National Grid taps into US AI power boom

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Hello and welcome to Energy Source, coming to you from London.

Andy Burnham took office as UK prime minister on Monday, a day after Labour disappointed the oil and gas industry by signalling that he would stick to the party’s ban on new North Sea exploration licences. The decision dashed hopes of a policy reversal as his government faces pressure to bring down household energy bills following the surge in prices triggered by the Iran war.

However, his government could allow more drilling around existing fields through “tiebacks” and ease some tax and regulatory burdens on the industry. Labour deputy leader Lucy Powell described the approach as a “change of emphasis” rather than a policy change.

While Burnham is set to keep restrictions on new exploration in the North Sea, US oil explorers are finding new opportunities elsewhere. Veteran US wildcatter Bill Armstrong is preparing to hunt for oil in Venezuela after agreeing a draft deal with the country’s authorities and buying seismic data, as investors move to capitalise on Donald Trump’s removal of strongman Nicolás Maduro in January.

Armstrong, who made his name with a major oil discovery in Alaska, described Venezuela as having “dreamland geology and a gigantic resource”. His move comes as global exploration spending recovers, with Wood Mackenzie forecasting it will reach $27bn this year, up from a modern-era low of $22.1bn in 2020.

In today’s newsletter, we report on National Grid’s latest move into the US energy market, which will give the UK utility exposure to surging electricity demand from the AI boom.

Thanks for reading, Ryohtaroh

National Grid taps into US AI power boom

National Grid has deepened its push into the US energy market, investing $1.75bn in a developer focused on supplying power to data centres as tech giants continue to invest in computing power for AI.

The UK utility company said earlier this month that it would acquire a 35 per cent equity stake in US energy company Joulent through its investment arm. The deal gives National Grid exposure to one of the fastest-growing sources of electricity demand, as the power crunch becomes a major challenge facing AI adoption.

The investment would help gain “exposure to a major source of electricity demand growth that diversifies our regional US exposure”, said chief executive Zoë Yujnovich.

The decision marks another step in National Grid’s involvement in the US, where its electricity and gas distribution businesses in New York and Massachusetts generated about £2.5bn, or roughly 45 per cent of the group’s operating profit in the fiscal year ending last March.

The companies said the funding would support Joulent’s flagship project with Chevron in west Texas, which aims to provide 2.67GW of electricity to a Microsoft data centre by 2028. National Grid will provide experience and equipment for large-scale energy infrastructure and grid operations, complementing the partnership Joulent already has with Chevron and gas turbine manufacturer GE Vernova.

Noelle Walsh, president of Microsoft’s cloud operations, said AI data centres increasingly required “closer co-ordination between energy and infrastructure”, adding that National Grid’s expertise in electricity networks would help deliver the project.

The move comes as power providers race to meet rapidly growing demand from AI. However, developers have struggled to secure grid connections as surging investment in renewables congests the transmission network and permits for new connections drag on for years.

Founded in 2026, Joulent is a spinout from activist fund Engine No. 1. It develops energy systems combining multiple power sources, including gas turbines, renewable generation and battery storage.

Partnering with energy companies would “provide access to critical long-lead equipment and supply chains”, Joulent said, claiming this would allow it to provide power to big energy consumers more quickly. High demand for off-grid power for data centres has pushed wait times for gas generators to several years, with hyperscalers scrambling to secure alternatives, including smaller gas engines and even jet engines.

Powering data centres has become more complex with the surge in AI computing.

AI data centres house thousands of advanced chips, which operate in synchronised bursts, creating much larger swings in power consumption than at conventional cloud-computing facilities. This has prompted data centre operators or grid operators to explore ways to smooth those fluctuations and reduce pressure on the grid.

In a previous interview with Energy Source, Yujnovich said utilities could connect more data centres by identifying “pockets of availability” on the grid and making data centre loads more flexible. National Grid has also announced collaborations with Nvidia and other partners to demonstrate systems that smooth AI power fluctuations while minimising the impact on computing performance.

Power Points

The EU plans to channel more emissions trading revenues to heavy industry while easing the pace of its decarbonisation obligations.

Britain’s grid operator is increasingly paying consumers to cut electricity use as renewable power makes balancing the grid more complex.

The EU is set to delay penalties for companies breaching new methane rules for three years after pressure from the US and gas-dependent member states.

The EU plans to channel more emissions trading revenues to heavy industry while easing the pace of its decarbonisation obligations.

Britain’s grid operator is increasingly paying consumers to cut electricity use as renewable power makes balancing the grid more complex.

The EU is set to delay penalties for companies breaching new methane rules for three years after pressure from the US and gas-dependent member states.

Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Rachel Millard, Malcolm Moore, Ryohtaroh Satoh and Stephanie Findlay with support from the FT’s global team of reporters. Reach us at [email protected] and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.

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