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Rob and Jesse talk with a former Meta energy executive, Near Horizon Group’s Peter Freed.
If you care about decarbonizing the power grid anytime soon, you have to care about data centers. The AI boom and the ongoing growth of the internet have driven a big new cycle of data center construction in the United States, with tech companies trying to buy electricity on the scale of large cities’ energy demands.
Peter Freed has seen this up close. As Meta’s former director of energy strategy, he worked on clean energy procurement and data center development from 2014 to 2024. He is now a founding partner at the Near Horizon Group, where he advises investors and companies on emerging topics in data centers and advanced clean energy.
On this week’s episode of Shift Key, Rob and Jesse talk with Peter about whether AI and new data centers are going to blow up the grid and break decarbonization. What are the real-world constraints on developing a data center in 2025? Are tech companies beginning to run out of natural gas to burn? What do their investments in clean energy mean? And could the rise of AI prompt an accidental return to coal? Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: Even now, most of the data centers getting built are not AI data centers, right? The AI signal has yet to fully set in. Is that right?
Peter Freed: That’s right. What I would say is, if you look back at what happened, what got announced in 2024, most of the data centers that broke ground and were announced in 2024 were part of a demand plan that was done in 2023, when we did not have the AI demand ratchet, as I call it, on the system.
Now, what people then did is they probably just pulled stuff in. So you know, maybe you were going to do four data centers in 2024 and a few more in 2025. And instead they just, they yanked it forward. So it is also true that we’re definitely seeing the beginnings of this. But this year, 2025, will be a real bellwether year in terms of what the likely overall picture looks like. And one of the proxies that you can use for that is the capex forecast of the hyperscalers. So Meta’s capex forecast in 2024 was $38 billion; 2025, their capex forecast is $65 billion. So that’s a huge jump.
And by the way, Meta in particular doesn’t have a cloud business, so they’re not dependent on the signals coming in from other people. This is just for their own. So in some ways, it’s a clearer picture than we get from some of the other companies. Both Microsoft and Google are up at $80 billion. So to me this says, okay, 2025 is kind of going to show us where this trajectory is likely to go. And it’s pretty high.
I see the same reports that you all see. We’re probably somewhere between 30 [gigawatts] and 100 gigawatts of incremental data center-related load by 2030. I’d take the over at 50 gigawatts. It might be a little bit less, it might be more — 100 [gigawatts], I don’t know. So that’s a big signal.
Jesse Jenkins: For context, 50 gigawatts is half of the U.S. nuclear power fleet.
Freed: That’s correct. Yeah.
Jenkins: Maybe like 10% of U.S. electricity.
Freed: Yeah. Yeah. And so it lines up pretty well with what we were just talking about in terms of those forecasts. At the same time, if you look at all of the load growth projections that utilities with major data center demand have in their jurisdictions, you also get a number which is way larger than 50 gigawatts.
What is the reason for this gratuitous speculative behavior, the likes of which the industry has never seen? And we can talk as much or as little about that as you want, but it is simultaneously true that I think this is going to be a really large demand driver and that we have bubble-like characteristics in terms of the amount of stuff that people are trying to get done.
Music for Shift Key is by Adam Kromelow.
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That’s okay for clean energy firms, terrible for manufacturers, and a big risk for everyone.
Over the past few months, you could put together three different — and somewhat conflicting — pictures of the American economy.
For companies exposed to the AI boom, business has been good — excellent, even. The surge in ongoing capital investment into data centers and electricity has been larger than other recent booms, such as the telecom buildout. Electricity demand is soaring, especially in Texas and the Mid-Atlantic. Technology companies have signed power offtake deals with nuclear and hydroelectricity companies. If anything, companies exposed to artificial intelligence are more afflicted by congested supply chains and shortages than by slack demand — see the yearslong waiting lists to get a new transformer or natural gas turbine.
Outside of the AI economy, though, the economy has been a fair bit colder. You might even say it’s been frozen by indecision. When you talk to business leaders, they confess confusion about where things are heading. President Trump’s constantly changing tariffs — and his administration’s mercurial policy shifts — have made it difficult for non-AI-exposed businesses to plan long-term capital investment.
You could hear this view from clean energy manufacturing and traditional fossil firms alike. When I talked to John Henry Harris, the CEO of the medium-duty truck maker Harbinger Motors, for an episode of Heatmap’s Shift Key podcast in June, he told me that his company was just about to shift a production process to Mexico when a last-minute Trump change made it cheaper to keep it in China. Meanwhile, an oil and gas executive recently told the Dallas Federal Reserve: “The Liberation Day chaos and tariff antics have harmed the domestic energy industry. Drill, baby, drill will not happen with this level of volatility.”
But the data contradicted that tepid view. This was the third picture that we were getting of the economy. Through the summer, federal surveys showed an economy that was performing okay. In May, according to the Bureau of Labor Statistics, the U.S. economy added 139,000 jobs; it gained another 147,000 jobs, apparently, in June. The AI boom was clearly contributing to those robust reports. But how could an economy that business leaders otherwise described as difficult be going so well?
Now we can finally square these disparate pictures.
On Friday, the federal government released its newest tranche of job numbers. The headline number was mediocre — the U.S. added a mere 73,000 jobs in July — but the guts of the report were worse. The government revised down its estimate of the May and June reports by a total of 258,000 jobs. With these new numbers in hand, it’s clear that the labor market has essentially stalled out since Liberation Day in April.
The unemployment rate slightly rose to 4.2%, which was in line with what economists predicted.
These new reports clarify that the broader American economy wasn’t actually thriving. Its summer strength was a mirage the whole time. Outside of AI, things are downright frigid. And as President Trump continues to shuffle tariffs and increase trade uncertainty, we can expect conditions to worsen. Trump seems hellbent even on clouding our ability to understand the underlying economy: on Friday afternoon, he fired the Bureau of Labor Statistics commissioner, a career civil servant.
If you squint, you can see a hazy “AI sector” versus “non-AI sector” distinction in the data, even among the energy and decarbonization companies we cover at Heatmap. But it’s not obvious. Contrary to what you might expect when power demand is surging, utility employment was basically flat last month. Heavy and civil engineering construction jobs were up by 6,000, and “nonresidential specialty trade contractors” — a category that can include electricians — gained nearly 2,000 jobs.
But manufacturing lost 11,000 jobs last month, with the motor vehicles industry driving 2,600 of those losses. Mining, quarrying, and oil and gas jobs were down. The Institute of Supply Management report, a private survey of U.S. manufacturing activity, showed the sector shrank in July for the fifth month in a row.
And even though the Department of Government Efficiency’s deferred buyout program for more than 150,000 people has yet to hit, the federal government bled 12,000 jobs.
In a way, the clean energy industry — or at least solar, battery, nuclear, and geothermal developers — might consider themselves lucky. Despite the best efforts of Trump’s officials, and despite the chaos of President Trump’s policies, they have been able to eke through the past few months because of the AI boom. Nearly 70% of all new power-generating capacity added to the U.S. grid in the first quarter of this year came from solar panels, and the government has thrown its weight behind next-generation nuclear and geothermal technologies. A tepid jobs report might even bring some interest rate relief from the Federal Reserve.
But if that AI boom slows down, we should all watch out below.
A conversation with Heather O’Neill of Advanced Energy United.
This week’s conversation is with Heather O’Neill, CEO of renewables advocacy group Advanced Energy United. I wanted to chat with O’Neill in light of the recent effective repeal of the Inflation Reduction Act’s clean electricity tax credits and the action at the Interior Department clamping down on development. I’m quite glad she was game to talk hot topics, including the future of wind energy and whether we’ll see blue states step into the vacuum left by the federal government.
The following conversation has been lightly edited for clarity.
During Trump 1.0 we saw blue states really step into the climate role in light of the federal government. Do you see anything similar taking place now?
I think this moment we’re in – it is a different moment.
How are we handling load growth? How are we making sure consumers are not paying for expensive stranded assets? Thinking about energy affordability? All of those challenges absolutely present a different moment and will result in a different response from state leaders.
But that’s where some of the changes our industry has gone through mean we’re able to meet that moment and provide solutions to those challenges. I think we need aggressive action from state leaders and I think we’ll see that from them, because of the challenges in front of them.
What does that look like?
Every state is different. Take Virginia for example. Five years after we passed the Virginia Clean Economy Act – a big, bold promise of action – we’re not on track. So what are the things we need to do to keep the foot on the accelerator there? This last legislative session we passed the virtual power plant legislation that’ll help tremendously in terms of grid flexibility. We made a big push around siting and permitting reform, and we didn’t quite get it over the finish line but that’s the kind of thing where we made a good foundation.
Or Texas. There’s so much advanced energy powering Texas right now. You had catastrophic grid failure in Hurricane Uri and look at what they’ve been able to build out in response to that: wind, solar, and in the last few years, battery storage, and they just passed the energy waste reduction [bill].
We need to build things and make it easier to build – siting and permitting reform – but it’s also states depending on their environment looking at and engaging with their regional transmission organization.
You saw that last week, a robust set of governors across the PJM region called on them to improve their interconnection queue. It’s about pushing and finding reforms at the market level, to get these assets online and get on the grid deployed.
I think the point about forward momentum, I definitely see what you’re saying there about the need for action. Do you see state primacy laws or pre-emption laws? Like what Michigan, New York, and California have done…
I’m not a siting expert, but the reform packages that work the best include engagement from communities in meaningful ways. But they also make sure you’re not having a vocal minority drowning out the benefits and dragging out the process forever. There are timelines and certainty attached to it while still having meaningful local engagement.
Our industry absolutely has to continue to lean into more local engagement and community engagement around the benefits of a project and what they can deliver for a community. I also think there’s a fair amount of making sure the state is creating that pathway, providing that certainty, so we can actually move forward to build out these projects.
From the federal government’s perspective, they’re cracking down on wind and solar projects while changing the tax credits. Do you see states presenting their own incentives for renewables in lieu of federal incentives? I’ve wondered if that’ll happen given inflation and affordability concerns.
No, I think we have to be really creative as an industry, and state leaders have to be creative too. If I’m a governor, affordability concerns were already front and center for me, and now given what just happened, they’re grappling with incredibly tight state budgets that are about to get tighter, including health care. They’re going to see state budgets hit really hard. And there’s energy impacts – we’re cutting off supply, so we’re going to see prices go up.
This is where governors and state leaders can act but I think in this context of tight state budgets I don’t think we can expect to see states replacing incentive packages.
It’ll be: how do we take advantage of all the flexible tools that we have to help shape and reduce demand in meaningful ways that’ll save consumers money, as well as push on building out projects and getting existing juice out of the transmission system we have today.
Is there a future for wind in the United States?
It is an incredibly challenging environment – no question – for all of our technologies, wind included. I don’t want to sugar-coat that at all.
But I look at the whole picture, and I include wind in this: the technologies have improved dramatically in the past couple of decades and the costs have come down. When you look around at what resources are around to deploy, it’s advanced energy. We’re seeing it continue to grow. There’ll be headwinds, and it’ll be more expensive for all of us. But I look at what our industry and our technologies are able to offer and deliver, and I am confident we’ll continue to see growth.
The Grain Belt Express was just the beginning.
The anti-renewables movement is now coming for transmission lines as the Trump administration signals a willingness to cut off support for wires that connect to renewable energy sources.
Last week, Trump’s Energy Department with a brief letter rescinded a nearly $5 billion loan guarantee to Invenergy for the Grain Belt Express line that would, if completed, connect wind projects in Kansas to areas of Illinois and Indiana. This decision followed a groundswell of public opposition over concerns about land use and agricultural impacts – factors that ring familiar to readers of The Fight – which culminated in Republican Senator Josh Hawley reportedly asking Donald Trump in a meeting to order the loan’s cancellation. It’s unclear whether questions around the legality of this loan cancellation will be resolved in the courts, meaning Invenergy may just try to trudge ahead and not pick a fight with the Trump administration.
But the Grain Belt Express is not an anomaly. Across the country, transmission lines tied to both renewable sources and more conventional fuels – both fossil and nuclear – are facing a growing chorus of angst and anguish from the same crowds that are fighting renewable energy. In some ways, it’s a tale as old as widespread transmission itself. But I am also talking about farmers, ranchers, and rural towns who all now mention transmission lines in the same exasperated breaths they use to bemoan solar, wind, and battery storage. Many of the same communities fighting zero-carbon energy sources see those conflicts as part of a broader stand against a new age of tech industrial build-out – meaning that after a solar or wind farm is defeated, that activism energy is likely to go elsewhere, including expanding the grid.
I’ve been trying to figure out if there are other situations like Grain Belt, where a project facing local headwinds could potentially be considered no longer investable from a renewables-skeptic federal perspective. And that’s why since Invenergy lost its cash for that project, I have been digging into the Cimarron Link transmission line, another Invenergy facility proposed to carry wind energy from eastern Oklahoma to the western part of the state, according to a map on the developer’s website.
Do you remember the campaign to ban wind energy in Oklahoma that I profiled at the start of this year? Well, one of the most prominent scalps that this activism movement has claimed was bagged in late 2024, when they successfully pressured Governor Kevin Stitt into opposing a priority transmission corridor proposed by the Biden administration. Then another one of the activists’ biggest accomplishments came through an anti-wind law enacted this year that would, among other things, require transmission projects to go through a new certification program before the state’s Corporation Commission. Many of the figures fighting Cimarron and another transmission line project – NextEra’s Heartland Spirit Connector – are also involved in fighting wind and solar across the state, and see the struggles as part and parcel with each other.
Invenergy appears to want to soldier on through this increasingly difficult process, or at least that’s according to a letter some landowners received that was posted to Facebook. But these hurdles will seriously impact the plausibility that Cimarron Link can be completed any time soon.
Now, on top of these hurdles, critics want Cimarron Link to get the Grain Belt treatment. Cimarron Link was told last fall it was awarded north of $300 million from the Energy Department as a part of DOE’s Transmission Facilitation Program.
Enter Darren Blanchard, a farmer who says his property is in the path of Cimarron Link and has been one of the main public faces of opposition against the project. Blanchard has recently been pleading with the DOE to nix the disposition of that money if it hasn’t been given already. Blanchard wrote the agency a lengthy request that Cimarron get similar treatment to Grain Belt which was made public in the appendix of the agency’s decision documents related to the loan cancellation (see page 23 of this document).
To Blanchard’s surprise, he got a reply from the Transmission Facilitation Program office “responding on behalf of” Energy Secretary Chris Wright. The note, to him, read like they wanted him to know they saw his comment: “We appreciate you taking the time to share your views on the project,” it read.
Now, this might’ve been innocuous. I haven’t heard back from the Energy Department about Cimarron Link and I am personally skeptical of the chances a grant is canceled easily. There is no high-level politician calling for the cancellation of this money right now, like there was in Sen. Josh Hawley and the Grain Belt Express.
But I do believe that if there is a will, there is a way with the Trump administration. And as anti-renewables sentiments abound further, there’ll be more ways to create woe for transmission projects like Cimarron that connect to renewable resources. Should voices like Blanchard aim their sights at replicating what happened with Grain Belt, well… bets may be off.
Over the next few weeks, I will be chronicling more fights over individual transmission projects connected to zero-carbon sources. Unique but with implications for a host of proposed wires across the country, they’re trend-setters, so to speak. Next week I’ll be tackling some power lines out West, so stay tuned.