Fix the AI Electricity 'Crisis' by Unleashing Market Forces |
Free Markets
Steven Greenhut | 1.16.2026 7:30 AM
The rapid growth of artificial intelligence is causing an AI power crisis, as the electricity demands of massive AI data centers are straining existing power grids and outpacing the development of new energy sources. This has led to concerns about grid stability, rising electricity costs, and significant environmental impacts. If there's not enough juice, then I'll have to write my own ledes—as those two sentences were penned by AI and powered by the local grid.
Excuse my snarkiness, as I'm not feeling too kindly toward AI this morning after being stuck on the most insane call with a "virtual assistant" who was supposed to help me get my internet service up and running but was oddly aggressive and incapable of fixing my problem. Nevertheless, I know AI is a remarkable advancement that offers huge potential. A big issue, as raised by the robot above, is whether our state has the electricity capacity to handle it.
California remains the national hub for AI development, and it's one of the main bright spots in our economy. The state's budget—now awash in an $18-billion deficit—is increasingly dependent on it. In its recent fiscal analysis, the Legislative Analyst's Office noted that income-tax collections are the one bright spot in the state economy. They are "growing at double‑digit rates" and are "driven by enthusiasm around AI, which has pushed the stock market to record highs and boosted compensation among the state's tech workers."
Obviously, the state has a vested interest in assuring that there's plenty of electricity........