The US is entering an era of unprecedented electricity demand, with twin troops of artificial intelligence (AI) adoption and widespread building electrification driving a surge in consumption that has not been seen for decades.
Bank of America Institute predicts that U.S. electricity demand will rise at a combined annual growth rate (CAGR) of 2.5% from 2024 to 2035. It's five times faster than the 0.5% growth recorded between 2014 and 2024. system.
U.S. interior investment rush
Growth Equity Firm Mercato Partners sees this energy demand boom as one of the most persuasive opportunities of the decade, especially in America's Heartland. “We're focusing on the inside of the country,” says Joe Kaiser, CEO and Managing Director of Mercato, pointing to states like Utah, Minnesota, Texas and Pennsylvania as key growth corridors.
Mercato's latest focus lies in energy infrastructure investments that can drive the AI revolution. Estimates suggest that the US will need 150-170 gigawatts of new power over the next decade – equivalent to the construction of around 30 new 500 megawatt natural gas plants – just to keep up with AI's computing needs.
Balancing the grid – AI itself
Kaiser emphasizes that power generation is only half of the challenge. Maintaining a constant supply demand balance is equally important. If there is supply and demand, the result is a power outage. Mercato invests in companies like Torus, which deploy AI-driven flywheels that act like SuperCapacitors, and immediately pushes power into the grid when data centers face a sudden surge.
Short-term and long-term energy strategies
In the short term, Kaiser is seeing the fastest returns when upgrading existing energy assets, particularly nuclear and natural gas plants. This is a strategy pursued by companies such as Meta and Microsoft in collaboration with utilities.
Over the long term, he predicts that small modular reactors and geothermal energy will play a greater role. Closed-loop geothermal systems defended by companies like Fervo Energy and Sage show promise, but remain primarily private investment for now.
Geopolitics, Resources, and Domestic Benefits
Energy investment decisions are also shaped by geopolitical considerations. Kaiser points out that nuclear reliance on uranium (most of which are imported from Canada, Russia or China) poses supply risks, as well as rare earth elements needed for fusion. The US has reserves in states such as Utah and Nevada, but the regulatory and logistics hurdle is a drop in domestic production. In contrast, natural gas provides a completely domestic supply chain.
Public-private collaboration as a catalyst
Policy cooperation has emerged as a key enabler of growth. In Utah, state officials say they believe Kaiser can replicate nationwide to utility and data center owners who could innovate “behind the meter” unless the homeowner's bill is affected.
Deciding 10 years from now
With AI and electrification pushing the grid towards gigawatt-scale growth, investors, policymakers and utilities face critical challenges.
“We're a very early inning,” Kaiser said. “We have to bring a lot of power online.
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