Podcast Summary: Energy Gang

Episode: AI could break the electricity grid. What do regulators and the industry need to do to keep the lights on?
Host: Ed Crooks (Wood Mackenzie)
Guests:

• Amy Myers Jaffe (Director, NYU’s Energy, Climate Justice and Sustainability Lab)
• Neil Chatterjee (former FERC chairman; Chief Government Affairs Officer, Palmetto)
• Cecilio Velasco (Managing Director for Infrastructure, KKR)
  Recorded: October 30, 2025, Council on Foreign Relations, NYC

Overview

This live episode explores the rapidly growing demand on the U.S. electricity grid, propelled by AI, data centers, and the energy transition, raising questions about grid reliability, investment, and the role of regulation. The panel dives into the risks, necessary policies, and innovation needed to ensure resilience and affordability—while navigating political and market uncertainty.

Key Discussion Points & Insights

The Grid Under Stress: What’s Behind New Demand Surges?

• AI and Data Centers: Surging electricity needs, driven not just by AI but also by cloud computing, streaming, electrification of vehicles/buildings, and reshoring manufacturing. (Neil Chatterjee, 05:00)
• Changing Generation Mix: Rapid retirement of coal and older centralized generation, replaced by wind and solar, creates new grid management challenges. (Ed Crooks, 00:30)
• Resource Adequacy and Reliability: Ensuring enough supply to meet peaks is now a political as well as technical problem.

Politics, Markets, and Regulation—A Rocky Coordination

• Politicization of Energy Policy:
  • Both Trump and Biden administrations are accused of manipulating markets to favor their preferred generation sources, fueling instability.
  • “I want to take the politics out of it. I genuinely believe we need every available electron.” (Neil Chatterjee, 07:52)
• Importance of Regulatory Certainty:
  • Investors struggle with shifting policies and tax credits (especially affecting renewables).
  • “When policy changes quickly and abruptly, it makes it really difficult to plan and deliver on those projects.” (Cecilio Velasco, 16:33)
• FERC’s Role: As a traditionally stable regulatory body, increasing politicization threatens long-term investment confidence.
  • “We don’t want politics in it. We want to create that investment certainty.” (Neil Chatterjee, 20:02)

Technology and Regional Solutions: “No Silver Bullet”

• Different parts of the country require different solutions—what works in sunny Southwest may not fit the snowy Northeast or industrial Midwest.
• Solar + Storage + Gas Peakers: “If I could get a tattoo... it would say 'solar plus storage with gas peakers to balance the grid and investing in alternative technologies.' It’s not that hard.” (Neil Chatterjee, 08:38)
• Role of Batteries and Virtual Power Plants:
  • Batteries are critical for reliability, particularly as variable renewables scale.
  • “Texas is the largest market now in the United States for battery storage deployment.” (Amy Myers Jaffe, 13:11)
• Wind and Off-shore Wind’s Political Headwinds:
  • Supply chain and regulatory hurdles hamper large-scale projects.
  • “When you’re doing giant infrastructure... we have to absolutely get the technology right.” (Amy Myers Jaffe, 55:02)
• Nuclear and Hydro: Viewed as necessary, but new nuclear builds are risky and slow. Restarts/restart investments are more feasible for private capital.

Market and Investment Challenges

• Policy Stability as Priority:
  • “First and foremost, that stability would be the biggest enabler.” (Cecilio Velasco, 18:31)
  • FERC Order 1920’s future remains uncertain; lack of clarity may deter much-needed transmission investments. (Neil Chatterjee, 25:30)
• Role of Private vs. Public Capital: Private investment is willing to lead if policy environment is predictable. Government funds can accelerate, but are not fundamentally required. (Cecilio Velasco, 19:49)

AI’s Two-Edged Sword: Demand Driver AND Potential System Optimizer

• Demand Spike:
  • “A ChatGPT search takes about 10 times as much power as a simple Google search. With advanced AI, it’ll be a million times as much power.” (Neil Chatterjee, 37:45)
• Efficiency Promise:
  • AI could optimize grid management, improve outage prediction, and enhance demand-side efficiency.
  • “Actual research shows it’s not as horrifying...we might actually see more energy savings from AI than AI itself uses.” (Amy Myers Jaffe, 41:15)
• Open Questions: Will AI’s optimization beat out its extra demand, or will emissions rise?

Legislative and Governance Solutions

• Need for Non-Partisan, Long-Term Policy (“Magna Carta for energy”):
  • Both the panel and audience stressed the need for Congressional action to enshrine core regulatory principles and transmission mandates in law, breaking free from the whiplash of executive branch changes. (Philip Ellison Q&A, 43:10)
  • “We need real, bipartisan, set-in-stone, Magna Carta energy policy.” (Neil Chatterjee, 46:49)
• Technical Expertise Over Politics:
  • Complex grid issues require expert (not political) leadership, especially around reliability, frequency, and response. (Amy Myers Jaffe, 49:15)

Notable Quotes & Memorable Moments

On what both left and right must accept:

“For the political left, that means coming to terms with the reality we’re going to need fossil fuels ... for the foreseeable future. For the political right, ... we cannot possibly win the AI race and maintain affordability and reliability with fossil fuels alone.”
— Neil Chatterjee (07:10)

On investment needs:

“If you look at what's expected here through the end of 2030... more electrons than most countries in Europe use.”
— Cecilio Velasco (16:43)

On distributed approaches:

“There’s no one solution fits all. You need a little bit of all of the above.”
— Cecilio Velasco (18:51)

On private capital’s confidence:

“The beauty of FERC—independent agency, five commissioners, staggered terms. When it comes to electricity and reliability, we don’t want politics in it.”
— Neil Chatterjee (19:57)

On AI’s real impact:

“It could lead to more savings than the energy AI itself uses... not as horrifying as [media] makes out.”
— Amy Myers Jaffe (41:15)

Timestamps for Major Segments

• [00:02 – 03:16] – Framing: AI, surge in power demand, grid reliability issues
• [03:16 – 09:21] – Chatterjee: Political challenges, the need for an “all of the above” resource approach
• [11:30 – 14:46] – Jaffe: Recent FERC reforms, data-driven insights on outage patterns
• [16:10 – 19:57] – Velasco: Investor perspective, scale of future demand, necessity of stable policy
• [22:13 – 26:18] – Transmission & FERC Order 1920: Opportunities and pitfalls
• [27:29 – 31:05] – DOE report debate: Value of renewables and dispatchable generation; gas/nuclear challenges
• [32:35 – 36:41] – Diversification, nuclear, practical limits of private investment
• [37:58 – 42:24] – AI: Demand, optimization potential, and uncertainties
• [43:10 – 47:37] – Q&A: Can Congress create stable, long-term policy?
• [48:20 – 58:53] – Q&A on AI’s real electricity share, grid modernization, and locational solutions
• [52:58 – 60:08] – Q&A on wind, offshore wind, and the need to depoliticize technical deployments

Conclusion & Key Takeaways

• The grid faces dramatic new pressures—not just from AI, but from broad electrification and economic trends.
• Political and regulatory instability is the chief barrier to investment and innovation.
• “All of the above” electricity strategies are mandatory: solar, storage, gas, wind, batteries, nuclear—each region must customize.
• AI, while a demand driver, could become a critical efficiency and reliability tool for the grid.
• There is an urgent need for bipartisan, durable national energy policy—something like an “Energy Magna Carta.”
• Experts urge leaving technological choices to technical professionals and depoliticizing critical regulatory bodies like FERC.

Suggested Listening: Future episodes to feature Nvidia’s Head of Energy on further AI/grid intersections. (42:17)