Artificial intelligence is colliding with a very old constraint: electricity. As data centers scale up to feed generative models and real-time AI services, they are running into a grid that was never designed for this kind of always-on, power-hungry load. At the very moment when the industry needs vast new sources of clean energy, President Donald Trump’s crackdown on offshore wind is stripping away one of the most promising options.
The result is a policy collision that could slow the AI boom, raise costs for cloud customers, and deepen regional power shortages. Instead of pairing new data centers with large offshore projects that can deliver steady, carbon-free power, developers now face a landscape of frozen permits, canceled contracts, and mounting financial losses that ripple from coastal communities to global tech firms.
The AI boom’s power problem
AI developers like to talk about model size and compute, but the real bottleneck is increasingly the grid connection behind the server racks. I see the same pattern repeating across the country: data center proposals that once drew little attention are now triggering alarm among grid planners because of the sheer scale of their electricity demand. Grid officials have warned that Ballooning power requests from data center developers will require a surge of new generation, particularly solar, wind, and storage, to keep the system stable and affordable, a point underscored in detailed analysis of how ENERGYWIRE Ballooning demand is reshaping planning through the end of the decade.
Unlike traditional corporate campuses, AI-heavy facilities run at high utilization around the clock, which means they cannot simply rely on spare capacity that utilities once used to cover peaks. The more these clusters grow, the more they risk crowding out other customers or forcing utilities to lean on older fossil plants that undermine corporate climate pledges. That is why grid planners and clean energy advocates increasingly see large-scale renewables as a prerequisite for AI expansion rather than a nice-to-have add-on.
Why offshore wind matters for data centers
Offshore wind has emerged as a particularly attractive match for AI data centers because it can deliver large, steady blocks of power close to coastal load centers where cloud infrastructure is already clustered. Offshore projects can be built at a scale that rivals conventional power plants, and they tend to generate more consistently than onshore wind, which helps balance the variable output of solar. Industry groups note that Offshore wind is expected to be a part of the power mix for proposed new AI data centers throughout the world, even if in the United States it is still described as a “nascent industry” that needs policy stability to mature, a point emphasized by developers who explain what Offshore projects do for large power users.
For cloud companies, the appeal is straightforward: pairing a hyperscale data center with a nearby offshore wind farm offers a path to long-term, fixed-price clean power that can anchor corporate decarbonization goals. It also reduces dependence on congested transmission corridors that already struggle to move electricity from distant onshore wind or solar farms to coastal hubs. When that option is taken off the table, the alternatives are either more fossil generation, more expensive grid upgrades, or a slowdown in new AI capacity.
Trump’s offshore wind freeze
Instead of leaning into that opportunity, the Trump administration has moved in the opposite direction. In Dec, the Department of the Interior abruptly halted five under construction offshore wind projects after President Trump cited national security concerns, a decision that was publicly described in a video where the phrase “Trump halts five under construction offshore wind projects, citing national security” captured the scale of the reversal and was amplified through coverage of how Trump halted five projects that were already underway.
Officials framed the move as a necessary response to defense-related warnings, but the practical effect was to freeze billions of dollars in infrastructure that coastal states had already integrated into their energy and economic plans. Developers, utilities, and port operators that had spent years preparing for these projects suddenly faced indefinite delays, with no clear path to resolve the security questions or recover sunk costs. For AI companies counting on those megawatts to power new clusters, the message was unmistakable: federal support for offshore wind can vanish overnight.
National security vs energy security
The administration has tried to justify the clampdown by pointing to classified assessments. In public, officials have said the Department of the Interior acted after complaints from the Pentagon that offshore turbines could interfere with radar or other defense systems, a rationale that surfaced as the US freezes five big offshore wind projects and shares dive in coverage that highlighted how the Department of the Interior and the Pentagon were aligned on pausing construction.
Interior officials later described the decision as a response to “emerging national” concerns, language that Niina H. Farah reported when explaining how Interior pins the shutdown of wind projects on security, noting that Niina and Farah detailed how the agency communicated with developers and coastal states as it halted projects that would have supplied power to regions with large offshore wind ambitions. In that account, Interior’s explanation was tied to a specific figure, 39, which appeared in the context of how many projects or stakeholders were being tracked, and the report, which included a Copy reference and an EST Updated notation, underscored how the department framed the pause as a precaution rather than a permanent ban, even as it left investors and grid planners in limbo through Niina Farah Copy EST Updated reporting.
Economic shockwaves from canceled projects
The financial fallout has been immediate and severe. Norwegian energy giant Equinor booked a nearly $1 billion writedown on its U.S. offshore wind portfolio, explicitly tying the loss to changing regulations, contract uncertainty, and exposure to tariffs that made its projects uneconomic under the new policy environment. That writedown, which Equinor disclosed as it reassessed its American strategy, showed how a single political shift can erase years of planning and force a global player like Norwegian Equinor to reconsider its appetite for risk in a market that had once been seen as a cornerstone of its offshore expansion, a dynamic laid out in detail when Trump moves triggered Equinor’s writedown.
Domestic political leaders have warned that the damage goes far beyond a single balance sheet. Climate jobs on the chopping block was how New York state Senator Andrew Gounardes described the situation, arguing that the administration’s suspension of key renewable programs threatens thousands of positions and puts tens of billions of dollars in investment in jeopardy. In his view, the crackdown on renewables threatens jobs and could drive up energy prices, a combination that hits both working families and the very industries, including AI and advanced computing, that states like New York are trying to attract, a concern he laid out as he criticized how Climate jobs in New York, Senator Andrew Gounardes were being put at risk.
States push back as prices rise
Coastal states that had banked on offshore wind to stabilize prices and cut emissions are now scrambling to fill the gap. Connecticut Governor Ned Lamont, a Democrat, called the federal pause “erratic” and warned that it will drive up the price of electricity for his constituents, especially as utilities are forced to rely more heavily on gas-fired plants and imported power. His criticism captured a broader frustration among state leaders who see their long-term planning upended by sudden federal reversals, a tension that was highlighted when Connecticut Governor Ned Lamont, a Democrat described the pause as a blow to both ratepayers and clean energy goals.
For AI companies, higher regional power prices translate directly into higher operating costs and tougher decisions about where to locate new facilities. States that had pitched themselves as clean energy hubs now face the prospect of losing data center investments to regions with cheaper, if dirtier, power. That dynamic risks creating a two-tier AI economy in which some clusters run on relatively affordable fossil-heavy grids while others pay a premium for scarce clean electrons, undermining both climate targets and the industry’s public commitments.
Climate, AI, and the offshore wind link
Clean energy advocates have been blunt about what is at stake. Pasha Feinberg, an offshore wind strategist at the Natural Resources Defense Council, told Grist that turbines can interfere with certain systems but that those challenges are manageable with proper siting and technology, arguing that the benefits of large-scale offshore wind for decarbonization and grid reliability far outweigh the risks. In his view, the Department of the Interior’s decision to halt projects in Dec reflects a broader pattern in which the Trump administration has targeted offshore wind renewable energy, creating uncertainty that chills investment just as the sector is poised to scale, a pattern described in coverage of how the Department of the Interior and Pasha Feinberg at the Natural Resources Defense Council told Grist about the administration’s approach.
From a climate perspective, slowing offshore wind while AI power demand surges is a recipe for higher emissions. Every megawatt of clean capacity that fails to materialize makes it more likely that new data centers will be served by gas or coal, locking in pollution for decades. That tension is especially stark in regions that have already retired older plants in anticipation of offshore projects, leaving them with fewer options to meet new loads without backtracking on environmental gains.
A broader pattern of tech regulation whiplash
The offshore wind crackdown is not an isolated case. The administration has also moved aggressively on AI policy itself, including a federal moratorium that threatens state-level artificial intelligence laws aimed at housing discrimination and rental screening. That moratorium, which could upend efforts to safeguard tenants and enforce protections under the Equal Credit Opportunity Act, shows how quickly federal action can override local attempts to shape the technology’s impact, a dynamic described in detail in reporting on how Trump’s AI moratorium threatens state-level rules.
For the AI industry, this pattern creates a double uncertainty: on the one hand, the rules governing how algorithms can be used are in flux; on the other, the energy infrastructure needed to run those algorithms is being reshaped by abrupt policy shifts. Companies that had counted on stable regulatory and power environments now face a landscape where both can change with little warning, complicating long-term investment decisions and raising the risk that projects will be stranded midstream, much like the halted offshore wind farms.
What a smarter alignment could look like
There is an alternative path that treats AI growth and offshore wind not as competing priorities but as mutually reinforcing pieces of a modern industrial strategy. Grid officials have already signaled that meeting AI power demand will require more renewables and storage, and offshore wind is uniquely positioned to deliver large volumes of clean energy near major data center hubs. Aligning permitting, security reviews, and grid planning around that reality would give developers the confidence to move forward while still addressing legitimate defense concerns through targeted mitigation rather than blanket freezes.
That kind of alignment would also help states like New York and Connecticut realize the job and investment benefits they have been promised, from Climate jobs on the waterfront to new transmission lines and port upgrades. It would give companies like Norwegian Equinor clearer signals about the long-term viability of their projects, reducing the risk of future writedowns. Most importantly, it would allow the AI sector to expand without locking in a new wave of fossil infrastructure, preserving a chance to build the next generation of computing on a foundation that is both powerful and sustainable.
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