• THE GRID
The Power Wall Just Got Higher
I read a lot of energy reports. Most blur together. This one didn't.
Sam DeFabrizio runs McKinsey's energy practice. His team released something on Monday that stopped me mid-scroll.
"From now to 2030, our most likely scenarios all have power supply lower than IT compute demand."
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McKinsey's Global Energy Perspective 2026 says data center power demand will grow at 24% per year through 2030. At that rate, demand nearly doubles every three years.
But the growth rate isn't the story. The gap is.
The grid can't keep up. Permits take years. Transformers are back-ordered. Crews are stretched thin. Every stage of the power pipeline is clogged.
Put 24% in plain terms. Total U.S. power demand grows about 2% a year. Data centers grow at twelve times that rate. One sector is eating the grid alive.
On Tuesday, the EIA released its October forecast. U.S. power demand will hit a record 4,288 billion kilowatt-hours in 2026. Next year climbs to 4,356 billion. Data centers and manufacturing are the drivers.
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DC Power CAGR to 2030
24%
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2026 U.S. Power Demand
4,288 BkWh
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Operators Going Hybrid
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Gas for Power, 2026
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60%+
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37.0 bcf/d
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When the grid is too slow, developers build around it.
McKinsey found more than 60% of operators now plan on-site generation paired with grid access. Gas engines. Fuel cells. Battery packs. They're done waiting for utilities to show up.
That sounds like a fix. It's not quite one.
On-site gas plants need pipelines. Pipelines need rights-of-way. Rights-of-way take time — the one resource developers don't have. And every cubic foot of gas that powers a server is one that doesn't heat a home this winter.
The EIA says the electric power sector will use 37 billion cubic feet of gas per day in 2026. A record. Before winter even peaks.
DeFabrizio warned that pipeline competition could delay even gas-powered data centers. Locating near gas fields helps. But most data centers sit near cities. And city pipelines are already full.
Even in a weak demand scenario, McKinsey says more than 150 gigawatts of new data center power capacity would still find use by 2030. That's the floor. Not the ceiling.
After 2030, AI efficiency could cut demand. Or it won't. Developers have to plan for both at once. The ones who lock up supply early win. The rest get left behind.
The biggest risk in energy isn't a shortage of demand. It's a shortage of everything needed to meet it.
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• BLACKOUT WATCH
The Risks Nobody's Pricing
The earnings are strong. The backlogs are record. But two cracks are opening underneath — and neither one shows up in a quarterly report.
The insurance gap is blowing wide open. Swiss Re warned this year that a single data center campus can cost $20 billion to build. Double that once you add the technology inside. Global data center insurance premiums are on pace to hit $24.2 billion by 2030. But coverage limits aren't scaling with costs. A major loss event — a fire, a flood, a prolonged outage — at one hyperscale site could blow through all available coverage. Insurers are quietly pulling back from the biggest facilities.
Growth is outrunning resilience. A September survey found that more than 90% of digital infrastructure leaders had a material disruption in the past five years. Power failures. Supply-chain breaks. Climate events. Yet most still pour budgets into new capacity, not into hardening what they've already built. The industry is racing to add megawatts while the megawatts it already has are breaking more often. That's a reliability problem hiding inside a growth story.
When insurers can't cover the buildings and operators aren't bracing for disruptions, the market is mispricing the entire sector's downside.
• RESISTANCE
California Turns On Its Own
San Francisco voted Tuesday to freeze new data centers for 45 days. Hours later, across the bay, Oakland did the same. Both votes were unanimous.
Two of tech's home cities just locked the door on AI infrastructure.
This is California. The state where Google, Meta, and Apple were born. The place that invented the server farm. Now it's telling the industry: slow down.
Five Bay Area cities now restrict data centers. Richmond passed a moratorium in September. Gilroy and Oakley already had freezes in place. The wave is spreading fast.
But the local bans are just the start.
On September 21, Governor Newsom signed seven data center bills into law — the most comprehensive state-level data center regulation in the nation. New tariffs, cost-allocation rules, and mandatory reporting requirements take effect January 1, 2027.
Three of those bills — SB 886, AB 2383, and SB 1168 — create a new tariff regime. Data centers must cover the full cost of grid upgrades they trigger. No more spreading those costs to every ratepayer.
AB 1577 and AB 2619 add mandatory disclosure. Operators must report energy use, water consumption, and power sources to regulators and local agencies.
Supervisor Shamann Walton, who wrote San Francisco's moratorium, cited pollution fears in the city's industrial southeast. Oakland's Councilmember Fife pointed to developers using NDAs to hide project details from city officials.
Twenty states now have active data center bans or moratoriums. Seven more are advancing legislation. California just joined them — and brought the heaviest rule book of any state.
The industry's home state just became its toughest regulator.
