Energy and money are two moats that are protecting AI developing nations from competition. EU cannot compete since EU cannot get enough for AI of both energy and money in the fragmented financial market. The U.S. and China with help of Russia have enough for AI of both. Who will build the new AI based economy and who will not?
The United States and China are positioned to build the new AI-based economy due to their substantial lead in investment and access to energy for AI compute power, while the European Union faces challenges that make it a less competitive "industrial" AI player, focusing more on childish play of regulation, pretending to do something here.
The AI Economy: Key Players and Prospects
United States: The U.S. currently leads the world in private AI investment, top-tier model development, and AI talent. Its innovation-first approach, combined with significant private sector capital, has created a robust AI ecosystem. However, it faces potential energy bottlenecks for new data centers and relies heavily on foreign chip manufacturing.
China: China is rapidly closing the gap through massive state-directed investment, a significant lead in total energy production capacity, and a high volume of AI publications and patents. China aims to become the world leader in AI by 2030 and is building out its domestic semiconductor capabilities to reduce reliance on the West.
European Union: The EU lags significantly behind in AI investment, model development, and supercomputing capacity compared to the U.S. and China. While the EU possesses strong research institutions and a large talent pool, market fragmentation, regulatory burdens (such as prioritizing climate goals over rapid data center development), and a lack of large domestic tech firms hinder its ability to compete as an industrial powerhouse. Its primary role has been as a "regulatory player," establishing comprehensive frameworks like the EU AI Act.
Russia: Russia is mentioned often as a potential energy provider to China, and it is using Chinese open-source AI models like DeepSeek. Its role in building the global AI economy is more aligned with the China-led sphere of influence, especially concerning energy, data sovereignty and content control.
Russian Energy Imports: China does purchase discounted oil and gas from Russia as EU sanctions have forced Russia to lean heavily on China as a customer. The "Power of Siberia" pipelines facilitate these deals, with long-term contracts in place.
Conclusion on Future Economy Builders: The U.S. and China are the primary contenders to build and dominate the new AI-based economy, utilizing their respective strengths in private capital/innovation (U.S.) and state-directed investment/energy production (China). The EU, while a significant global actor in regulation and research, will likely remain dependent on AI models developed by the U.S. and China unless it overcomes significant investment and energy infrastructure hurdles, stops blocking cheap Russian energy. Money? Nothing can take away control of money from local elites in separate EU countries, nothing.
“America's AI boom is pushing the nation's largest power-grid operator to the brink of a supply crisis.
Sixty-seven million people in a 13-state region stretching from New Jersey to Kentucky get their power from a market operated by nonprofit PJM. So, too, do the many AI data centers springing up in Northern Virginia's "Data Center Alley," which have a bottomless appetite for electricity.
Rates are going up for consumers. Older power plants are going out of service faster than new ones can be built. And the grid's capacity is in danger of maxing out during periods of high demand, which could force PJM to call for rolling blackouts during heat waves or deep freezes to avoid damaging grid infrastructure.
Mark Christie, former chairman of the Federal Energy Regulatory Commission, said that a few years ago he considered the PJM blackout threat to be on the horizon. "Now I'm saying that the reliability risk is across the street," he said.
PJM expects power demand to grow by 4.8% a year, on average, for the next decade -- an astonishing pace for a system that hasn't had substantial demand growth in years.
Consumers are furious about the rate increases. And tech companies, including Amazon, Alphabet and Microsoft, have fought against proposed rules that would require data centers to build their own power sources or go dark during demand surges.
Potential solutions to PJM's problems are complex, controversial and nearly impossible to implement quickly. Adding to the challenge: The organization's longtime chief executive, Manu Asthana, stepped down at the end of 2025 with no successor yet in place. PJM board chairman David Mills will serve as interim CEO until a replacement is chosen.
"The reliability challenges facing the grid are real, but they are not unsolvable," Mills said in a written statement. PJM is coordinating with policymakers, regulators and industry, he said, to align investments in power generation and transmission with increasing demand.
Grid operators such as PJM -- originally called the Pennsylvania-New Jersey-Maryland Interconnection -- play a vital role in the U.S. energy system. In the vast region served by PJM, it serves as the intermediary between power producers and the utilities that own the poles and wires and deliver electricity to consumers. PJM's mission is to balance supply and demand by telling power plants when to ramp production up or down.
Other regions of the country are also seeing a surge in power demand tied to data centers. West Texas and the parts of the Southeast and the Southwest are becoming home to massive facilities. Power demand forecasts vary widely, but analysts expect significant growth in the coming years. An analysis by consulting firm ICF forecasts U.S. power demand in 2030 will be 25% higher than it was in 2023, largely because of data center needs.
In a PJM control room about 20 miles northwest of Philadelphia, rotating teams of operators keep watch for threats to the grid's stability. The command hub is kept movie-theater dark so the operators, known as dispatchers, can better study the wall-to-wall screens showing the movement of electricity across the service area. The region's network of high-voltage power lines is lighted up on a large digital map, while a series of graphs and tables show which plants are producing power and how much it costs.
PJM's energy dispatchers essentially function as air-traffic controllers, rerouting power as needed. Any imbalance between supply and demand can alter the frequency of the grid, potentially damaging power plants and other equipment.
As data centers have multiplied, it has gotten more challenging for PJM to handle surges in demand. Northern Virginia is home to more data centers for companies such as Amazon than any other part of the country. Google said last year it planned to invest $25 billion over the next two years to build out data centers in the same service area.
Dominion Energy, the utility company serving parts of Virginia, has received requests from data-center developers that would require more than 40 gigawatts of electricity, enough to power at least 10 million homes. Those requests alone amount to roughly twice the capacity than Dominion had across its Virginia network at the end of 2024. By 2039, Dominion expects peak demand on its system to double.
When Asthana took over as CEO of PJM in 2020, power plants within its service area were shutting down more quickly than they could be replaced. Six years later, that trend has continued even though power demand has risen.
State environmental policies have accounted for some of the closures. Illinois, Michigan, Maryland and other states on the PJM grid have shut down some coal and gas-fired units to reduce carbon emissions.
Other shutdowns have come for economic reasons. Coal-fired and nuclear plants had a hard time competing after the shale boom unleashed abundant, inexpensive natural-gas supplies, and the cost of wind and solar projects plummeted.
PJM's troubles have become so pronounced that Pennsylvania Gov. Josh Shapiro, a Democrat, filed a complaint with federal regulators in 2024 seeking, among other things, to cap price increases in the PJM market. In September, the governor convened a meeting between governors and representatives from all 13 states within PJM, where he called for more political oversight on prices.
"For the largest grid in the nation to have the fewest avenues for customers and their elected representatives to be heard is unacceptable," he said.
At the time, then-CEO Asthana suggested that elected officials have made the problem worse by making it harder to build and operate power plants. "We can do whatever we want in the markets," he said, "but if our plants run into a hostile siting and permitting regime, they will not get built."
In New Jersey, rates for residents spiked by about 20% in June. Gov.-elect Mikie Sherrill made electricity prices a signature issue in her campaign, vowing in her victory speech to "declare a state of emergency on day one" to drive down utility costs.
The governors of Pennsylvania, Virginia and Maryland have threatened to walk away from PJM, though it would be difficult for most states to pull out because their utilities generally don't own power plants. Federal authorities would need to approve any state withdrawals.
Unlike the single-state power markets in California, New York and Texas, PJM's market encompasses multiple states run by officials with disparate political views.
"One of the fundamental problems that PJM faces is political," said Christie, the former FERC chairman. "You've got 13 different states with 13 very different policies about what kind of generation they want, and about who can build generation."
This past summer, a series of heat waves drove power demand on the PJM grid to near-record highs. In June, with consumers cranking their air conditioners, PJM called on every power plant to run at full steam. It also began reducing demand by paying some large energy users such as factories to power down, a tactic known as demand response. Its aim was to avoid rolling blackouts that would have affected many more customers.
Rolling blackouts, used only rarely in the U.S., can be dangerous. In Texas, more than 200 people died after the grid operator there issued emergency orders for utilities to cut power during a severe freeze in February 2021. Because an unprecedented number of power plants tripped offline in the cold, utilities were forced to make huge cuts, and some people were in the dark for four days.
PJM's grid-reliability challenges during weather extremes are intensifying as data centers, which generally aim to operate around the clock, suck up more power.
In September, PJM released proposals meant to balance data-center needs with those of other customers, including one that would cut power to data centers during times of extreme strain on the grid. That one included possible exceptions for data centers that either arrange for their own power supplies or volunteer to participate in demand response.
Amazon, Google, Microsoft and others said parts of that proposal discriminated against data centers. They opposed almost every facet of it, expressing concern about the prospect of being cut off from the grid, the cost of building power plants and the feasibility of powering down.
Tech companies put forward counterproposals that would make building power plants or going offline strictly voluntary for data centers within PJM.
In November, efforts to establish new rules for data centers stalled when PJM executives, tech companies, power suppliers, utilities and the independent monitor that oversees the market couldn't agree on a plan. PJM's board of managers is now working to propose one.
The market monitor, Joseph Bowring, has urged federal regulators to intervene. In a complaint filed with the Federal Energy Regulatory Commission, the monitor said PJM should stop admitting new data centers to the grid unless there are enough power plants and transmission lines to serve them.
Bowring's firm, Monitoring Analytics, has been sounding the same warning for months.
Unless data centers bring their own power supply, the firm said in a letter to the grid operator in November, "PJM will be in the position of allocating blackouts rather than ensuring reliability."” [1]
1. Power Grid Has An AI Problem --- Largest grid operator in the U.S. strains under demands of data centers. Blunt, Katherine; Hiller, Jennifer. Wall Street Journal, Eastern edition; New York, N.Y.. 15 Jan 2026: A1.
