Billionaire investor Chamath Palihapitiya is sounding the alarm on what he calls an overlooked risk of the AI boom: energy.
In a new episode of the All-In Podcast, the venture capitalist says he spoke with the head of a major energy company who believes the United States is heading toward a power crunch.
Palihapitiya says the rise of AI infrastructure — from hyperscale data centers to server farms — is already straining local grids and driving public resistance to new builds.
“I talked to somebody yesterday who runs a huge energy business. And I have to tell you, it’s not in a good place… The residents of Indianapolis were able to reject or get their city to reject a billion-dollar data center that Google was going to build near Indianapolis, largely because of concerns of price inflation around electricity.”
The executive told Palihapitiya that the next half-decade is locked in — and that without major breakthroughs, consumers will face surging costs.
“What this energy CEO told me is, look, ‘The next five years are baked. And if we don’t find some compelling solves… electricity rates will double in the next five years.’”
Palihapitiya warns that AI’s power appetite is creating a new kind of corporate liability: public anger. As household energy bills climb, consumers could start blaming the same tech firms driving the AI race.
“It’s a huge PR crisis, because if you want to take big tech, which is already viewed negatively, and make their perception even worse, if you start to finger point to them and say, ‘These guys are the reason my electricity costs have doubled in the last five years,’ that is no bueno for them.”
He added that large technology firms will need to find “an off ramp ASAP.” One proposed solution from the energy sector is to implement a “cross-subsidy,” a pricing mechanism that would require big tech companies to pay higher energy rates in order to shield residential customers from inflationary shocks.
“They pay a rate card, which they can absorb with all their free cash flow materially higher than what other rate payers would pay in that geographic area. So the homeowner, his or her electricity costs stay flat to down. The data center costs are higher, and it’s the Metas, the Googles, the Apples, the Amazons, who have hundreds of billions of free cash; they absorb it.”
The second solution involves installing batteries in residential areas around data centers that would allow homes to absorb the rising electricity costs without having to pay for them.
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