Will AI & Electrification Break the Grid?

One of the most pressing challenges confronting our energy transition is how to manage the grid impacts of soaring electricity demand driven by AI, data centers, and economy-wide electrification. During this year's San Francisco Climate Week, we convened a panel of industry experts for a wide-ranging discussion on how the climate sector can respond to these challenges head on.

Katie Fehrenbacher of Axios moderated our panel of leaders from across the energy ecosystem: Brian Janous of Cloverleaf Infrastructure, Cassidy DeLine of Linea Energy, Matt LeDucq of Forum Mobility, Page Crahan of Tapestry, and Bryce Smith of LevelTen Energy.

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The panelists agreed that current load growth projections are unprecedented, and there is no easy path to meeting this demand while also decarbonizing. Brian Janous, who previously served as VP of Energy at Microsoft, warned that "the way this technology is moving is infinitely faster than the way utilities move and the way utilities plan for infrastructure ... I have a hard time believing that this is just hype."

Bryce Smith of LevelTen Energy framed the climate implications in more stark terms: "If we are fortunate enough to be able to meet this new load growth with renewables, we're still just treading water. It's important to remember from a climate perspective, we've got a lot of work to do without any load growth."

While the challenges may be daunting, the panel also highlighted reasons for optimism and identified key levers for impact:

Leveraging demand flexibility: Data centers and industrial facilities have significant potential to modulate their power consumption and alleviate grid congestion. As Matt LeDucq of Forum Mobility explained, the future grid needs to be flexible through smart load management: "I can take 10 megawatts at night, and eight in the morning and two in the afternoon." However, realizing this potential will require "a more intelligent distribution system that will allow things to be Tetris'd into the grid." Utilities have a major opportunity to work proactively with data centers, EV charging hubs, and other industrial customers to integrate demand response and flexible load management into their planning and operations. This kind of flexible load management can be a game-changer for managing the grid impacts of electrification.

Accelerating grid-enhancing technologies: Innovations like dynamic line rating, power flow control, and advanced grid modeling can help squeeze more capacity out of existing infrastructure. Page Crahan shared how Tapestry (Google X's moonshot project for the electric grid) is working on grid optimization using "deep AI on the problems around data and visibility". She gave an example of their recent collaboration with Chilean grid operators who can now evaluate transmission scenarios "in a week rather than four months" by using their tools. However, Crahan cautioned that realizing the full potential of these technological innovations will require complementary regulatory reforms. Utilities need the right incentives to adopt and scale grid-enhancing solutions, rather than defaulting to more capital-intensive infrastructure. As she put it, "If you only get paid when you build things, you might not want to use more of what you have. But I think the gift of load growth is that we can't do that anymore."

Driving cross-sector collaboration: Tackling the immense challenge of grid modernization will require unprecedented coordination between utilities, tech companies, regulators, and other stakeholders. As Brian Janous emphasized, "We know that there are levers that can be pulled, it’s just: are you willing to actually sit down and do the work to solve it?" Janous pointed to initiatives like the Department of Energy's Lift Off Reports, which “create a common fact base and a tool for ongoing dialogue with the private sector on the pathways to commercial liftoff,” per their website. He noted that in addition to money, the DOE has been "a great convening force" and that "there's a lot of work that the government's doing right now that's really great in terms of education."

Matt LeDucq shared that he recently participated in a White House convening on zero-emission heavy-duty transportation: "It is so unbelievably helpful. When you get the utilities, manufacturers, truckers, and folks like us all in the room...what can come out of that convening is like nothing else." These kinds of multi-stakeholder dialogues and problem-solving sessions will be essential for navigating the complex technical, economic, and regulatory challenges ahead. As Bryce Smith of LevelTen Energy put it, "What's frustrating about this is it's really not an economic problem so much, it's really not a technology problem – it's a coordination problem, a planning problem, a communication problem, a regulatory problem."

Seizing the Policy Window: The panel emphasized the vital role of policy in addressing critical challenges around transmission build-out, interconnection, and supply chains. Cassidy DeLine of Linea Energy warned that potential extensions of tariffs on imported equipment like transformers and switchgear "have the potential to take all of the economics out of the Inflation Reduction Act (IRA)." On interconnection, DeLine was blunt in sharing "If you're going to buy a 230kV recloser right now, it's a 2030 delivery. And it's only going to get worse from here with on-shoring." She stressed that "from a policy perspective, we need to be hyper-focused on allowing our borders to stay open to these products."

The panelists highlighted promising policy developments that could help address these barriers, such as the formation of the DOE and DOT's Joint Office to convene stakeholders and drive transmission reform. Other key policy levers include FERC's proposed rules to accelerate interconnection and incentivize grid-enhancing technologies, as well as state utility commission proceedings on performance-based ratemaking and demand flexibility. By staying informed and engaged on these policy fronts, founders can position themselves for success.

The Path Forward: The challenges facing our grid are immense, but so too is the potential for transformation. Climate founders have a critical role to play in channeling optimism into real-world solutions. By leveraging cutting-edge innovations, forging cross-sector partnerships, and engaging proactively on policy, the climate tech ecosystem can help build a grid that is resilient, sustainable, and equitable in the face of unprecedented change.

At Wireframe, supporting founders who are tackling the critical challenges of grid modernization and decarbonization is core to our mission. It's why we've invested in visionary entrepreneurs like Bryce Smith of LevelTen Energy, who are developing innovative solutions for renewable energy procurement and grid integration. We're also proud to back a growing roster of startups that are pushing the boundaries of what's possible in this space, including  Synop, Gridware, Tyba Energy, Electriphi, and SPAN. From advanced grid monitoring and control systems to electric vehicle fleet management and smart home energy solutions, these companies are at the forefront of building for the clean energy transition.

Looking ahead, we're more excited than ever to partner with the next generation of founders reimagining the grid of the future. If you're an entrepreneur with a bold vision for accelerating the energy transition, we'd love to hear from you.