The $600B Question: Can Power Grids Keep Up with AI Demand?
Our Analysis
The AI infrastructure buildout is the largest capital deployment in technology history. Goldman Sachs projects hyperscalers will spend over $600 billion in 2026 alone—more than the GDP of many developed nations. But there's a problem: you can't buy your way to a faster grid connection.
In the United States, data center power requests in Virginia have pushed grid connection timelines to 4-7 years. Similar constraints are emerging in every major market. The physical infrastructure required—substations, transmission lines, generation capacity—simply cannot be built at the pace capital is being deployed.
This creates a structural opportunity for infrastructure investors who can: 1. Secure sites with existing or near-term power availability 2. Build relationships with utilities before hyperscaler demand peaks 3. Develop in markets where grid constraints are less severe
Emerging markets like India, where grid investment is accelerating and power capacity is being added faster than in developed markets, offer a window of opportunity that is rapidly closing.
Key Takeaways
- 1Hyperscaler infrastructure spending will exceed $600B in 2026 alone
- 2US grid connection timelines have extended to 4-7 years in key markets
- 3Money cannot accelerate physical infrastructure buildout timelines
- 4Emerging markets with growing grids offer structural advantages
- 5First-mover advantage in power-ready sites creates durable moats
Why This Matters for Infrastructure Investors
This is the thesis that drives our investment strategy. The biggest bottleneck for AI isn't chips—it's power. While hyperscalers have unlimited capital, they cannot buy their way past the physics of grid infrastructure. Investors who can deliver power-ready capacity in markets where grid growth is keeping pace with demand will capture disproportionate value. India added more power generation capacity last year than most developed markets—this is why we're building here.
Power is the ultimate AI infrastructure constraint
This is original research from our team. For questions or to discuss our analysis, please reach out.
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