Morgan Stanley’s global head of thematic and sustainability research believes that the rapid expansion of AI infrastructure is pushing tech companies to build their own power systems.
In a new CNBC interview, Stephen Byrd says hyperscale cloud companies are increasingly exploring ways to operate independently from traditional power grids.
Byrd says the move would help address growing political concerns about electricity demand from large AI facilities.
“When we talk to the hyperscalers and folks in the power space, more and more, they’re going to go completely off grid so they can go to politicians and say, ‘Look, we understand there’s so much sensitivity. We’re going to completely disconnect. So we have no impact.’”
He says future data centers may even supply electricity back to the grid during periods of high demand.
“I think we might even go further, where they provide one-way power, meaning there are power plants at the data center. And when the grid needs it, that data center will voluntarily provide additional power to the grid to lower price.”
According to Byrd, the idea is to make AI infrastructure a net benefit for surrounding communities rather than a strain on local resources.
“That’s the new table stakes is making sure do not hurt anyone else and then ultimately provide a real benefit to the community.”
He also notes that the United States faces broader energy constraints as AI infrastructure expands and that the lengthy permitting process is pushing companies to build independent power systems rather than wait for traditional grid upgrades.
“In the US, we have a shortage of both the electrons and the grid that we need. So we need both. Now, Team Trump is trying to eliminate barriers to get more power onto the grid and provide more electricity. So that is good. Renewables alone won’t do it, though. We need renewables, but we also need a lot of natural gas. I’d say, broadly, the permitting process in the US just takes longer than in China. It just takes time to get that infrastructure in place. That’s why, again, I think the data center community will just take control of their own destiny, build their own mini-grids that are completely separated.”
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