The power grid is severely lagging! American data centers are even turning to "islanding," operating independently from the power grid

According to the Wind Trading Platform, Barclays revealed in its latest report released on November 5 that a growing reality behind the AI frenzy is that power supply has become an absolute bottleneck.

This report, based on frontline observations from the DCD>Connect industry conference, paints a picture of an industry dominated by a "scarcity mentality," where data center developers, utility companies, and equipment manufacturers face genuine anxiety over the comprehensive shortages of power, labor, and resources.

Barclays stated that in the face of severe delays in the power grid, the data center industry is being forced to adopt a radical self-rescue measure: disconnecting from the grid and establishing "island" projects with their own power sources.

However, operating in an "island" mode is not a panacea; the extreme power fluctuations of AI workloads pose an unprecedented challenge to the stability of independent power systems.

A "Crazy" Market and a Power Grid on the Brink

The demand for AI-driven data centers has put the entire industry in a state of chaos. The report points out that market participants generally believe that the growth rate has surpassed the limits of resource capacity. Budget is no longer a limiting factor; the ability to obtain power, land, and manpower is what matters. A comment from an industry insider hits the nail on the head: "It's like sitting on a rocket without a seatbelt."

The "Pandora's box" of power shortages has been opened. The key issue is not insufficient power generation, but rather that the outdated transmission network cannot cope with the concentrated surge in demand, as the report cites:

We do not have a power generation problem; we have a transmission problem... The focus of the grid is on capacity, not reliability... Some utility companies are even unable to handle email requests from data center developers.

No Choice: "Island" Operation is Becoming a Reality

Faced with severe delays in the power grid, the data center industry is being forced to adopt a radical self-rescue measure: disconnecting from the grid and establishing "island" projects with their own power sources. This is no longer a temporary backup plan but the only way to secure computing power online. The report emphasizes that this is not a proactive choice by developers but a desperate move.

Distributed power has traditionally been used to supplement the grid, but now the grid (construction) is too far away, and projects are becoming completely 'islanded'... Data center developers do not want to build their own power plants, but they want something you cannot have (grid power).

AI Load Fluctuations: New Risks of Island Operation

However, operating in an "island" mode is not a panacea; the unique properties of AI workloads bring new technical challenges. Their extreme power fluctuations pose an unprecedented challenge to the stability of independent power systems.

AI workloads can surge from idle to peak power in milliseconds and then return to idle... Many customers are concerned about 'island' data centers due to delivery speed, but there are many risks in managing power fluctuations... The engineers needed for these power system studies may only account for 1-2% of the total.

This significant gap in system integration and the extreme scarcity of specialized talent mean that hastily launched "island" projects face enormous potential operational risks. For investors, this power arms race ignited by AI presents risks that are far more complex than imagined