Observed Signal · Mar 28, 2026 · Industry Analysis · Source: techcrunch · Impact: 3/5 · Sentiment: Neutral
Race to Power the Grid by 2035 Widens
Tech companies' growing AI compute needs are driving investment and commercial deals across fusion, small modular fission, natural gas, and long-duration battery storage as contenders to supply reliable 24/7 power by 2035. Natural gas remains the current baseload choice but faces supply-chain vulnerabilities and multi-year turbine backlogs. Several small modular reactor (SMR) firms and fusion startups aim to connect commercial plants to grids in the early 2030s; notable projects include Kairos Power's Hermes 2 demo, Oklo's 2028 target, Commonwealth Fusion Systems' demo and 400 MW Arc, and Helion's aggressive plan to deliver electricity to Microsoft by 2028 and to supply OpenAI at multi-gigawatt scale by 2030–2035. Cost and scale remain key hurdles: current levelized costs for new nuclear and fusion are high versus gas and renewables paired with batteries, while new long-duration storage (iron‑air, organic fluid designs) could undercut alternatives.
Energy supply and cost decisions will affect availability and operating costs for compute‑intensive infrastructure (AI/datacenters) used across tech and advertising industries; commercialization timelines for SMRs, fusion, and long‑duration storage could materially change power sourcing and pricing over the next decade.
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Key Takeaways & Evidence Grounding
- About 40% of U.S. natural gas consumption today is used to generate electricity.
- Kairos Power received approval for its Hermes 2 demonstration reactor in 2024 and is under construction.
- Oklo merged with Sam Altman’s blank-check company in 2024 and is targeting 2028 for first commercial operations.
- Helion aims to build its Orion commercial-scale power plant by 2028 to supply Microsoft and is reportedly in talks with OpenAI to provide up to 5 GW by 2030 and 50 GW by 2035.
- Last year the U.S. added 63 gigawatts of new generating capacity and grids installed about 58 gigawatt-hours of batteries; Form Energy signed a deal to provide Google power from a 30 GWh iron-air battery.
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Related Market Signals & Shifts
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Behind-the-Meter Power Challenges for Datacenters
SemiAnalysis reports that behind-the-meter (BTM) power generation for AI datacenters has become mainstream, with 75GW of firm orders tracked, 20GW ordered in Q2 2026 alone. Major deals include Microsoft's 5GW with Chevron and Crusoe, Google's 930MW aeroderivative turbines and 900MW Bloom fuel cells, and OpenAI's 1.4GW campus with Jenbacher engines. The report details six key challenges: contracts & bankability, permitting, fuel supply, equipment procurement, workforce, and electrical physics. It highlights permitting delays (e.g., Oracle's Project Jupiter) and the rise of Energy-as-a-Service vendors like VoltaGrid. The analysis emphasizes the shift towards reciprocating engines and fuel cells, and the growing importance of balance-of-plant equipment.
Solar to Dominate by 2035; AI Data Centers Sustain Fossils
A BloombergNEF report, cited by TechCrunch, forecasts that solar will become the largest source of power by about 2035 driven largely by rapidly falling costs and industrial-scale manufacturing. The consultancy warns that rising electricity demand from AI data centers and broader electrification will also drive large new capacity builds — including significant additions of gas and coal — because fossil plants can supply continuous 24/7 power. BloombergNEF projects data centers will spur major capacity additions across technologies and expects fossil fuels to supply about 51% of incremental generation for data centers by 2050. The report notes competing options (long‑duration storage, geothermal, nuclear) and cites corporate activity — such as Google buying $1 billion of 100‑hour batteries from Form Energy — that could shift outcomes depending on policy and technology adoption.
AI Labs Adopt Onsite Gas Power to Bypass Grid
SemiAnalysis examines how AI datacenter operators are increasingly deploying onsite gas generation to avoid multiyear grid interconnection delays. The report traces a rapid move from grid dependence to Bring Your Own Generation (BYOG) strategies—led by xAI’s truck‑mounted turbines—to enable faster time‑to‑power. It documents large orders (e.g., an OpenAI/Oracle 2.3 GW Texas plant), broad supplier participation (GE Vernova, Siemens Energy, Doosan Enerbility, Wärtsilä, Boom Supersonic, Bloom Energy, Caterpillar, and others), and three main generator families (aeroderivative/industrial gas turbines, reciprocating engines, and solid‑oxide fuel cells). The analysis covers tradeoffs—capex, lead times, ramp rates, redundancy/overbuild needs, permitting, supply‑chain bottlenecks (turbine blades/cores)—and emerging commercial models such as bridge power and Energy‑as‑a‑Service. The market is characterized by acute supplier booking, rising lead times, and material impacts on datacenter economics and deployment timelines.
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