years, access to electricity has become the primary constraint limiting the development of new data centers.

After decades of stagnant energy demand in the U.S., power providers across the country have been caught off guard by a sudden surge in electricity demand, largely from data centers, that has emerged as a byproduct of the AI gold rush. Developers in major markets face wait times approaching 10 years for grid connections as utilities go through the cumbersome process of building new transmission lines, substations and power plants. 

Data centers added the equivalent of a second New York City to U.S. power grids last year alone, and the demand wave is only expected to grow. Power demand in the U.S. is expected to outstrip supply as soon as next year, and utilities will need to increase their annual generation by as much as 26% by 2028 to keep pace, according to Bain & Co. 

The Biden administration has addressed the issue, launching initiatives to facilitate access to power for data center construction, including the White House Task Force on AI Data Center Infrastructure that brought together leaders of firms like Microsoft, OpenAI and QTS with top administration officials.   

The administration has also pushed for the rapid expansion of nuclear power to contend with rising electricity demand from data centers. Under Biden, the Department of Energy has pushed for the recommissioning of older nuclear plants and pushed the development of next-generation nuclear technologies like small modular reactors by creating subsidies and reducing regulatory hurdles. Last week, the administration published a nuclear road map that aims to increase nuclear generation in the U.S. by 35 gigawatts by 2035.

Most corners of the data center ecosystem received this engagement well, industry leaders told Bisnow. But many within the industry are also quick to point to Biden’s efforts to expedite the retirement of coal and other fossil fuel power plants that provide constant “baseload energy” in favor of adding intermittent renewables like wind and solar to regional grids, causing overall energy production to stagnate.

While those policies were implemented before the AI boom sent electricity demand skyrocketing for the first time in decades, there is widespread frustration that the shortages could have been alleviated if older coal and gas power plants hadn’t been retired. 

“If you talk to any utility company across the country, they’ll say, ‘Gosh, we shut down all these coal plants, and I sure wish we hadn't,’” said Ali Greenwood, executive director of Cushman & Wakefield's data center group. “We could have used that because it takes a lot of time and a lot of money to spin up new nuclear.” 

The Trump administration, by contrast, has promised to make the expansion of fossil fuel generation to power AI a centerpiece of its domestic economic policy. 

On the campaign trail, Trump pledged to roll back environmental regulations and other government oversight — including calls for “killing” or “canceling” the Environmental Protection Agency — that he claimed are slowing the development of fossil fuel and nuclear power. He often explicitly framed these plans as a critical effort to help the U.S. stay ahead of China as the global AI leader. 

In the days since the election, Trump and his transition team have been even more explicit in tying efforts to roll back environmental regulations and ramp up nonrenewable energy production to the development of AI data centers. 

In a statement announcing the appointment of energy czar Doug Burgum to head the administration’s newly created National Energy Council, the president-elect framed the council as an effort to “dramatically” increase the grid's baseload power to “win the battle for AI superiority” and “win the AI arms race with China (and others).” Similarly, in a statement announcing former Rep. Lee Zeldin as Trump’s nominee to head the EPA, Zeldin said he planned to “unleash US energy dominance” to “make America the AI capital of the world.”

Ali Fenn, president of AI data center developer Lancium, told Bisnow the Trump administration's energy policies should improve access to power and help projects move faster. 

“You’ll probably have coal stick around longer in order to go faster, you probably have a lighter weight permitting process in order to go faster, and you probably get nuclear generation online faster,” Fenn said. “Environmentally, it’s probably not a positive. But from an energy growth perspective, it's certainly helpful to ensure that we meet the demand here.”

A second Trump presidency could particularly accelerate the growth of natural gas to power data centers, Moody’s director of economic research Ermengarde Jabir said.

Natural gas has emerged as one of the largest beneficiaries of the data center power crunch, with growing adoption of natural gas generators linked directly to data center campuses to produce some or all of a facility’s electricity on-site. 

The Biden administration increasingly supported natural gas as a transitional fuel for on-site generation until more nuclear power comes online or more sustainable technologies become viable, industry executives said. But there is broad consensus that a Trump presidency will reduce potential regulatory barriers that could prevent gas turbines in certain locations and expedite new pipelines needed to bring natural gas to where data centers can be developed.

“This really provides an opening for natural gas to sort of lead the way as the transition occurs, because obviously you don't build something like a nuclear reactor overnight,” Jabir said.

Even before Trump takes office, there are signs that the election result has started to shift the data center energy landscape. Southern Co. CEO Chris Womack told Bloomberg last week that the utility conglomerate is considering extending the life of coal assets to meet rising energy demand from data centers, citing the expectation of relaxed emissions rules under the Trump administration. 

Meanwhile, data center executives tell Bisnow that developers pursuing projects with on-site generation, particularly in states with lax regulatory regimes, are increasingly confident that their project will move forward without hitting federal regulatory roadblocks. 

“I had a conversation yesterday with a potential client about a facility in Texas where they were going to build on-site generation and were more enthusiastic about the possibility of that actually happening because of the election,” DLA Piper's Rechtin said.