a16z

Energy capacity = economic capacity, in one chart There are no low electricity, rich countries

The US grid plans to add 86 gigawatts this year. Here's where it's coming from: - Solar: 43.4 GW - Batteries: 24.3 GW - Wind: 11.8 GW - Gas: 6.3 GW - New nuclear: 0 GW The AI labs are planning for hundreds of gigawatts. Solar is the one source already produced at that scale, and most of it is made in China. "Scaling firm power that isn't gas is much more complicated. Uprates and restarts can squeeze a little more from the existing nuclear fleet, but the real upside is new reactors." a16z's @rmcentush on how America powers the next wave of growth: https://www.a16z.news/p/why-texas-is-making-data-centers

Texas just froze new data center permits: - Its queue went from 63 GW to 474 GW in 18 months, more than 5x record peak demand - Only 9.5 GW is approved and about 4.3 GW is actually running - The rest is duplicates, speculation, and developers who have never plugged in a GPU a16z's @rmcentush on why the grid can't build for that many maybes: https://www.a16z.news/p/why-texas-is-making-data-centers

John Collison on why @Stripe calls January 1st, 2026 "day one of the singularity," and the record high of new companies being created: "The Unix epoch is January 1st, 1970. We decided that the singularity epoch is January 1st, 2026... We are now in the singularity." "It's not a total coincidence that we picked that date. It was the end of last year that I feel like for many of us it was the 'holy crap' moment when it came to coding models and how they're getting so good." "All the AI folks talk about this idea of recursive self-improvement where the AI uses the AI to make itself better... People refer to the AI as this monolithic thing, but we are clearly in a world where AI capabilities are helping with the rate of improvement in AI." "As a result of intelligence on tap getting much cheaper, new firm creation is way up. We're seeing the highest rates of new firm creation that we've seen in recent memory on Stripe, right now." "Because when you have all these tools, it's easier to start a company, it's easier to actually make it successful." "I think this technology has a lot to be optimistic about. And so we don't see the singularity in any kind of a pessimistic or worried manner. We are in this moment of AI takeoff right now." @collision w/ @mollyoshea

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We're excited to invest in Preference Model. Building RL environments that actually work is harder than it looks. Models are relentless at reward hacking, finding shortcuts, and exploiting vulnerabilities. @preferencemodel has focused on the domain that matters most to labs right now: AI research and ML engineering itself. Over the past year, the team has built RL environments for leading labs. Their focus has been on building the infrastructure to make harder, more resistant environments as models improve: tooling that finds where models are weak, generates new tasks to target those gaps, and tests environments against agents actively trying to break it. This week they're open-sourcing Karotte, the framework they've used in production — hardened through more than a million evaluation runs and red-teaming. We're thrilled to partner with @chem_safety and @Ning_Catsnail and the Preference Model team as they build the training grounds for capable and aligned models. By @JenniferHli

Left: Texas's grid only maxes out about 200 hours a year, roughly 2% of the time. Right: New data centers that agree to cut back during peak hours can skip the wait for more capacity. US grids could add 100 GW of them without building a single new plant. a16z's @rmcentush on how flexible data centers get onto the grid sooner: https://www.a16z.news/p/why-texas-is-making-data-centers

.@basepowerco has raised $2.5B to bring affordable, reliable energy to people's homes across America. They're building a new nationwide power company by rebuilding every layer from scratch. Three years in: - Built a home battery factory in 8 months - Installing 100 batteries a day - Powering 30,000+ homes And they're hiring! Open roles in Austin, TX: - Head of Firmware - Backend Engineer (BaseOS) - Product Engineer - Electronics Design Engineer - System Integration Engineer - Deployment Finance & BizOps (Bay Area office opening soon, too.) More roles and the full interview with Head of Software @JaredMGreene on a16z Jobs: https://a16zjobs.substack.com/p/base-power-has-raised-25b-to-bring

.@heronpower CEO Drew Baglino on the 40-year streak that kept US electricity flat while the economy grew, and why it just ended: "We benefited from energy efficiency from the '70s... until like the 2010s. You saw efficiency everywhere... And all of that energy efficiency more or less negated the growth in energy services." "The energy services were growing over time in the United States, but the net electricity delivered to accomplish those energy services stayed basically flat. And the same thing even happened in data centers." "If you look at the efficiency of compute, even with all the AI things that are going on, in terms of flops per watt, it's really gone up an immense amount from the first data centers to today." "And that has allowed more and more compute capability for the same percentage of GDP electricity production." "Now it's changing... We are seeing electricity growth higher than it's ever been before. And that's not just because the benefits of energy efficiency are tailing off, it's because we are seeing broad based demand for more electricity: compute, transportation, industrial electrification." "Electricity as a carrier is incredibly flexible... whether it's for intelligence or for heating, I see it as a great thing and wanna accelerate it." @baglino @heronpower

a16z's Connor Love on why the old defense model gave soldiers systems "developed for 10 years ago," and how private capital lets startups build what they need before the Pentagon asks: "I experienced this in my past when I served in the Army. The buyer is not the user, and the appropriator of the dollars for the buyer is completely removed." "You had primes who would just sit there and listen, like, 'Tell me what you want. I'll develop the thing after you give me the money.'... You get a system that was developed for 10 years ago." "The beautiful thing is venture capital and what we do in American Dynamism, but also the rest of the capital markets is saying, 'We will actually fund that in advance.'" "The outcome of that is the soldier gets a better product, gets something that actually fundamentally changes the battlefield and helps with deterrence or security or safety." "More importantly, you get a type of system that is actually aligned with the requirement of the market and what technology can do today." "Instead of sitting and waiting for the government to tell you what they want, the government signals, and you see it, and you build it in advance by using private capital, and that just has not happened in the history of defense." @ConnorLoveCA

a16z's Alex Immerman, David George, and Sarah Wang on why a data center can lower your electricity bill: "It may seem counterintuitive, but a data center can help lower your electricity rate. A recent US study showed that for every 10% increase in data center capacity, residential rates went down by 40 bps." "You should think about it as a power grid is a shared fixed cost base: poles, wires, substations. A large stable customer, like a data center, can help spread those costs across more units of electricity. Simply put, more demand across a shared system is a positive." "Investment in shared infrastructure can also improve the economics for the households and businesses connected to it." "There's real examples of that today. It's not just lip service." Still, 56% of Texas voters say more data centers would raise their power bills. The catch is it depends on who pays. When developers cover their own grid upgrades instead of pushing them onto everyone else's bills, the savings are real. a16z's @rmcentush on how to get that right: https://www.a16z.news/p/why-texas-is-making-data-centers @aleximm @DavidGeorge83 @sarahdingwang

"At the end of 2024, Texas' grid operator had 63 GW of large new customers in its queue. By this June, that figure reached 474 GW, more than five times record peak demand." "Then Texas hit pause." "Developers routinely spam requests across several sites, and many are speculative builds with no customer yet." "Planners can't tell which are real, and they don't want ratepayers covering upgrades built for projects that never show up." "Fully connecting a large data center can take 5 to 10 years... Idle GPUs cost far more than the electricity to run them, so speed matters most... That's why developers are planning to bring their own power on site." "Full reliability for these power islands is very, very hard, but some labs and hyperscalers have shown that, forced to choose between reliability and speed, they'll pick speed." "Every site I'm aware of intends to connect to the grid as soon as it can, chiefly because on-site power almost always costs more." "AI companies have pledged to pay their way, and most would rather connect to the grid than avoid it. It seems ideal for everyone that we let them do so instead of driving that spending into private islands." "Texas created the energy fast lane first; now it has the opportunity to show us a better one, and I expect it will. Power is where America finds out whether it can still build." a16z's @rmcentush on why Texas is making data centers wait: https://www.a16z.news/p/why-texas-is-making-data-centers