AI+Energy: Fortifying American Energy Dominance in the Age of AI

I’m Ylli Bajraktari, CEO of the Special Competitive Studies Project. In this week’s edition of our newsletter, SCSP’s David Lin and Nyah Stewart outline a comprehensive strategy to ensure U.S. energy security and global technological leadership during today’s AI moment.

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This report outlines a comprehensive strategy to ensure U.S. energy security and global leadership amidst the burgeoning demands of artificial intelligence (AI) and growing international competition.

Background

The United States currently holds a strong position as a net energy exporter. However, maintaining this advantage requires a proactive and strategic approach to meet the unprecedented electricity demands of the AI revolution. AI is poised to become a primary driver of economic growth and technological advancement, demanding a robust and reliable energy infrastructure. While the United States benefits from abundant fossil fuel resources that provide affordable energy in the near term, a long-term strategy must focus on developing and deploying next-generation energy technologies like advanced nuclear, fusion, and geothermal. These technologies offer the potential for virtually limitless and reliable power as they achieve economies of scale.

China's aggressive pursuit of renewable energy technologies and dominance in critical mineral supply chains presents a direct challenge to U.S. leadership in the energy sector. To maintain its competitive edge, the United States must overcome five key obstacles:

1. Insufficient Supply: Existing energy sources alone will likely prove inadequate to power the AI revolution and future economic growth.

2. Regulatory Hurdles: Cumbersome regulations and permitting processes hinder the timely deployment of innovative energy technologies.

3. Infrastructure Limitations: The aging U.S. electric grid requires modernization and expansion to accommodate increased energy demands and integrate new energy sources effectively.

4. Market Fragmentation: A lack of cohesion within the U.S. energy sector limits collaboration and slows the pace of innovation.

5. Global Competition: Strategic competitors like China and Russia pose a significant challenge to U.S. energy dominance.

Recommendations

Building on the discussions at SCSP’s AI+Energy Summit in September 2024, we offer a roadmap by which the United States can address some of these challenges and fortify its energy leadership.

Immediate Actions (0-2 years)

1. Streamline Regulatory Processes

   • Accelerate Permitting: The Department of Energy (DOE), the Environmental Protection Agency (EPA), the Federal Energy Regulatory Commission (FERC), and other relevant stakeholders should enforce strict timelines across the energy sector for environmental reviews and permitting decisions for energy infrastructure projects, particularly for advanced nuclear reactors and renewable energy projects. This includes leveraging existing legislation like the Fixing America's Surface Transportation Act to expedite project approvals and implement the provisions of the Infrastructure Investment and Jobs Act (IIJA) to streamline National Environmental Policy Act (NEPA) reviews and establish clear timelines for project completion.

   • Digitize and Simplify: DOE, FERC, and other relevant agencies should transition permitting processes to digital platforms to improve efficiency and transparency. All relevant agencies should simplify application procedures and reduce bureaucratic burdens for energy projects.

   • Promote Regulatory Certainty: FERC, the Nuclear Regulatory Commission (NRC), and the DOE, in coordination with Congress, should establish clear and consistent regulatory frameworks for emerging energy technologies to encourage long-term investment. All relevant agencies should provide clear guidance on permitting requirements and timelines to reduce uncertainty for project developers.

2. Enhance Grid Security and Resilience

   • Cybersecurity Enhancements: The DOE, the Department of Homeland Security (DHS), the North American Electric Reliability Corporation (NERC), FERC, and the Electricity Information Sharing and Analysis Center (E-ISAC), should implement comprehensive and advanced cybersecurity measures, such as real-time threat monitoring, to protect the entire energy system—from generation to distribution—from cyberattacks. The DOE, DHS, FERC, NERC, and E-ISAC should enhance information sharing and coordination across the energy sector to improve threat response and recovery.

   • Physical Security Measures: The DOE, DHS, FERC, NERC, E-ISAC, utilities, and state and local governments should strengthen physical security at critical energy infrastructure sites, including power plants, substations, and transmission lines, to prevent disruptions and sabotage. All relevant stakeholders across the energy system should improve surveillance and access control measures to deter physical attacks and unauthorized access.

   • Grid Modernization: The DOE and FERC should invest in grid modernization technologies, such as advanced sensors, AI-powered grid management systems, and microgrids, to improve grid efficiency, reliability, and resilience. Utilities and state and local governments should utilize distributed energy resources (DERs) like battery storage to enhance grid flexibility and responsiveness.

3. Foster Public-Private Partnerships

   • Incentivize Private Investment: The DOE, in coordination with Congress, should offer tax credits, loan guarantees, and other financial incentives to encourage private sector investment in energy innovation and infrastructure development. The DOE should explore innovative financing mechanisms and public-private partnerships to leverage private capital and de-risk investments for new energy projects.

   • Facilitate Collaboration: The DOE should establish platforms and initiatives to foster collaboration between national laboratories, universities, and private companies to accelerate the development and deployment of new energy technologies. The DOE and industry associations should support the creation of industry consortia and research partnerships to address common challenges and share best practices.

Medium-Term Actions (2-5 years)

1. Invest in Breakthrough Energy Technologies

   • Increase R&D Funding: The Federal Government should substantially increase federal funding for research and development to solve key scientific barriers to realizing advanced nuclear reactors, fusion energy, geothermal energy, long-duration energy storage, and other promising energy technologies. The DOE should prioritize funding for high-risk, high-reward research with the potential to transform the energy sector.

   • Support Commercialization: The DOE should provide financial and technical support to facilitate the commercialization and deployment of these technologies, including demonstration projects and first-of-a-kind deployments. The DOE and the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs should support early-stage companies and entrepreneurs developing breakthrough energy technologies.

2. Secure Critical Mineral Supply Chains

   • Domestic Production: The Department of the Interior (DOI), the Bureau of Land Management (BLM), and the U.S. Geological Survey (USGS) should incentivize domestic exploration, mining, and processing of critical minerals to reduce reliance on foreign sources. The DOI and the EPA should streamline permitting processes for mining projects.

   • International Partnerships: The Department of State and the U.S. Agency for International Development (USAID) should strengthen alliances with countries rich in critical minerals to diversify supply chains and reduce dependence on China. The U.S. Trade Representative (USTR) should negotiate trade agreements and partnerships to secure access to critical minerals and promote responsible sourcing practices.

   • Recycling and Recovery: The DOE and the EPA should invest in technologies for recycling and recovering critical minerals from existing products and waste streams. The EPA and Congress should continue to develop policies and incentives, such as recovery standards and benchmarks, in addition to tax credits, grants, and depreciation incentives to spur both national, state, and local partnerships focused on materials recycling and recovery.

Long-Term Actions (5+ years)

1. Build a Resilient and Reliable Energy System

   • Diversify Energy Sources: The DOE, FERC, utilities, and state and local governments should promote a diverse energy mix that includes fossil fuels – oil and natural gas – and renewable energy sources – such as advanced nuclear and geothermal – to ensure long-term energy security and reduce reliance on any single source. The DOE, in coordination with the White House, should develop an integrated energy strategy for the nation that optimizes the use of different energy sources based on availability, cost, and reliability.

   • Expand Transmission: The DOE and FERC should exercise their existing authority to construct high-voltage direct current (HVDC) transmission lines across the interconnection seams to increase energy transmission. This includes leveraging FERC’s ability to expedite the permitting process for projects in the national interest and DOE’s power to provide capital for transmission build-out.

2. Lead in Global Energy Governance

   • International Cooperation: The Department of State, the DOE, and USAID should actively engage in international forums and partnerships to promote energy technologies, security, and development. The DOE should collaborate on research and development with other countries to accelerate the global energy transition.

   • Export U.S. Energy Technology: The Department of Commerce and the Export-Import Bank of the United States (EXIM) should support the strategic export of U.S. energy technologies, including small modular reactors (SMRs), to strengthen global partnerships and promote American leadership in energy. The Department of State and USAID should provide financing and technical assistance to help other countries adopt energy technologies and build resilient energy systems.

Conclusion

The AI revolution presents both an unprecedented opportunity and a significant challenge for U.S. energy security and global leadership. Meeting the energy demands of this transformative era requires bold, strategic action to modernize infrastructure, streamline regulations, and invest in next-generation energy technologies. By leveraging the nation’s unique position as a net energy exporter and proactively addressing vulnerabilities, the United States can ensure a resilient, diversified, and sustainable energy system. The recommended steps—ranging from immediate regulatory reforms to long-term investments in advanced energy solutions—offer a comprehensive roadmap to maintaining American energy dominance. With decisive leadership and a collaborative approach, the U.S. can not only power the AI revolution but also define the global energy future, safeguarding its economic and technological preeminence in an increasingly competitive world.

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2025 AI+Expo for National Competitiveness

On June 2-4, 2025, SCSP will host its second AI+ Expo at the Walter E. Washington Convention Center in DC. The AI+ Expo is the place to convene and build relationships around AI, technology, and U.S. and allied competitiveness.

Interested in joining us? We are seeking additional exhibitors and sponsors that are eager to share and discover new breakthroughs with us this summer. Find out more at expo.scsp.ai.