US AI data centers face 32 GW power shortfall by 2028, Morgan Stanley warns

CryptoBriefing

AI data centers face increasing challenges due to power shortages, as utilities and grid operators struggle to meet the rapid construction timelines of hyperscale projects. According to Morgan Stanley, U.S. data centers may experience a power shortfall of approximately 32 GW, or 34% of the necessary supply, by 2028. This situation underscores electricity availability as a critical constraint on AI computing capacity expansion. The prolonged timelines for grid interconnections and transmission upgrades, typically spanning four to seven years, clash with the shorter demands of new AI data center developments.

Key Takeaways

• Market pricing suggests increased scrutiny on data center operations may lead Texas to consider a moratorium on new developments.
• The largest observed change occurred in the January 1, 2028, sub-market, with a 6-point increase, consistent with heightened concerns over energy constraints.
• Louisiana markets similarly show an increase in the probability of a data center moratorium, reflecting broader regional impacts of power shortages.

What to Watch

Key actors such as Texas Governor Greg Abbott and the Texas Legislature could play pivotal roles in potential policy changes. Observers should monitor for legislative sessions addressing energy constraints and any executive orders from Abbott. Additionally, decisions from the Electric Reliability Council of Texas (ERCOT) or the Public Utility Commission of Texas (PUCT) concerning data center interconnections could indicate shifts in regulatory stance. The situation in Louisiana also warrants attention, particularly any executive actions or legislative movements by Governor Jeffrey M. Landry or the Louisiana Legislature that could suggest a moratorium is being considered.