The archaic energy grid is holding us back from the abundant, YIMBY, sci-fi future we dream of.

Across the Western world, the grid is a chaotic patchwork. It’s impressive that it still works, but its days are numbered.

If we were to design the electrical grid from scratch today, we’d never choose this system. Parts of it are, quite literally, a hot mess.

A few grid absurdities:

• Long connection delays: Energy infrastructure and housing developments face connection dates stretching into the 2030s. Entire projects are stuck in limbo for a decade or more.

• Paying to waste energy: In the UK, we spend £0.5 billion annually compensating wind farms not to generate energy when it’s too windy. Why? Because the grid can’t handle the surplus. (Yes, this cost is passed directly to bill payers.)

• AI demand is skyrocketing: The energy demand of AI infrastructure is exploding, and the grid is utterly unprepared.

• Inadequate prep: Multi-billion-dollar investments were needed just to handle the transition to renewables and EVs. These plans were not designed to accommodate emerging demands like AI, humanoid robots, reindustrialization, the autonomous economy, drones, crypto and widespread AC adoption.

• Legacy Energy inefficiencies: Much of the energy generated at power-plants has to be transformed from DC to AC to move along the grid, only to be transformed back into DC for use in applications like data centers. But we’ve now discovered that DC is better at moving huge amounts of power long distances with fewer losses. This is why China is using DC in its transmission grid.

🔗 LINK: https://www.bbc.com/future/article/20241113-will-chinas-ultra-high-voltage-grid-pay-off-for-renewable-power#:~:text=China%20defines%20those%20sending%20direct,are%20more%20expensive%20to%20build.

So, What’s the Solution?

If we could start over, how would we design the grid? And how can we move forward now?

The answer is simple: Make every building or development its own power plant.

In energy parlance, this is called a ‘behind-the-meter’ microgrid. It’s a decentralized scenario where developments generate and
consume all their own power.

I call them energy islands.

We originally separated power generation from consumption because it was polluting. Now energy can be generated cleanly it can re-urbanised.

This is the conclusion Stripe reached in their recent white paper. You can read more about it here:

🔗 LINK: https://www.offgridai.us/

In Practice:

Developers—whether industrial, residential, or data center—must also become energy developers. If they don’t, they’ll be stuck waiting a decade or more just to power their assets.

This shift isn’t easy. It comes with significant challenges:

• Planning and permitting: It was hard enough already but there’s a slim chance these ‘energy islands’ at better received.

• Land prices: More land is required, but it could provide some locational flexibility.

• Capital expenditure: Capex is higher but so is revenue. Value may be added through longer lease contracts.

• Competency gaps: Developing energy infra requires specialist expertise.

• Contract structures: Adapting lease, build and FPA contracts to account for energy development and generation will be challenging.

• Financing: Finding lenders willing to back integrated energy solutions as well as RE development will be…interesting.

Why This Matters:

The first developers to crack this code will have an enormous competitive edge. They’ll not only secure energy independence but will also be highly sought after in an energy-constrained world.

The decentralized grid is no longer a futuristic fantasy—it’s a pressing m necessity. The question isn’t if this will happen, but who will lead the way.

GSTK