“Future electricity needs for artificial intelligence (AI) are wildly uncertain—shaped by unproven concepts, disputed performance, limited trust, volatile markets, unpredictable adoption, and technical efficiency that quadruples roughly each year.” That warning comes from Amory Lovins, one of the legendary energy gurus of the 1970s and 1980s. 
In a May 10 paper from his firm, Lovins Associates of Snowmass, Colo., he describes a “speculative surge” that risks “a 12-figure overbuild” in electric generating capacity. “Avoiding an electricity bubble requires clear-eyed analysis, disciplined planning, and using markets to allocate risks fairly to potential beneficiaries.”
Lovins, 77, coined the term “soft path” in 1976 to counter the energy hysteria of the 1970s “energy crisis,” driven in part by the Arab and the Iranian oil embargoes and resulting soaring gasoline prices. He was often prescient decades ago.
He now reprises many of those arguments and analyses. Lovins writes that “lost bets on electricity demand could waste major investments, lock in unneeded fuel infrastructure, and derail health and environmental progress.” That warning is timely as the Trump administration roles back health, safety, and environmental rules to boost production of the fuels of the 1970s.
Lovins offers a “cautionary history”: In 1999, the U.S. coal industry claimed that information technology would gobble half the nation’s electricity by 2020. Their answer? Build more coal plants. “Such claims were spectacularly wrong but widely believed, even by top officials,” Lovins writes. “Hundreds of unneeded power plants were built, hurting investors.”
That was then. Is it repeating now? “Big Tech giants, aided by 36 states’ subsidies, are investing a trillion dollars in data centers for AI services,” notes Lovins.
Forecasts of skyrocketing electric demand are ubiquitous. Are they accurate? Nope. “In 2023, US grid electricity fell; in 2024 it rose 2%, the fourth-fastest rate in the past decade, as data centers’ share (little from AI) crept up from 4.4% to 4.5%. Electricity growth was real in a few hotspots, but was widely misreported as a national trend.”
A classic bubble may forming, with hundreds of billions of dollars at risk
A classic bubble may forming, with hundreds of billions of dollars at risk. “Hundreds of new data centers, each drawing the power of a small city, have been proposed, but many will never be built, and not all built are certain to thrive.”
One of Donald Trump’s first act when he again moved into the White House in 2025 was to declare an “energy emergency,” mainly aimed at highlighting his fatuous shibboleth “drill, baby, drill.” This was “declared to speed, favor, and further subsidize rapid expansion of gas, coal, and nuclear plants already rejected in the marketplace; the emergency is apparently that they can’t compete. They’re also far too slow: gas turbines are sold out for 6+ years, and nuclear annual global net capacity additions now match just two days of renewable growth.”
Lovins observes that the “market winners—solar, wind, and storage—are adding 93% of new US and 95% of world capacity in 2025,” a trend bolstered by the latest report from the Department of Energy’s Energy Information Administration.
According to EIA, for the first quarter of 2025, coal accounted for 49,134 MW of total generation, nuclear at 62,457 MW. Renewables, including wind, solar, and hydro, totaled 101,130 MW. Natural gas at 118,920 remained king of the generating hill.
EIA reported that coal generation 2023-2024 grew 28%, gas fell 8.9%, and nuclear fell 1.4%. Renewables over the same period grew 18.7% (wind was up 11.1%, solar up 45.6%, and hydro down 18.7%).
Lovins adds, “New federal rules are also stalling queued-up renewables and storage totaling more than total US generating capacity. They’re ready to go, and far faster and cheaper than the favored options.”
The AI hysteria, Lovins argues, “poses risks including unreliable grids and load forecasts, stranded assets, weakened utility finances and credit, and cost burdens unfairly shifted onto other electricity users. State-level utility regulators can manage this by requiring developers to guarantee power payments, backed by bonds or insurance that can market-price the risk of default.”
There is hope, according to Lovins. He advises that “disciplined foresight can support innovation while avoiding previous errors. Smart regulation, accurate risk pricing and allocation, and market-led investment in proven, least-cost solutions can ensure that the AI era advances not just technological progress but also resilience, economic stability, and global responsibility.”
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