Future Cities

Powering the AI Boom

By: Pat Lynch, Executive Managing Director and Global Head of CBRE Data Center Solutions

May 16, 2025 3 Minute Read

Graphic of an industrial park with available land parcels highlighted in green; suitable for commercial real estate development.

The grid may be the real bottleneck. What can we do today to address the surge in power demand?

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It’s almost impossible to go a full day without hearing about artificial intelligence. While the technology is still emerging, its potential is massive—and its impact will likely be felt in ways we can’t yet imagine.

What’s often overlooked is how the demand for AI is reshaping global utility infrastructure—and how unprepared we might be to manage it.

Access to power is foundational to any data center development. And for years, delivery of utilities was a primary factor in site selection negotiations. Recently, however, this trend has shifted.

Today, we’re seeing data center developers consider any location where there’s power—a new direction driven by the sheer size of modern data center campuses, which are increasingly demanding over one gigawatt of power each (the equivalent of powering all of San Francisco).

This surge is part of a broader trend: Global electricity demand from data centers, AI and crypto is skyrocketing, potentially doubling by next year, putting massive pressure on existing grids.

Graphic of an industrial park with available land parcels highlighted in green; suitable for commercial real estate development.

AI, combined with sustained cloud and computing growth, has pushed global electrical systems to a tipping point.

And we’re noticing the strain.

Today, many of the largest data centers are being powered by fossil fuels like natural gas and coal, even as many operators and end users push for greener, more sustainable solutions—wind, solar, hydro, geothermal and nuclear.

Nonetheless, without a scalable and cost-effective power storage solution, intermittent sources like wind and solar simply can’t meet the always-on demands of data centers. Hydro and geothermal are geographically limited. And nuclear—whether large-scale or via small modular reactors (SMRs)—remains years away from being available at scale.

So, what does that mean for our industry, our communities and society at large?

Speaking both as a 30-year industry veteran and a newly minted grandfather, I see a growing disconnect. Every company we work with wants a sustainable power source, but most end up settling for fossil-based options because there’s no real alternative—at least not one that’s readily available at scale.

Recently, I’ve become much more engaged in the utility space, speaking at conferences and working with industry leaders. One observation stands out: The urgency in the tech sector simply doesn’t match that of the utility world.

Tech companies need power now.

I recently spoke with a senior executive at a Fortune 20 tech firm who said he wants to see any U.S. site with 20 megawatts available within two years or less—and a clear path to 100 megawatts—preferably near a major airport.

Compare that to the utility sector, where even “fast-track” projects often take five to seven years. SMRs and other next-gen tech? Try eight to 10 years.

The utility sector isn’t built to solve for the now—it’s solving for the next decade. And that’s a problem.

Much of the bottleneck isn’t just power generation—it’s transmission. Layer on top of that a complex web of jurisdictions, regulatory bodies and territorial constraints, and it becomes clear that this is a systemic issue, even as power demand surges.

Utilities in key U.S. data center markets like Virginia and California face significant challenges, from transmission constraints to regulatory pressures, slowing their ability to meet tech’s urgent demands.

So, what happens in the short term?

Expect fossil fuels to continue leading the way for near-term demand. Locations with available power and developer friendly policies will become hotspots.

In the U.S., Texas and Georgia are poised to benefit most. In Europe, the Nordics (with abundant hydro) and France (with its strong nuclear infrastructure) are emerging winners. In the Asia-Pacific region, the “three Ms”—Mumbai, Malaysia and Melbourne—are leading the charge. In Latin America, Brazil stands out with 90% of its power coming from hydro.

Ultimately, I remain optimistic.

With enough attention and urgency, I believe we’ll see real movement—not in years, but in months—toward a more sustainable power future. But we can’t afford to wait.

Here in the U.S., the utility industry should start to streamline and create a national approach for accessing large-scale power. Currently, the system varies by state and provider, and each approach is very different in terms of process, timing and cost.

And the digital infrastructure industry—including end users, developers and operators—needs to work in tandem with the utility sector to create a more efficient process for allocating resources in a timely, cost-effective and more predictable, risk-averse fashion.

The demand is here. The time to act is now.

Bridging the utility gap isn’t optional. It’s foundational for enabling the AI-driven future.

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