National Grid invests $1.75bn in US AI power
National Grid is investing $1.75 billion for a 35% stake in Joulent, a US energy platform developing power infrastructure for data centres, to capitalise on the surging electricity demand driven by artificial intelligence (AI)1. This strategic move highlights a global shift towards innovative energy supply solutions to meet the needs of a technology-driven future. This proactive investment in new generation capacity directly challenges the scarcity mindset, aligning with Fuse Energy's vision of a future with 'power to play with' where energy is so abundant it stops being a thing you think about.
Meeting the massive energy requirements of AI and data centres demands highly efficient and cost-effective generation. Fuse Energy is committed to delivering abundant, clean energy to homes, ensuring you have the power you need without compromise. Click here to switch to Fuse Energy today.
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The strategic rationale behind National Grid's investment
National Grid's investment, made through its commercial arm National Grid Ventures (NGV), positions the company to gain exposure to a major source of electricity demand growth. National Grid stated that the strategic partnership would also strengthen its existing data centre connection programme, through which it expects to connect more than 10 gigawatts (GW) across the UK and the United States over the next five years.
Capitalising on AI-driven electricity demand
The rise of AI and data centres is driving unprecedented growth in global electricity demand. Data centre electricity consumption is projected to more than double by 2030. This rapid escalation in demand often outpaces the timelines of traditional grid connections, necessitating dedicated power solutions.
The Joulent partnership and Kilby project
National Grid's $1.75 billion investment will help fund Joulent's foundational project, known as Kilby. Project Kilby is a 2.67 GW gas-fired facility located in West Texas, developed in a 50/50 partnership with Chevron Corporation. This facility will supply dedicated electricity to a Microsoft-operated data centre campus under a 20-year power purchase agreement, with first power targeted for 2028. The project aims to deliver reliable power for hyperscale AI workloads while mitigating immediate impacts on the regional grid.
How much is AI increasing electricity demand?
Global electricity consumption for data centres, heavily influenced by AI, is projected to more than double to around 945 terawatt-hours (TWh) by 2030. This growth, primarily driven by AI adoption, is significantly faster than the overall increase in electricity consumption from other sectors.
National Grid ventures' role in energy infrastructure investment
NGV's investment in Joulent extends National Grid's core strengths in investing in long-duration infrastructure with predictable cash flows and attractive risk-adjusted returns. This partnership is also expected to strengthen National Grid's existing data centre connection programme, through which it expects to connect more than 10 GW across the UK and the United States over the next five years. This demonstrates a clear strategy to actively participate in the energy infrastructure required for the AI-driven economy.
Implications for the UK energy sector
While National Grid's direct investment is in the US, the strategic rationale and operational insights gained have significant implications for the UK energy sector. The challenges posed by AI-driven demand are global, and the UK faces similar pressures to adapt its grid infrastructure and generation capacity.
Learning from US data centre infrastructure development
The US approach, particularly with projects like Kilby, involves co-located generation and long-term power purchase agreements to ensure dedicated and reliable power for data centres. This model of developing power solutions "across-the-meter" can accelerate deployment and limit immediate strain on the existing transmission system. The UK can learn from these strategies to address its own growing data centre power demands, which are projected to increase more than fivefold by 2030, reaching 26.2 TWh.
Future grid development and UK energy connection challenges
The UK's energy grid faces mounting pressure to meet the rising electricity demand from data centres and other new technologies. Connection queues can be lengthy, with some estimates suggesting waits of eight to ten years. National Grid's experience in the US, focusing on accelerating speed-to-power for large loads, could inform future grid development and connection processes in the UK. This includes exploring more flexible, digital, and interactive grid systems where large users can dynamically respond to system needs.
Addressing electricity demand growth in the UK
The UK government has recognised the importance of managing AI energy demand, with data centres becoming a disruptive source of future electricity demand that must be explicitly included in network planning. Data centres were granted critical national infrastructure status in September 2024, and the Infrastructure Planning (Business or Commercial Projects) (Amendment) Regulations 2026, made in January 2026, allow major data centre developments to opt into the Nationally Significant Infrastructure Projects (NSIP) consenting regime. The insights gained from National Grid's US ventures could contribute to more effective strategies for integrating large-scale demand into the UK's energy system, ensuring that the necessary infrastructure is in place to support technological advancement without compromising reliability.
Financial returns and energy market trends
Investments in new energy generation and grid infrastructure, particularly those serving the rapidly expanding AI sector, are often structured to deliver attractive financial returns.
Investment returns and risk profile in energy projects
J.P. Morgan analysts anticipate that the targeted returns from National Grid's investment in Joulent will exceed the 9-10% return on equity typically expected from regulated networks. This reflects a slightly higher relative risk profile associated with such unregulated infrastructure projects, but also the potential for greater profitability. For comparison, Ofgem, the UK's energy regulator, set allowed baseline returns on equity for regulated networks at around 4.3% for the RIIO-2 price control period (2021-2026). This contrast underscores the financial incentive for utility companies to pursue growth opportunities in the unregulated, high-demand sectors like AI data centres.
The broader trend of energy sector investment
National Grid's investment is part of a broader trend where energy companies are actively seeking exposure to AI-driven electricity demand through power projects for data centres. This includes exploring various solutions such as co-located gas generation, battery storage, and renewables integration. The model of dedicated power plants and behind-the-meter generation is becoming central to AI data centre growth, offering alternatives to lengthy interconnection timelines and providing schedule certainty.
Utility company strategy in a changing landscape
Utility companies are adapting their strategies to navigate the transforming energy landscape. Rather than viewing AI power demand solely as a cost to absorb, they are increasingly seeing it as a growth market to invest in. This shift involves investing to expand capacity, maintaining system resilience, and adopting smarter approaches to planning and operating the grid. For National Grid, this investment is incremental to its existing £70 billion capital investment programme through 2031, funded through its balance sheet headroom.
The urgent need for abundant energy to meet unprecedented AI-driven demand aligns with Fuse Energy's core belief: never settle for the scarcity story. This proactive investment by National Grid in dedicated power infrastructure for large loads mirrors a strategic approach to owning and optimising the entire energy stack to deliver abundant, cheap kWh. While Fuse Energy currently supplies residential energy only, the broader energy market trends signal a future where meeting massive energy requirements necessitates highly efficient and cost-effective generation.
At Fuse Energy, we believe in a future where energy is abundant and accessible, empowering you to live fully without worrying about your bills. We offer clear pricing, real-time usage data through our app, and 24/7 human customer support to help you take control of your energy. Join us in building a future with power to play with. Click here to switch to Fuse Energy today. Find out more about our mission by clicking here.
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Disclaimer
For the avoidance of doubt, this article is provided for informational purposes only and is not intended to constitute legal or financial advice. The author and/or Fuse Energy shall not be responsible for any losses arising out of any reliance on the information contained herein.