Morgan Stanley Warns of Looming 45-Gigawatt U.S. Power Shortage Driven by AI Data Center Boom
- Morgan Stanley forecasts a 45-gigawatt U.S. power deficit by 2028 due to rapid AI data center expansion[1][2][5].
- The projected shortage equals the electricity needs of roughly 33 million American households[2].
- Power grid upgrades lag behind the rate of data center construction, prompting utilities to delay coal plant closures and increase gas-powered capacity[2][6].
- Natural gas and nuclear power are being considered as bridge solutions to meet urgent demand[1][2].
- Industry stakeholders are under pressure to address power supply constraints as AI growth persists[6].
Morgan Stanley has warned that the United States could face a 45-gigawatt electricity shortage by 2028, a shortfall driven by the rapid expansion of AI-powered data centers. The projected deficit highlights a growing mismatch between data center infrastructure growth and the speed of power grid modernization.
AI Data Center Growth Outpaces Power Grid Capacity
U.S. data center demand for electricity is increasing sharply, fueled by investments in large AI clusters and hyperscale projects in regions such as Texas, Northern Virginia, and Oregon. Morgan Stanley estimates total U.S. data center power demand will reach 65 gigawatts from 2025 to 2028, outstripping available grid capacity[1][3][4]. Utility providers like Dominion Energy report order books for new data centers exceeding 40 gigawatts, further highlighting a surge in infrastructure projects[2].
Delayed Coal Plant Closures and Gas-Powered Expansion
With new high-voltage transmission lines taking five to ten years to come online, utilities have delayed scheduled coal plant closures to maintain supply, despite environmental concerns. Natural gas, powering approximately 40% of data centers globally, has emerged as a favored solution due to its fast deployment, with utilities in Georgia seeking authorization for an additional 10 gigawatts in gas-powered generation[2]. Nuclear energy is also being considered for providing stable, baseload power to meet growing demand[1].
Time to Power and Grid Bottlenecks
The ability to rapidly deliver electricity—‘time to power’—is being increasingly prioritized by data center operators. Companies that can accelerate grid interconnection and generation upgrades are expected to secure premium, long-term contracts, as delivery timelines become critical to AI industry expansion[1][5]. Existing Bitcoin mining sites with large-scale, ready grid connections are being explored as immediate solutions to bridge the supply gap, bypassing the lengthy approval processes for traditional new construction[3][4].