U.S. Department of Energy $1.9B Power Grid Upgrade—31 Projects Expected to Unlock 23 GW Transmission and Distribution Capacity
The U.S. Department of Energy has announced $1.9 billion in funding for 31 grid upgrade projects designed to accelerate data center connections and unlock an estimated 23 gigawatts of additional transmission and distribution capacity on the grid.
This infrastructure investment comes as artificial-intelligence infrastructure spending is reshaping the American economy. According to new research by economist Stijn van Nieuwerburgh published by the Brookings Institution, total investment in data centers and AI infrastructure is projected to reach $10.3 trillion from 2025 to 2032—representing an average of 3.6% of U.S. gross domestic product annually. This scale of investment dwarfs historical spending on railroads, the highway system, and internet infrastructure, making it potentially the largest single-industry economic bet in American history.
The rapid expansion, however, faces mounting regulatory and logistical pressures. The Federal Energy Regulatory Commission has rejected ComEd's attempt to cancel a $20 billion, 1.8-gigawatt data center contract with PowerHouse Hillwood. Meanwhile, large-load tariffs and other mechanisms to filter speculative projects are gaining traction across the country, driven partly by public backlash to data center expansion and shifting state-level policies. Prince William County in Northern Virginia has cut its "by right" overlay district for digital infrastructure projects by two-thirds, while Virginia's new restrictions on state assistance and expedited permitting are raising questions for the construction industry.
On the energy supply side, Google-backed Fervo Energy has achieved first power at its 900-megawatt Cape Station geothermal plant in Utah, marking the first utility-scale enhanced geothermal project to reach operational status. Separately, Woodway is constructing a 22-mile gas pipeline to serve an undisclosed data center facility behind the meter.
A persistent challenge is securing public support for development. Even Texas has moved to slow data center permitting, signaling that power availability alone will not resolve capacity constraints. Data center growth is nonetheless driving a surge in U.S. construction starts, though construction permits are rising faster than infrastructure investment in several regions.
Development activity continues at scale. Applied Digital plans to build the Delta Forge 2 AI data center in Alabama with an estimated $3.2 billion investment and potential operational start in 2028. Idaho has seen its first data center proposal on public lands, a facility four times larger than Meta's Kuna installation. Floating data centers are also advancing toward infrastructure scale, with Samsung/Mousterian, Seatrium, Mocean Energy and Atomarine pursuing diverse offshore approaches ranging from 30-megawatt modular barges to 200-megawatt concepts powered by wave energy, though marine engineering, permitting and environmental questions remain unresolved. Google is simultaneously testing experimental satellite-based computing capacity for simple AI queries from orbit.