AI could cause a huge electricity shortfall in the US, Bank of America says: A closer look

Bank of America (BAC) predicts that the US could face a major electricity shortage between 2026 and 2030. Yahoo Finance Breaking Business News Reporter Jake Conley breaks down the details.

Bank of America is saying the US could be short 100 gigawatts of electricity by 2030. So, start there, just break that down simply for us. What's driving that and how big of a how big of a problem could that be?

Yeah, 100 or more is the shortfall they see and what is driving this, it is the absolute boom in AI and the data center demand. These data centers they're going up everywhere are extraordinarily power intensive. They need huge amounts of electricity. And the problem this country's run into is that for the last 20, 30 years, electricity demand has largely been flat. Hasn't really gone up and we assumed that was going to continue.

Now, all of a sudden electricity demand is booming. The shortfall is about 100 gigawatts. That's a real problem for a grid that is already under pressure even in current conditions. Now, Bank of America pulling a ton of data here and even in 2025, 2026, the need for energy is already outpacing what was expected. That's only expected to get worse.

Uh if that power crunch plays out, who would be potential, you know, uh big beneficiaries, big winners?

The first thing you think about are the natural gas turbine makers. This is GE Vernova, this is Eaton, this is Emerson. All the data centers, their problem is that they want power right now. And if you want to get connected to the US power grid, have that load stability, that's looking at a five to seven year timeline. And if I'm Meta, or if I'm Oracle, or if I'm Amazon, I don't want to wait five to seven years for my power.

So how am I going to solve that? I'm going to build power on site, what we call behind the meter solutions. I'm going to build right next to my data center. The first solution is natural gas turbines, GE Vernova, Eaton. The problem that the market's going to face is that natural gas turbines are sold out through 2030, completely. You cannot get a new order for a natural gas turbine because of the demand.

So the second option are these systems called gas reciprocating engines. Basically think huge car engines. The companies that produce this, this is Rolls-Royce, this is Inneo Group, this is Caterpillar. These are kind of the second- order companies we're going to see do well now that the natural gas turbines are sold out and companies scrambling for power who didn't have their orders in a year ago are having to go elsewhere.