The AI Podcast

Episode: The AI Power Problem
Date: January 21, 2026
Host: Jaden Schaefer

Episode Overview

In this episode, host Jaden Schaefer unpacks a major new policy initiative: a $15-billion deal backed by the Trump administration and a bipartisan group of governors, designed to have tech companies directly fund new power plant construction to fuel the rapidly growing energy needs of AI data centers. The discussion centers around the potential impact of this deal on the U.S. electrical grid, electricity costs, the global AI arms race—particularly with China—and the broader implications for energy infrastructure and policy.

Key Discussion Points and Insights

1. The $15 Billion Power Generation Deal

• [02:32] The Trump administration, with support from both parties' governors in Mid-Atlantic and Midwest states, is pushing tech companies to buy long-term power contracts to underwrite the construction of new power generation.
  • “Tech companies, especially those building these huge data centers everywhere, are going to bid on 15-year power contracts that could help underwrite the construction of a lot of new power plants.” – Jaden Schaefer
• The main grid operator involved is PJM Interconnection, serving approximately 65 million Americans across 13 states.
• The goal is to ensure capacity keeps up with the surging demand, as AI model training and data center growth stretch the grid.

2. Energy Demand Surge and Consumer Costs

• [03:40] Jaden notes the visible impact of these demands on everyday consumers, such as increased electric bills due to heavy industry subsidies and new data centers.
  • “When I was living in Arizona... my electricity cost literally doubled as new facilities and data centers were built.” – Jaden Schaefer

3. Recommissioning Old Sources and Stopgap Solutions

• [06:01] Tech companies have begun striking innovative deals, such as Microsoft offering $1 billion to recommission the Three Mile Island nuclear plant.
• At the other extreme, companies like Xai have resorted to using thousands of portable diesel generators to power large data centers—an ad hoc and unsustainable fix.

4. Strain on Grid and Market Mechanisms

• [07:28] PJM and other grid regions have been pushed to capacity, leading to record-high energy prices in recent years.
• Capacity auctions are being used to encourage investment in new generation, with the new deal aiming to align the largest consumers (tech companies) with this responsibility, rather than pushing costs onto typical ratepayers.

5. The Challenge of Renewables and Battery Storage

• [09:08] Renewable sources like solar and wind are highlighted as valuable but fundamentally intermittent and insufficient as sole solutions for always-on demands of AI data centers.
  • “Solar and wind is intermittent... Data centers don’t get to take any breaks or clock out when the grid goes quiet at night.” – Jaden Schaefer [10:18]
• Battery storage can help but is currently only viable for short periods, not sustained, high-load operations.

6. Personal Story: Experience with Solar Limitations

• [10:56] Jaden shares a personal anecdote about living on a solar-powered sailboat, illustrating how prolonged weather events can deplete batteries and threaten essential systems—paralleling challenges data centers would face relying solely on renewables.
  • “We would have times where we'd have a storm blow over for like four or five days... our batteries were completely depleted. It was really scary.” – Jaden Schaefer

7. Systemic Energy Planning and Global Competition

• [13:40] The episode underscores the urgency: U.S. expansion is lagging behind China, which is rapidly increasing electric capacity, risking American competitiveness in AI if the grid cannot keep pace.
  • “We are getting absolutely, you know, run over by... China and the expansion of their electrical capacity.” – Jaden Schaefer

8. Policy, Market Signals, and Criticism

• [15:10] Long-term contracts are posited as crucial for giving private developers the certainty needed to invest and accelerate new projects.
• Critics question making tech pay for "power they might not use,” but Jaden argues that their continuous consumption justifies aligning them with the costs.
  • “They aren’t just occasional users... it’s going to be sucking electricity and a lot of it for forever, basically.” – Jaden Schaefer [17:26]

9. Equity and Impact on Consumers

• [18:42] The crux of the host’s perspective: Making big tech finance new capacity ensures average families and other consumers aren’t burdened with skyrocketing utility costs due to infrastructure lag.

10. Negotiation, Debate, and Next Steps

• [20:00] PJM’s approval is not yet secured; grid operators and private companies are still negotiating terms, reflecting competing stakeholder interests and the necessary complexity of energy transition.

Notable Quotes and Memorable Moments

• On the urgent need for expansion:
  “The thing that I think is not controversial at the end of the day is we need more power consumption. So anything that's going to expedite that process or pay for or get it done sooner is something that we desperately need.” — Jaden Schaefer [13:06]

• On global competitiveness:
  “They're building way more [capacity] than we are at a way faster rate. And so they're going to be able to build things cheaper and faster than us because of that if we don't try to keep up.” — Jaden Schaefer [13:59]

• On the limits of batteries and renewables:
  “Batteries paired with solar can cover definitely a few hours of demand, but they are still limited for long duration loads.” — Jaden Schaefer [10:36]

• On appropriate responsibility:
  “By having these companies contract for new capacity, it better aligns responsibility with the demand. Like, they are using this.” — Jaden Schaefer [18:29]

Timestamps for Major Segments

• 01:00–03:50: Overview of the federal deal, energy demand context
• 03:50–06:10: Real-world effects on consumer bills and industrial shifts
• 06:10–07:35: Novel solutions—nuclear repowering, diesel generator stopgaps
• 07:35–09:40: Utility strain, market mechanisms & capacity auctions
• 09:40–12:00: Renewables, storage, and host’s personal solar anecdote
• 12:00–15:20: Global trends and policy implications (U.S.-China comparison)
• 15:20–18:50: Critiques of the proposal; tech company responsibility
• 18:50–20:50: PJM negotiation and broader infrastructure planning debate

Final Thoughts

The episode dives deep into the energy challenges posed by AI’s growth, highlighting the complex mix of market forces, policy initiatives, global pressures, and consumer interests. Jaden Schaefer advocates for decisive action, innovative public-private partnerships, and realistic energy planning—urging a balanced future relying on multiple resilient power sources and equitable cost distribution.