Energy bottlenecks in the age of AI: fix the grid, or build around it?

A US company planned a data centre in Frankfurt that would run entirely off the grid on gas turbines. It won its approvals. Then two local residents calculated that its emissions would exceed half those of Frankfurt Airport, and the project was blocked. A participant who lives there told the story, and it complicated an early show of hands. Asked whether new load would be met by existing grids or by private, decentralised power, the table favoured private power, which surprised the hosts. The discussion kept finding reasons why the biggest users build their own power and still keep the grid.

Money is not what is short

The hosts set the scene. Data centres already use about 3% of Europe's electricity, and 22% in Ireland. Around €80bn a year is allocated to Europe's grids until 2050, yet the UK, the Netherlands and Germany have connection queues of up to a decade. A wave energy developer said transformers are now four or five years out. Data centres ask for 600 megawatts, hear it will take a couple of years, walk away, then come back because nowhere offers that much without a grid connection.

A founder who optimises batteries and renewable plants blamed the rules. In Sweden a distribution grid operator earns more by building new grid, because a bigger asset base lets it charge customers more. Sweden once estimated €100bn of grid build-out, a participant working on de-bottlenecking added, then realised that on an average day only about 20% of grid capacity is used. Using more of it could cut that bill sharply. Queue reform has started. Ireland has moved from first come, first served to first ready, first served, the US fast-tracks projects that bring their own capacity, and a storage founder said Germany wants to free connections that were reserved and never used.

Masters of their own house

The strongest case for building around the grid came from a founder developing small nuclear plants, whose lead backer and first offtaker is a large US strategic investor. That customer sees no way public systems can keep up with its demand. "It's not that they want off-grid power, they want to be masters of their own house," the founder said. A company that depends entirely on energy cannot leave it to someone else to provide.

Reliability pulls the other way. One participant said many data centres want five-nines uptime and so keep a grid link, and very few will decouple entirely. A wind developer described supplying a data centre in Texas with 250 megawatts from a co-located wind farm. The customer still required a gas turbine on site and a grid connection, because wind is not firm. Such customers want clean power, the nuclear founder said, but also baseload, and they cannot live with the footprint of the gas turbines they run today.

The participant who defended the grid admitted to playing contrarian because decentralisation seemed to be winning too easily. The UK pays Scottish wind farms to curtail, and the head of its regulator has blamed high prices partly on capacity that is paid for and not used. As one participant said, "a lot of the decentralised arguments fall apart against economies of scale."

Everyone else

Data centres can afford a team to run a private grid, one of the hosts said, but households and small firms have to find hardware, optimisation and financing on their own. Rooftop solar needs scaffolders, the contrarian said, and without subsidies will never be as cheap as utility-scale solar. A participant from Sweden said the country once had one of the least constrained grids in the world, and now finds its cities bottlenecked one by one. Retailers who want to charge electric trucks face queues of several years, so businesses and cities are adding solar and batteries themselves.

An investor said the offers gaining traction are energy as a service, where one company installs, optimises and finances everything for a monthly fee. A founder managing energy for electric-truck fleets said customers optimise per depot for the prices they pay, not for the grid operator. One of the hosts drew the conclusion. Electricity is a commodity and customers churn on price, so a business stays sticky only by also solving financing, installation or fast access to power, for which buyers will pay a premium.

It's not that they want off-grid power, they want to be masters of their own house.

Speed over price

The nuclear founder said $50m cheques are far easier to find in the US than in Europe, and capital came up again after the close. A data-centre offtaker changes the case, a founder said, because a plan that was almost unfundable becomes a venture case once the output is already sold. The nuclear founder's investors now ask whether the company could deliver power six months or a year earlier, because availability matters more than price. An investor said their firm now runs a credit fund for proven technology, since companies need cash on the balance sheet for performance guarantees and commercial banks find them too risky.

Talk turned to backlash. Data centres take space, water and energy, one participant said, and the issue could become a major topic in the US midterms. They would consider taxing the profits of off-grid projects harder so that money goes back to communities. Another said that in the history of capitalism demand had never been higher for a single thing, and that unlike in the dot-com bubble the demand was real. Whether it reaches a tipping point, and when, nobody would predict.

This Ripple was hosted by Andrea Gluscevic (Lightrock) and Inês Amorim Rocha (Blue Earth Capital) at The Drop 2026 on 16 September.