Blackrock CEO Cites Texas Power Grid As Example Of The Country's 'Inadequate' Infrastructure
The rapid scaling of artificial intelligence data centers — much of it expected to occur in Texas — could be limited not only by power grid capacity but also a lack of blue-collar workers, BlackRock CEO Larry Fink told energy professionals gathered in downtown Houston Monday.
Technology companies and President Donald Trump have emphasized the importance of building data centers in the United States so the country can win the AI race against China and other competitors.
But the country will need to upgrade its power grids to meet AI electricity demand, which is going to require a lot of private capital, Fink told crowds listening to his Monday lunch keynote at the CERAWeek by S&P Global conference.
“We all know that our infrastructure in the United States is pretty dated, pretty inadequate. We're working with the state of Texas right now, making sure that Texas avoids brownouts. I mean, (it's) the most energy-rich state,” Fink said.
Fink also observed that labor shortages in certain sectors could be exacerbated by the Trump administration's deportation policies.
“I do believe deportations, and the speed at which it is happening, is going to have a severe impact on the agricultural sector, the construction sector,” Fink said, as he referenced the high percentage of foreign-born workers in both of those industries. Texas, and Houston specifically, has an especially large share of construction workers who are undocumented and vulnerable to deportations.
“Now, with the whole idea that we're going to have to use private capital to build out this economy, are we going to have enough workers? I’ve even told members of the Trump team that we’re going to run out of electricians as we build out AI data centers; we just don’t have enough,” he added.
Demands on the Texas power grid
Electricity demand is growing faster in Texas than anywhere else in the country, partly due to new cryptocurrency mines and AI data centers, according to Department of Energy data. That could stretch not only power generation but also the capacity of power lines to their limits, in a state that already struggles with electricity reliability.
Even before the Electric Reliability Council of Texas saw a spike in large electricity users seeking to connect to its grid, state leaders have been trying to increase natural gas power generation they say is needed to supply a growing state. To that end, BlackRock’s Fink hosted a summit in Houston last year alongside Lt. Gov. Dan Patrick to try to court investors to build more gas-fired power plants in Texas.
The summit happened after Texas put BlackRock on its blacklist of investment firms that, according to state politicians, “boycott” fossil fuels. Since then, BlackRock has sought to highlight the firm’s investments in both traditional and alternative energy sources.
Still, in December, Attorney General Ken Paxton sued BlackRock and other investment firms, accusing them of “conspiring to artificially constrict the market for coal,” another claim the firm has vigorously denied.
Investing in Texas energy companies
On Monday, Fink again reiterated that BlackRock has approximately $108 billion invested in Texas energy companies. He also spoke of natural gas’ staying power in the global energy mix, particularly as AI data centers urgently need more energy.
“Let's be clear, gas is going to play a major role in the United States for tens of years, and maybe 50 plus years,” Fink said.
Earlier this year, BlackRock left an international coalition of asset managers supporting the goal to reach net-zero climate-warming emissions by 2050. The firm told clients that its membership “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials,” according to the Wall Street Journal.